[Federal Register Volume 65, Number 123 (Monday, June 26, 2000)]
[Rules and Regulations]
[Pages 39281-39284]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-16017]



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  Federal Register / Vol. 65, No. 123 / Monday, June 26, 2000 / Rules 
and Regulations  

[[Page 39281]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Docket No. FV00-981-1 FIR]


Almonds Grown in California; Release of the Reserve Established 
for the 1999-2000 Crop Year

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Department of Agriculture (Department) is adopting, as a 
final rule, without change, the provisions of an interim final rule 
relaxing volume regulation percentages implemented under the California 
almond marketing order (order) during the 1999-2000 crop year (August 1 
through July 31). The order regulates the handling of almonds grown in 
California and is locally administered by the Almond Board of 
California (Board). This rule continues the scheduled release of 
reserve almonds into normal salable channels. One-third of the reserve 
was released on May 2, 2000, the second-third was released on June 1, 
2000, and the final-third will be released on July 1, 2000. Releasing 
the reserve is necessary to provide a sufficient quantity of almonds to 
meet anticipated trade demand and carryover needs.

EFFECTIVE DATE: July 26, 2000.

FOR FURTHER INFORMATION CONTACT: Martin Engeler, California Marketing 
Field Office, Marketing Order Administration Branch, Fruit and 
Vegetable Programs, AMS, USDA, 2202 Monterey Street, suite 102B, 
Fresno, California 93721; telephone: (559) 487-5901, Fax: (559) 487-
5906; or George Kelhart, Technical Advisor, Marketing Order 
Administration Branch, Fruit and Vegetable Programs, AMS, USDA, room 
2525-S, P.O. Box 96456, Washington, DC 20090-6456; telephone: (202) 
720-2491, Fax: (202) 720-5698.
    Small businesses may request information on complying with this 
regulation by contacting Jay Guerber, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, P.O. Box 96456, room 
2525-S, Washington, DC 20090-6456; telephone: (202) 720-2491, Fax: 
(202) 720-5698, or E-mail: [email protected].

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Order 
No. 981, as amended, (7 CFR part 981), regulating the handling of 
almonds grown in California, hereinafter referred to as the ``order.'' 
The order is effective under the Agricultural Marketing Agreement Act 
of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the 
``Act.''
    The Department is issuing this rule in accordance with Executive 
Order 12866.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. Under the provisions of the marketing order now in 
effect, salable and reserve percentages may be established for almonds 
during any crop year. This rule continues the scheduled relaxation of 
the salable and reserve percentages for marketable California almonds 
during the 1999-2000 crop year, which began August 1, 1999, and ends 
July 31, 2000. This rule will not preempt any State or local laws, 
regulations, or policies, unless they present an irreconcilable 
conflict with this rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with the Secretary a 
petition stating that the order, any provision of the order, or any 
obligation imposed in connection with the order is not in accordance 
with law and request a modification of the order or to be exempted 
therefrom. A handler is afforded the opportunity for a hearing on the 
petition. After the hearing the Secretary would rule on the petition. 
The Act provides that the district court of the United States in any 
district in which the handler is an inhabitant, or has his or her 
principal place of business, has jurisdiction in equity to review the 
Secretary's ruling on the petition, provided a bill in equity is filed 
not later than 20 days after the date of the entry of the ruling.
    The order regulates the handling of almonds grown in California and 
is locally administered by the Board. During the 1999-2000 season, 
handlers were required to withhold as a reserve, from normal 
competitive markets, 22.36 percent of the almonds which they received 
from growers. The remaining 77.64 percent of the crop could be sold by 
handlers to any market at any time. These percentages are referred to 
as reserve and salable percentages, respectively. This rule continues 
to relax this regulation on handlers by continuing the scheduled 
release of all almonds held as reserve for sale to normal market 
channels. This is necessary to provide a sufficient quantity of almonds 
to meet anticipated trade demand and carryover needs. This action was 
unanimously recommended by the Board at a meeting on April 10, 2000.
    Section 981.47 of the almond marketing order provides authority for 
the Secretary, based on recommendations by the Board and the analysis 
of other available information, to establish salable and reserve 
percentages for almonds during a crop year. To aid the Secretary in 
fixing the salable and reserve percentages, Sec. 981.49 of the order 
requires the Board to submit information to the Department on estimates 
of the marketable production of almonds, trade demand needs for the 
year, carryin inventory at the beginning of the year, and the desirable 
carryout inventory at the end of the year. Reserve almonds may be 
disposed of in authorized reserve outlets, such as certified organic 
markets or for use in almond oil, almond butter, and animal feed. 
Reserve almonds can also be released for sale into normal marketing 
channels based on a revision of the aforementioned factors and other 
information. Authority for the Board to recommend revisions in the 
volume regulation percentages is provided in Sec. 981.48 of the order. 
Such revisions must be recommended by May 15.
    The Board met in May and July of 1999 to review projected crop 
estimates and marketing conditions for the 1999-2000 crop year. A 
record crop of 830 million kernelweight pounds was projected for the 
season. This would produce an estimated 796.8 marketable

[[Page 39282]]

kernelweight pounds after an adjustment for processing losses and 
exempt product. When combined with estimated carryin and adjusted for 
desired carryout, an estimated 827.2 million pounds was available for 
marketing during the 1999-2000 crop year. Trade demand was estimated by 
the Board at 649 million pounds; thus, a projected oversupply of 
almonds of about 178.2 million pounds existed for the 1999-2000 crop 
year. The Board also considered other factors such as price levels and 
fluctuations, increased plantings and yields, and weather-related 
variations in production, and ultimately recommended establishment of a 
reserve for the 1999-2000 season. The Department established salable 
and reserve percentages of 77.64 and 22.36 percent, respectively, for 
almonds received by handlers during the 1999-2000 crop year, pursuant 
to a regulation published in the Federal Register on November 2, 1999 
(64 FR 59107).
    The Board met on April 10, 2000, to consider disposition of the 
reserve. At that time, the Board evaluated marketing and other 
conditions in the industry, and recommended revisions to the marketing 
policy estimates initially used in establishing the reserve. A 
comparison of the initial estimates and revised estimates are contained 
in the following table.

                  Marketing Policy Estimates--1999 Crop
               [Kernelweight basis in millions of pounds]
------------------------------------------------------------------------
                                             07/12/99        04/10/00
                                              initial         revised
                                             estimates       estimates
------------------------------------------------------------------------
Estimated Production:
    1. 1999 Production..................          830.0            827.4
    2. Loss and Exempt--4.0%............           33.2             33.1
                                         -------------------------------
    3. Marketable Production............          796.8            794.3
Estimated Trade Demand:
    4. Domestic.........................          190.0            203.0
    5. Export...........................          459.0            492.0
    6. Total............................          649.0            695.0
                                         -------------------------------
Inventory Adjustment:
    7. Carryin 8/1/99...................          100.4             91.8
    8. Desirable Carryover 7/31/00......           70.0            191.1
    9. Adjustment (Item 8 minus item 7).          -30.4             99.3
                                         -------------------------------
Salable/Reserve:
    10. Adjusted Trade Demand (Item 6             618.6            794.3
     plus item 9).......................
    11. Reserve (Item 3 minus item 10)..          178.2              0.0
    12. Salable % (Item 10 divided by          \1\ 77.64           100.0
     item 3  x  100)....................
    13. Reserve % (100% minus item 12)..       \1\ 22.36            0.0
------------------------------------------------------------------------
\1\ Percent.

    In arriving at these estimates, the Board revised its 1999-2000 
crop estimate of 830 million pounds to 827.4 million pounds, and 
marketable production of 796.8 million pounds to 794.3 million pounds. 
The carryin on August 1, 1999, was initially estimated to be 100.4 
million pounds. That figure was revised to reflect actual carryin of 
91.8 million pounds. Thus, the total available supply for the 1999-2000 
crop year is slightly lower than initially estimated.
    Shipment figures for the year-to-date were analyzed. Through March 
2000, total industry shipments of almonds were 525.5 million pounds, 
significantly higher than shipments for a comparable period in any 
prior year. Based on historical shipping patterns and shipments to date 
this season, the Board anticipates strong shipment levels to continue 
for the remainder of the season. Therefore, the Board revised its trade 
demand estimate from 649 million pounds to 695 million pounds.
    A final crop estimate for the 2000-2001 crop year will not be 
available until June 29. A preliminary crop estimate of 675 million 
pounds was issued by the California Agricultural Statistics Service 
(CASS) on May 11, 2000. The industry continues to believe that next 
year's crop will be significantly smaller than the current crop. 
Several factors have contributed to this conclusion. In addition to the 
usual pattern of a shorter crop following a large crop, the weather 
throughout the production area during the month of February was 
generally cool, rainy, and windy. During this period, almond trees were 
in bloom, and the weather conditions were not conducive to good flower 
pollination. Field observations since the bloom period confirm that the 
2000-2001 crop will be significantly smaller, perhaps smaller than the 
preliminary estimate. It is believed that next year's crop will not 
provide a sufficient supply of almonds to meet trade needs and provide 
an adequate carryout at the end of the 2000-2001 crop year. Therefore, 
to provide more almonds to satisfy the current year's trade demand and 
to augment next year's supplies, the Board recommended releasing the 
1999-2000 crop year reserve. The Board also considered the timing of 
releasing reserve product to salable market channels. The Board 
determined that a gradual release schedule would best serve the 
industry. This would prevent a large quantity of almonds from being 
made available for sale by handlers immediately, which could put 
downward pressure on prices and create disorderly marketing conditions. 
Thus, the Board unanimously recommended releasing one-third of the 
reserve as soon as possible, one-third on June 1, 2000, and the final-
third on July 1, 2000. The resulting salable and reserve percentages 
were 85.09 percent and 14.91 percent, respectively, on May 2, 2000; 
92.55 percent and 7.45 percent, respectively, on June 1, 2000; and will 
be 100 and 0 percent, respectively, on July 1, 2000.
    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Administrator of the Agricultural Marketing Service 
(AMS) has considered the economic impact of this action on small 
entities. Accordingly,

[[Page 39283]]

AMS has prepared this final regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and rules issued thereunder, are unique in that 
they are brought about through group action of essentially small 
entities acting on their own behalf. Thus, both statutes have small 
entity orientation and compatibility.
    There are approximately 105 handlers of California almonds who are 
subject to regulation under the marketing order and approximately 6,000 
producers in the regulated area. Small agricultural service firms are 
defined by the Small Business Administration (13 CFR 121.201) as those 
having annual receipts of less than $5,000,000, and small agricultural 
producers are defined as those whose annual receipts are less than 
$500,000.
    Based on the most current data available, about 54 percent of 
almond handlers ship under $5,000,000 worth of almonds and 46 percent 
ship over $5,000,000 worth on an annual basis. In addition, based on 
production and grower prices reported by the National Agricultural 
Statistics Service (NASS), and the total number of almond growers, the 
average annual grower revenue is approximately $195,000. In view of the 
foregoing, it can be concluded that the majority of handlers and 
producers of California almonds may be classified as small entities, 
excluding receipts from other sources.
    Pursuant to Secs. 981.47 and 981.49, during the 1999-2000 crop 
year, handlers were required to withhold as a reserve, from normal 
competitive markets, 22.36 percent of the almonds which they received 
from growers (64 FR 59107, November 2, 1999). The remaining 77.64 
percent of the crop could be sold by handlers to any market at any 
time. Volume regulation was implemented because the available supply of 
almonds for the 1999-2000 crop year, adjusted by carryin and desired 
carryout, was estimated to be about 827 million pounds, which exceeded 
the estimated trade demand needs of about 649 million pounds.
    Pursuant to Sec. 981.48 of the order, this rule continues the 
scheduled release of reserve almonds. A total of 7.45 percent of the 
reserve was released on May 2, 2000, another 7.45 percent was released 
on June 1, 2000, and the final 7.45 percent will be released on July 1, 
2000. Releasing the reserve is necessary to provide a sufficient 
quantity of almonds to meet anticipated trade demand and carryover 
needs. Shipment levels through March, 2000 and anticipated strong 
shipments for the remainder of the season led to an increased trade 
demand estimate from 649 million pounds to 695 million pounds. In 
addition, because a smaller 2000-2001 crop is expected, the industry 
would like to increase the amount of 1999-2000 carryout inventory from 
70 million pounds to 191.2 million pounds to augment supplies during 
the next crop year. The timing of the releases was structured so that 
all 178 million pounds of reserve product would not enter the market at 
one time.
    This action is expected to have a positive effect on producers and 
handlers of almonds. It gradually removes the regulatory requirement 
that handlers hold product in reserve or sell it to reserve outlets. 
Handlers will be able to sell reserve almonds into normal markets at 
prevailing prices (currently in the range of $1.15 per pound to $1.60 
per pound) as opposed to selling them into lower value reserve outlets 
(ranging from 8 to 15 cents per pound for oil or 4 to 5 cents per pound 
for animal feed). Although reserve almonds can be sold to organic 
markets or for use in the manufacture of almond butter at higher prices 
than other reserve outlets, the quantity that can be sold is limited 
because those markets are relatively small. Handlers and growers should 
be able to achieve higher total revenue for their product by selling to 
normal markets, because trade demand for almonds has increased 
significantly from early season estimates, and price levels have also 
improved in recent months.
    Releasing reserve almonds into the market in three stages has 
helped ensure that a large supply of almonds is not available for sale 
by handlers at the same time, which could have created a temporary 
oversupply and had a negative impact on price levels. The staged 
release also helped to ensure that additional product will be available 
for carryin to the following crop year to augment anticipated short 
supplies. This action is intended to promote orderly marketing 
conditions for the remainder of the 1999-2000 crop year and also 
leading into the 2000-2001 crop year, for the benefit of producers and 
handlers, regardless of size.
    One alternative considered was to release all of the reserve 
product to normal market channels as soon as possible. This alternative 
was not recommended because it was believed that too much product would 
be available at one time, creating a short-term oversupply situation, 
which could have negatively impacted prices and market conditions. 
Another alternative considered was to release one-third of the reserve 
as soon as possible, and if the May 11, 2000, crop estimate issued by 
CASS for the 2000-2001 crop was less than 525 million pounds, to 
release the entire reserve as soon as possible after that. If the May 
crop estimate was more than 525 million pounds, this alternative would 
have released one-third of the reserve as soon as possible after May 
11, and the final one-third on July 1, 2000. This was not recommended. 
The Board decided that three equal releases were preferable.
    All the scenarios considered had the common goal of releasing all 
the 1999-2000 crop year reserve to the salable category. The Board 
ultimately recommended releasing one-third of the reserve as soon as 
possible (May 2, 2000), one-third on June 1, 2000, and the final one-
third on July 1, 2000. The Board believed this would best achieve 
orderly marketing objectives. Adequate supplies should be available to 
meet market needs for the remainder of the crop year and for carryin to 
the next crop year, thus satisfying market needs and maintaining market 
and price stability.
    This rule will not impose any additional reporting and 
recordkeeping requirements on either small or large handlers. As with 
all Federal marketing order programs, reports and forms are 
periodically reviewed to help reduce information requirements and 
duplication by industry and public sector agencies. In addition, the 
Department has not identified any relevant Federal rules that 
duplicate, overlap, or conflict with this rule.
    Further, the Board's meeting was widely publicized throughout the 
almond industry and all interested persons were invited to attend the 
meeting and participate in Board deliberations. Like all Board 
meetings, the April 10, 2000, meeting was a public meeting and all 
entities, both large and small, were able to express their views on 
this issue.
    Also, the Board has a number of appointed committees to review 
certain issues and make recommendations to the Board. The Board's 
Reserve Committee met on April 10, 2000, and discussed this issue in 
detail. That meeting was also a public meeting and both large and small 
entities were able to participate and express their views.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/fv/moab.html. Any questions about the compliance 
guide should be sent to Jay Guerber at the previously mentioned

[[Page 39284]]

address in the FOR FURTHER INFORMATION CONTACT section.
    An interim final rule concerning this action was published in the 
Federal Register on May 1, 2000 (65 FR 25233). Copies of the rule were 
mailed by the Board's staff to all Board members and almond handlers. 
In addition, the rule was made available through the Internet by the 
Office of the Federal Register. That rule provided for a 15-day comment 
period which ended on May 16, 2000. One comment was received. The 
comment was submitted by the Board in support of the release, noting 
that the Board met on May 16, 2000, and reaffirmed its position to 
release the reserve in three stages.
    After consideration of all relevant material presented, including 
the Board's recommendation and comment, and other information, it is 
found that this rule, as hereinafter set forth, will tend to effectuate 
the declared policy of the Act.

List of Subjects in 7 CFR Part 981

    Almonds, Marketing agreements, Nuts, Reporting and recordkeeping 
requirements.

PART 981--ALMONDS GROWN IN CALIFORNIA

    Accordingly, the interim final rule amending 7 CFR part 981 which 
was published at 65 FR 25233 on May 1, 2000, is adopted as a final rule 
without change.

    Dated: June 19, 2000.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 00-16017 Filed 6-23-00; 8:45 am]
BILLING CODE 3410-02-P