[Federal Register Volume 60, Number 105 (Thursday, June 1, 1995)]
[Rules and Regulations]
[Pages 28520-28522]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-13339]



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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service

7 CFR Part 981

[FV94-981-3IFR]


Almonds Grown in California; Release of the Reserve Established 
for the 1994-95 Crop Year

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This document relaxes volume regulations imposed on California 
almond handlers for the 1994-95 crop year by releasing reserve almonds 
into salable channels. Volume regulations were imposed under the 
authority of the Federal marketing order which regulates the handling 
of almonds grown in California and is locally administered by the 
Almond Board of California (Board). During the 1994-95 season, handlers 
were required to withhold as a reserve, from normal competitive 
markets, 10 percent of the almonds which they received from growers. 
The remaining 90 percent of the crop could be sold by handlers to any 
market at any time. This rule relaxes these regulations on handlers by 
releasing the reserve percentage to the salable category and is 
necessary to provide a sufficient quantity of almonds to meet 
anticipated trade demand and carryover needs.

DATES: Effective on May 25, 1995; comments received by July 3, 1995 
will be considered prior to issuance of a final rule.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent in triplicate to the Docket 
Clerk, Fruit and Vegetable Division, AMS, USDA, room 2525-S, P.O. Box 
96456, Washington, DC 20090-6456. All comments should reference the 
docket number and the date and page number of this issue of the Federal 
Register and will be made available for public inspection in the Office 
of the Docket Clerk during regular business hours.

FOR FURTHER INFORMATION CONTACT: Kathleen M. Finn, Marketing 
Specialist, Marketing Order Administration Branch, Fruit and Vegetable 
Division, AMS, USDA, room 2522-S, P.O. Box 96456, Washington, DC 20090-
6456; telephone: (202) 720-1509, or fax (202) 720-5698; or Martin 
Engeler, Assistant Officer-in-Charge, California Marketing Field 
Office, Fruit and Vegetable Division, AMS, USDA, 2202 Monterey Street, 
suite 102B, Fresno, California 93721; telephone: (209) 487-5901, or fax 
(209) 487-5906.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing 
Agreement and Order No. 981 (7 CFR part 981), both as amended, 
hereinafter referred to as the ``order,'' regulating the handling of 
almonds grown in California. 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 of Agriculture (Department) is issuing this rule in 
accordance with Executive Order 12866.
    This rule has been reviewed under Executive Order 12778, 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 revises the salable and reserve 
percentages for marketable California almonds during the 1994-95 crop 
year. 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 date of the entry of the ruling.
    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.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order [[Page 28521]] 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 115 handlers of almonds who are subject to 
regulation under the marketing order and approximately 7,000 producers 
in the regulated area. Small agricultural service firms have been 
defined by the Small Business Administration (13 CFR 121.601) 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. The majority of handlers and producers of California almonds 
may be classified as small entities.
    This rule relaxes volume regulations imposed on California almond 
handlers for the 1994-95 crop year (July 1 through June 30). During the 
1994-95 season, handlers were required to withhold, from normal 
domestic and export markets, 10 percent of the merchantable almonds 
which they received from growers (reserve percentage). The remaining 90 
percent of almonds received by handlers could be sold to any market at 
any time (salable percentage). Volume regulations were recommended by 
the Board and imposed on handlers to lessen the impact of a large 
almond supply for the 1994-95 season. Salable and reserve percentages 
were established through publication of a final rule in the Federal 
Register on December 9, 1994 (59 FR 63693). The Board now believes that 
volume regulations on almond handlers are no longer necessary and that 
the entire reserve should be released to provide a sufficient quantity 
of almonds to meet anticipated trade demand and carryover needs.
    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, section 981.49 of the order 
requires the Board to submit information to the Department on estimates 
of the marketable production of almonds, combined domestic and export 
trade demand for the year, carryin inventory at the beginning of the 
year, and the desirable carryover inventory at the end of the year. 
Authority for the Board to recommend revisions in the volume regulation 
percentages is provided in section 981.48 of the order. Such revisions 
must be recommended by May 15.
    The Board met in July of 1994 to review projected crop estimates 
and marketing conditions for the 1994-95 almond season. A very large 
crop of 640 million kernelweight pounds was projected for the season. 
Estimated shipments for the two prior seasons were 535.9 million pounds 
for 1992 crop almonds and 497.7 million pounds for 1993 crop almonds.
    Variations in production from season-to-season can cause wide 
fluctuations in prices. For example, the Board estimated that grower 
prices increased from $1.26 per pound for 1992 crop almonds to $2.00 
per pound for the smaller, 1993 crop almonds. The large 1994 California 
almond crop estimate caused early speculation of grower prices in the 
$1.15 per pound range. Such swings in supplies and price levels can 
result in market instability and uncertainty for growers, handlers, 
buyers, and consumers. The long term goal of the almond industry is to 
increase almond consumption and demand, and the Board believes this is 
best achieved in the presence of stable and orderly market conditions. 
Thus, the Board recommended that the volume regulation provisions of 
the order be utilized for the 1994-95 season as a supply management 
tool, with 10 percent of the 1994 crop almonds being held by handlers 
as a reserve.
    On May 12, 1995, the Board met in Modesto, California, and 
unanimously recommended releasing the reserve established for the 1994-
95 crop year. Thus, the salable percentage will increase from 90 to 100 
percent and the reserve percentage will decrease from 10 to 0 percent. 
The Board considered a number of factors in arriving at its 
recommendation to release the reserve. The 1994-95 almond crop is now 
estimated at 727 million pounds, far above the initial 640 million 
pound estimate. Shipments for the year are expected to exceed 600 
million pounds. Further, it appears that production in the rest of the 
world is well below normal. Production in Spain, the world's second 
largest producer of almonds, fell well below usual and is estimated to 
have been about 75 million pounds. Spain, California's biggest 
competitor in the world almond markets, became the United States' 
fourth largest export market.
    At the meeting, the Board also considered a crop estimate for 
California almonds for the 1995-96 season provided by the California 
Agricultural Statistics Service (CASS). CASS released its crop estimate 
of 430 million kernelweight pounds on May 11. The estimate is 
relatively small compared with normal almond production for a year. An 
extremely wet spring that prohibited successful pollination of almond 
trees during the critical bloom period as well as crop losses due to 
trees having been blown over by high winds have resulted in the 
predicted small yield in California. Very short carryin inventories of 
1993 crop almonds into the current season combined with reduced 
production from California competitors resulted in higher than 
anticipated demand for California almonds.
    As required under the order, the Board revised a number of 
estimates that had been considered when volume regulation was first 
recommended in July 1994. The Board's current estimates of marketable 
supply, combined domestic and export trade demand for 1994-95, and 
desirable carryover to be available for the 1995-96 crop year are shown 
below. The Board considered these revised estimates in arriving at its 
recommendation to release the 1994-95 reserve. The estimates used by 
the Board to establish the original volume regulations for the year are 
shown for comparison.

                  Marketing Policy Estimates--1994 Crop                 
               [Kernelweight basis in millions of pounds]               
------------------------------------------------------------------------
                                                     12/9/94    5/12/95 
                                                     Initial    Revised 
                                                    estimates  estimates
------------------------------------------------------------------------
Estimated Production:                                                   
  1. 1994 Production..............................     640.0      727.1 
  2. Loss and Exempt--3.0%........................      19.2       21.8 
  3. Marketable Production........................     620.8      705.3 
Estimated Trade Demand:                                                 
  4. Domestic.....................................     175.0      152.8 
  5. Export.......................................     381.4      449.0 
  6. Total........................................     556.4      601.8 
Inventory Adjustment:                                                   
  7. Carryin 7/1/94...............................      99.6      102.6 
  8. Desirable Carryover 6/30/95..................     100.0      206.1 
  9. Adjustment (Item 8 minus item 7).............       0.4      103.5 
Salable/Reserve:                                                        
  10. Adjusted Trade Demand (Item 6 plus item 9)..     556.8      705.3 
  11. Reserve (Item 3 minus item 10)..............      64.0          0 
  12. Salable % (Item 10 divided by item 3 x 100).       90%      100.0 
  13. Reserve % (100% minus item 12)..............       10%          0 
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[[Page 28522]]


    As previously mentioned and reflected in the table, estimated 
almond crop production for the 1994-95 season increased from 640 to 
727.1 million kernelweight pounds. Estimated weight losses resulting 
from the removal of inedible kernels by handlers and losses during 
manufacturing also increased from 19.2 to 21.8 million kernelweight 
pounds. Therefore, marketable production is expected at 705.3 million 
kernelweight pounds.
    The Board's estimated trade demand (or shipments) also increased 
from 556.5 million kernelweight pounds to a total of 601.8 kernelweight 
pounds. If the estimates are achieved, this would set a new record for 
the California almond industry. Although estimated domestic trade 
demand decreased from 175 to 152.8 million kernelweight pounds, 
estimated export trade demand increased sharply from 381.4 to 449 
million kernelweight pounds. Almond production in the rest of the world 
was well below normal, contributing to a significant increase in the 
amount of California almonds shipped into export markets.
    The Board also revised its inventory estimates. The carryin 
figure--supplies of salable almonds carried in from the 1993-94 crop 
year--was slightly revised from 99.6 to 102.6 million kernelweight 
pounds. The desirable carryout figure--supplies of salable almonds to 
be carried out on June 30 for early season shipment during the 1995-96 
crop year--was revised from 100 to 206.1 million kernelweight pounds. 
With the projected short crop for the upcoming season, the carryout 
figure was significantly increased to provide a more adequate supply of 
almonds available to meet early market needs. After taking into account 
the carryin and desirable carryover figures, the adjusted trade demand 
was increased from 556.8 to 705.3 million kernelweight pounds, an 
amount equal to the Board's estimate of marketable production.
    The order also permits the Board to recommend the establishment of 
a percentage of reserve almonds that can be exported. However, export 
is currently the largest market for California almonds and is not 
considered a secondary or noncompetitive outlet. For the 1994-95 crop 
year, exports were included in the trade demand and the export market 
was not an authorized reserve outlet. The percentage of reserve almonds 
available for export was established at 0 percent in the final rule 
previously cited that established volume regulation for the 1994-95 
crop. The export percentage is not changed as a result of this action.
    The Board believes that immediate release of the reserve will 
positively impact market stability by increasing the amount of almonds 
available to the market prior to the harvest of the 1995 crop, and by 
augmenting the overall supply available for the upcoming season. This 
action is expected to facilitate a smooth transition into the 1995-96 
season. Since market stability is of paramount importance in achieving 
long-term industry health, the Board concluded that there are no viable 
alternatives to its recommendation.
    This action is not expected to impose any additional costs on 
handlers or producers because immediate release of the reserve will 
eliminate the need for handlers to continue to store almonds and will 
allow the product to enter an eager market in a smooth fashion. 
Therefore, the Administrator of the AMS has determined that the 
issuance of this interim final rule will not have a significant 
economic effect on a substantial number of small entities.
    After consideration of all relevant material presented, including 
the Board's recommendation, and other available information, it is 
found that revision of section 981.239 so as to change the salable 
percentage from 90 to 100 percent and the reserve percentage from 10 to 
0 percent will tend to effectuate the declared policy of the Act.
    Pursuant to 5 U.S.C. 553, it is also found and determined upon good 
cause that it is impracticable, unnecessary, and contrary to the public 
interest to give preliminary notice prior to putting this rule into 
effect and that good cause exists for not postponing the effective date 
of this rule until 30 days after publication in the Federal Register 
because: (1) This rule relaxes requirements currently in effect by 
increasing the quantity of almonds that may be marketed; (2) this rule 
was discussed at a public meeting and interested persons had an 
opportunity to provide input; (3) the rule was unanimously recommended 
by the Board; and (4) this rule provides a 30-day comment period and 
any comments received will be considered prior to finalization of this 
rule.

List of Subjects in 7 CFR Part 981

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

    For the reasons set forth in the preamble, 7 CFR part 981 is 
amended as follows:

PART 981--ALMONDS GROWN IN CALIFORNIA

    1. The authority citation for 7 CFR part 981 continues to read as 
follows:

    Authority: 7 U.S.C. 601-674.

    Note: This section will not appear in the Code of Federal 
Regulations.

Subpart--Salable, Reserve, and Export Percentages

    2. Section 981.239 is revised to read as follows:


Sec. 981.239  Salable, reserve, and export percentages for almonds 
during the crop year beginning on July 1, 1994.

    The salable, reserve, and export percentages during the crop year 
beginning on July 1, 1994, shall be 100 percent, 0 percent, and 0 
percent, respectively beginning on May 25, 1995.

    Dated: May 25, 1995.
Sharon Bomer Lauritsen,
Deputy Director, Fruit and Vegetable Division.
[FR Doc. 95-13339 Filed 5-31-95; 8:45 am]
BILLING CODE 3410-02-P