[Federal Register Volume 73, Number 33 (Tuesday, February 19, 2008)]
[Rules and Regulations]
[Pages 9000-9005]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 08-739]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 982

[Docket No. AMS-FV-07-0150; FV08-982-1 IFR]


Hazelnuts Grown in Oregon and Washington; Establishment of 
Interim Final and Final Free and Restricted Percentages for the 2007-
2008 Marketing Year

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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

SUMMARY: This rule establishes interim final and final free and 
restricted percentages for domestic inshell hazelnuts for the 2007-2008 
marketing year under the Federal marketing order for hazelnuts grown in 
Oregon and Washington. The interim final free and restricted 
percentages are 8.1863 and 91.8137 percent, respectively, and the final 
free and restricted percentages are 9.2671 and 90.7329 percent, 
respectively. The percentages allocate the quantity of domestically 
produced hazelnuts which may be marketed in the domestic inshell market 
(free) and the quantity of domestically produced hazelnuts that must be 
disposed of in outlets approved by the Board (restricted). Volume 
regulation is intended to stabilize the supply of domestic inshell 
hazelnuts to meet the limited domestic demand for such hazelnuts with 
the goal of providing producers with reasonable returns. This rule was 
recommended unanimously by the Hazelnut Marketing Board (Board), the 
agency responsible for local administration of the marketing order.

DATES: Effective February 20, 2008. This interim final rule applies to 
all 2007-2008 marketing year restricted hazelnuts until they are 
properly disposed of in accordance with marketing order requirements. 
Comments received by April 21, 2008 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 to the Docket Clerk, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, Washington, DC 
20250-0237; Fax: (202) 720-8938; or Internet: http://www.regulations.gov. 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, or can be viewed at: http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Barry Broadbent or Gary Olson, 
Northwest Marketing Field Office, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, 1220 SW. Third Avenue, 
Suite 385, Portland, OR 97204; Telephone: (503) 326-2724, Fax: (503) 
326-7440, or E-mail: <a href="/cdn-cgi/l/email-protection#efad8e9d9d96c1ad9d808e8b8d8a819baf9a9c8b8ec1888099"><span class="__cf_email__" data-cfemail="3d7f5c4f4f44137f4f525c595f5853497d484e595c135a524b">[email protected]</span></a> or <a href="/cdn-cgi/l/email-protection#1b5c7a69625f3554776874755b6e687f7a357c746d"><span class="__cf_email__" data-cfemail="8ec9effcf7caa0c1e2fde1e0cefbfdeaefa0e9e1f8">[email protected]</span></a>.
    Small businesses may request information on complying with this 
regulation by contacting Jay Guerber, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence 
Avenue, SW., STOP 0237, Washington, DC 20250-0237; Telephone: (202) 
720-

[[Page 9001]]

2491, Fax: (202) 720-8938, or E-mail: <a href="/cdn-cgi/l/email-protection#ce84afb7e089bbabbcacabbc8ebbbdaaafe0a9a1b8"><span class="__cf_email__" data-cfemail="e8a28991c6af9d8d9a8a8d9aa89d9b8c89c68f879e">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing 
Agreement No. 115 and Marketing Order No. 982, both as amended (7 CFR 
Part 982), regulating the handling of hazelnuts grown in Oregon and 
Washington, 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 of Agriculture (USDA) is issuing this rule in 
conformance with Executive Order 12866.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. It is intended that this action apply to all 
merchantable hazelnuts handled during the 2007-2008 marketing year 
beginning July 1, 2007. This action applies to all 2007-2008 marketing 
year restricted hazelnuts until they are properly disposed of in 
accordance with marketing order requirements. 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 USDA 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, USDA 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 to review USDA's ruling on the petition, 
provided an action is filed not later than 20 days after the date of 
the entry of the ruling.
    This rule establishes free and restricted percentages which 
allocate the quantity of domestically produced hazelnuts that may be 
marketed in domestic inshell markets (free) and hazelnuts that must be 
exported, shelled, or otherwise disposed of by handlers (restricted). 
The Board met and, after determining that volume regulation would tend 
to effectuate the declared policy of the Act, developed a marketing 
policy to be employed for the duration of the 2007-2008 marketing year.
    Volume regulation is intended to stabilize the supply of domestic 
inshell hazelnuts to meet the limited domestic demand for such 
hazelnuts, with the goal of providing producers with reasonable 
returns. Based on an estimate of the domestic inshell trade demand and 
total supply of domestically produced hazelnuts available for the 2007-
2008 marketing year, the Board voted unanimously at their November 15, 
2007, meeting to recommend to USDA that the interim final free and 
restricted percentages for the 2007-2008 marketing year be established 
at 8.1863 percent and 91.8137 percent, respectively. Additionally, the 
Board unanimously voted to set the final free and restricted 
percentages, effective May 1, 2008, at 9.2671 and 90.7329 percent, 
respectively.
    The Board's authority to recommend volume regulation and use 
computations to determine the allocation of hazelnuts to individual 
markets is specified in Sec.  982.40 of the order. Under the order's 
provisions, free and restricted market allocations of hazelnuts are 
expressed as percentages of the total hazelnut supply subject to 
regulation. The percentages are derived by dividing the estimated 
domestic inshell trade demand (computed by formula) by the Board's 
estimate of the total domestically produced supply of hazelnuts that 
are expected to be available over the course of the marketing year.
    Inshell trade demand, the key component of the marketing policy, is 
the estimated quantity of inshell hazelnuts necessary to adequately 
supply the domestic inshell hazelnut market for the duration of the 
marketing year. The Board determines the domestic inshell trade demand 
for each year and uses that estimate as the basis for setting the 
percentage of the available supply of domestically produced hazelnuts 
that handlers may ship to the domestic inshell market throughout the 
marketing season. The order specifies that inshell trade demand be 
computed by averaging the preceding three years' trade acquisitions of 
inshell hazelnuts, allowing adjustments for abnormal crop or marketing 
conditions. In addition, the Board may increase the computed inshell 
trade demand by up to 25 percent, if market conditions warrant an 
increase.
    As required by the order, prior to September 20 of each marketing 
year, the Board meets to establish its marketing policy for that year. 
If the Board determines that volume control would tend to effectuate 
the declared policy of the Act, the Board then follows a procedure, 
specified by the order, to compute and announce preliminary free and 
restricted percentages. The preliminary free percentage releases 80 
percent of the adjusted inshell trade demand that handlers may ship to 
the domestic market. The purpose of releasing only 80 percent of the 
inshell trade demand under the preliminary stage of regulation is to 
guard against any potential underestimate of crop size. The preliminary 
free percentage is expressed as a percentage of the total hazelnut 
supply subject to regulation, where total supply is the sum of the 
estimated crop production less the three-year average disappearance 
plus the undeclared carry-in from the previous marketing year.
    On August 21, 2007, the National Agricultural Statistics Service 
(NASS) released an estimate of 2007 hazelnut production for the Oregon 
and Washington area at 33,000 dry orchard-run tons. NASS uses an 
objective yield survey method to estimate hazelnut production which has 
historically been very accurate.
    On August 23, 2007, the Board met for the purpose of (1) 
determining if volume control regulation would tend to effectuate the 
declared policy of the Act; (2) estimating the total available supply 
and the domestic inshell trade demand for hazelnuts; (3) establishing 
preliminary free and restricted marketing percentages for the 2007-2008 
marketing year; and (4) authorizing market outlets for restricted 
hazelnuts.
    After discussion, the Board unanimously determined that volume 
regulation would be necessary to effectively market the industry's 2007 
crop and would tend to effectuate the declared policy of the Act. The 
determination was based on (1) the size of the 2007 hazelnut crop; (2) 
the inability of the domestic inshell market to absorb such a large 
crop; (3) the projected large size of the world hazelnut crop and the 
probability of an oversupplied world market; and (4) the average price 
paid to Oregon-Washington growers has not exceeded the parity price in 
any one of the past 18 years.
    The Board then estimated the total available supply for the 2007 
crop year to be 33,603 tons. The Board arrived at that quantity by 
using the crop estimate compiled by NASS (33,000 tons) and then 
adjusting that estimate to account for disappearance and carry-in. The 
order requires the Board to reduce the crop estimate by the average 
disappearance over the preceding three years (1,426 tons) and to 
increase it by the amount of undeclared carry-in from previous years' 
production (2,029 tons).

[[Page 9002]]

    In the calculation, disappearance is defined as the difference 
between the estimated orchard-run production and the actual supply of 
merchantable product available for sale by handlers. Disappearance can 
consist of (1) unharvested hazelnuts; (2) culled product (nuts that are 
delivered to handlers but later discarded); (3) product used on the 
farm, sold locally, or otherwise disposed of by producers; and (4) 
statistical error in the orchard-run production estimate.
    Undeclared carry-in is defined as hazelnuts that were produced in a 
previous marketing year but were not subject to regulation because they 
were not shipped during that marketing year. Undeclared carry-in is 
subject to regulation during the current marketing year and is 
accounted for as such by the Board.
    Additionally, the Board estimated domestic inshell trade demand for 
the 2007-2008 marketing year to be 2,478 tons. The Board arrived at 
this estimate by taking the average of the domestic inshell trade 
acquisitions for the 2003/2004, 2004/2005, and the 2006/2007 marketing 
years (2,649 tons), increasing that amount by 5 percent (133 tons) to 
encourage sales (as allowed by the order), and then reducing that 
quantity by the declared carry-in from last year's crop (304 tons). The 
trade acquisition data for the 2005-2006 marketing year was omitted 
from the Board's calculations, as allowed by the order, after it was 
determined to be abnormal due to crop and marketing conditions. The 
Board is also allowed to increase the average domestic inshell trade 
acquisitions in their calculation by up to 25 percent, if market 
conditions justify such an increase. At this stage in the establishment 
of the marketing policy, the Board voted unanimously that a 5 percent 
increase would be sufficient to encourage new sales without risking 
oversupply of the market.
    The declared carry-in represents product regulated under the order 
during a preceding marketing year but not shipped during that year. 
This inventory must be accounted for when estimating the quantity of 
product to make available to adequately supply the market.
    After establishing estimates for total available hazelnut supply 
and domestic inshell trade demand, the Board used those estimates to 
compute and announce preliminary free and restricted percentages of 
5.8983 percent and 94.1017 percent, respectively. The Board computed 
the preliminary free percentage by multiplying the adjusted inshell 
trade demand by 80 percent and dividing the result by the estimate of 
the total available supply subject to regulation (2,478 tons x 80 
percent/33,603 tons = 5.8983 percent). The preliminary free percentage 
initially released 1,982 tons of hazelnuts from the 2007-2008 supply 
for domestic inshell use. The Board authorized the preliminary 
restricted percentage (31,621 tons) to be exported or shelled for the 
domestic kernel markets.
    Under the order, the Board must meet again on or before November 15 
to review and revise the preliminary estimate of the total available 
supply of hazelnuts and to recommend interim final and final free and 
restricted percentages. As indicated earlier, when establishing 
preliminary free and restricted percentages, the Board utilizes a pre-
harvest objective yield survey, compiled by NASS on behalf of the 
Board, to estimate the upcoming crop size. After the hazelnut harvest 
has concluded, usually sometime in October, information is available 
directly from handlers to more accurately estimate crop size. The Board 
may use this information to amend their preliminary estimate of total 
available supply before calculating the interim final and final 
percentages. At this meeting, the Board may also amend the percentage 
increase included in the computation of inshell trade demand to 
encourage increased sales.
    Interim final percentages are calculated in the same way as the 
preliminary percentages but release 100 percent of the inshell trade 
demand, effectively releasing the additional 20 percent held back at 
the preliminary stage. Final free and restricted percentages may 
release up to an additional 15 percent of the average trade 
acquisitions of inshell hazelnuts for desirable carryout, to provide an 
adequate carryover of product into the following season. The order 
requires that final free and restricted percentages be effective 30 
days prior to the end of the marketing year, or earlier, if recommended 
by the Board and approved by USDA. The Board is allowed to combine the 
interim final and the final stages of the marketing policy, if 
marketing conditions so warrant, by recommending final percentages 
which immediately release 100 percent of the inshell trade demand (the 
preliminary percentage plus the additional 20 held back) plus any 
percentage increase the Board determines for desirable carryout. 
Revisions in the marketing policy can be made until February 15 of each 
marketing year, but the inshell trade demand can only be revised 
upward, consistent with Sec.  982.40(e).
    The Board met, as required by the order, on November 15, 2007, to 
review and approve an amended marketing policy and to recommend the 
establishment of interim final and final free and restricted 
percentages. At that time, the Board revised the crop estimate in the 
marketing policy to 36,270 tons (from 33,000 tons) after considering 
the results of post-harvest handler survey information compiled by the 
Board. The Board also revised the percentage increase meant to 
encourage sales that is included in the inshell trade demand 
computation from 5 percent to 25 percent, effectively allocating 
another 529 tons of inshell hazelnuts that may be marketed in the 
domestic market.
    Using the revised crop estimate and the increased inshell trade 
demand, the Board then computed interim final free and restricted 
percentages. The percentages release the remaining 20 percent of the 
estimated inshell trade demand that was withheld during the preliminary 
stage of the marketing policy, as well as take into account the 
amendments made by the Board to the marketing policy computations 
(revising the total supply estimate and increasing the inshell trade 
demand). The interim final free and restricted percentages were 
therefore set at 8.1863 and 91.8137 percent, respectively. The interim 
final free percentage immediately releases a total 3007 tons of inshell 
hazelnuts from the 2007-2008 supply that may be marketed in domestic 
markets.
    During the meeting, the Board decided that market conditions were 
such that the industry would benefit from the release of an additional 
15 percent of the three year average trade acquisitions to allow for 
desirable carryout and that the increase would not adversely affect the 
2007-2008 domestic inshell market. The final free and restricted 
percentages were set at 9.2671 and 90.7329 percent, respectively. The 
final percentages are to become effective May 1, 2008. The final free 
percentage releases 3,404 tons of inshell hazelnuts from the 2007-2008 
supply for domestic use, which includes 397 tons released late in the 
marketing year for desirable carryout.
    The final marketing percentages are based on the Board's final 
production estimate and the following supply and demand information for 
the 2007-2008 marketing year:

[[Page 9003]]



------------------------------------------------------------------------
                                                               Tons
------------------------------------------------------------------------
                 Total Available Supply
---------------------------------------------------------
(1) Production forecast (11/15/07 crop estimate)........          36,270
(2) Minus: Disappearance (three year average--4.32                -1,567
 percent of Item 1).....................................
(3) Merchantable production (Item 1 minus Item 2).......          34,703
(4) Plus: Undeclared carry-in as of July 1, 2007                 + 2,029
 (subject to 2007-2008 regulation)......................
(5) Available supply subject to regulation (Item 3 plus           36,732
 Item 4)................................................
---------------------------------------------------------
                  Inshell Trade Demand
---------------------------------------------------------
(6) Average trade acquisition (ATA) of inshell hazelnuts           2,649
 (three prior years domestic sales).....................
(7) Plus: Increase to encourage increased sales (25% of            + 662
 average trade acquisitions)............................
(8) Minus: Declared carry-in as of July 1, 2007 (not                -304
 subject to 2007-2008 regulation).......................
(9) Adjusted inshell trade demand (Item 6 plus Item 7              3,007
 minus Item 8)..........................................
------------------------------------------------------------------------


 
               Percentages                     Free         Restricted
------------------------------------------------------------------------
(10) Interim final percentages (Item 9            8.1863         91.8137
 divided by Item 5) x 100...............
(11) Interim final free tonnage (Item 9)           3,007  ..............
(12) Interim final restricted in tons     ..............          33,725
 (Item 5 minus Item 9)..................
(13) Final percentages (Item 14 divided           9.2671         90.7329
 by Item 5) x 100.......................
(14) Final free tonnage (Interim final             3,404  ..............
 free tonnage (Item 11) plus 15% of ATA
 (397)).................................
(15) Final restricted tonnage (Item 5     ..............          33,328
 minus Item 11).........................
------------------------------------------------------------------------

    In addition to complying with the provisions of the order, the 
Board also considered USDA's 1982 ``Guidelines for Fruit, Vegetable, 
and Specialty Crop Marketing Orders'' (Guidelines) when making its 
computations in the marketing policy. This volume control regulation 
provides a method to collectively limit the supply of inshell hazelnuts 
available for sale in domestic markets. The Guidelines provide that the 
domestic inshell market has available a quantity equal to 110 percent 
of prior years' shipments before allocating supplies for the export 
inshell, export kernel, and domestic kernel markets. This provides for 
a plentiful supply of inshell hazelnuts for consumers and for market 
expansion, while retaining the mechanism for dealing with oversupply 
situations. The established final percentages make available 
approximately 755 additional tons to encourage increased sales. The 
total free supply for the 2007-2008 marketing year is estimated to be 
3,404 tons of hazelnuts, which is 137 percent of the average of the 
last three prior years' sales (2,478 tons) and exceeds the goal of the 
Guidelines.

Initial Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this action on small entities. Accordingly, AMS has 
prepared this initial 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 the 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.
    Small agricultural producers are defined by the Small Business 
Administration (13 CFR 121.201) as those having annual receipts of less 
than $750,000, and small agricultural service firms are defined as 
those having annual receipts of less than $6,500,000. There are 
approximately 650 producers of hazelnuts in the production area and 
approximately 19 handlers subject to regulation under the order. Using 
statistics compiled by NASS, the average value of production received 
by producers in 2004-2006 was $54,088,000. Using those estimates, the 
average annual hazelnut revenue per producer would be approximately 
$77,300. The level of sales of other crops by hazelnut producers is not 
known. In addition, based on records maintained by the Board, 
approximately 83 percent of the handlers ship under $6,500,000 worth of 
hazelnuts on an annual basis. In view of the foregoing, it can be 
concluded that the majority of hazelnut producers and handlers may be 
classified as small entities.
    Board meetings are widely publicized in advance of the meetings and 
are held in a location central to the production area. The meetings are 
open to all industry members and other interested persons who are 
encouraged to participate in the deliberations and voice their opinions 
on topics under discussion. Thus, Board recommendations can be 
considered to represent the interests of small business entities in the 
industry.
    Currently, U.S. hazelnut production is allocated among three main 
market outlets: domestic inshell, export inshell, and kernel markets. 
Handlers and growers receive the highest return for sales in the 
domestic inshell market. They receive less for product going to export 
inshell, and the least for kernels. Based on Board records of average 
shipments for 1997-2006, the percentage going to each of these markets 
was 10 percent (domestic inshell), 53 percent (export inshell), and 36 
percent (kernels). Other minor market outlets make up the remaining 1 
percent.
    The inshell hazelnut market can be characterized as having limited 
and inelastic demand with a very short primary marketing period. On 
average, 80 percent of domestic inshell hazelnut shipments occur 
between October 1 and November 30, primarily to supply holiday nut 
demand. The inshell market is, therefore, prone to oversupply and 
correspondingly low grower prices in the absence of supply 
restrictions. This volume control regulation provides a method for the 
U.S. hazelnut industry to limit the supply of domestic inshell 
hazelnuts available for sale in the continental U.S. and thereby 
mitigate market oversupply conditions.
    Many years of marketing experience led to the development of the 
current volume control procedures. These procedures have helped the 
industry solve its marketing problems by keeping inshell supplies in 
balance with domestic needs. Volume controls ensure that the domestic 
inshell market is fully

[[Page 9004]]

supplied while protecting the market from the negative effects of 
oversupply.
    Although the domestic inshell market is a relatively small portion 
of total hazelnut sales (averaging 10 percent of total shipments for 
1997-2006), it remains a profitable market segment. The volume control 
provisions of the order are designed to avoid oversupplying this 
particular market segment, because that would likely lead to 
substantially lower grower prices. The other market segments, export 
inshell and kernels, are expected to continue to provide good outlets 
for U.S. hazelnut production into the future.
    Adverse climatic conditions that negatively impacted hazelnut 
production in the other hazelnut producing regions of the world in 2004 
and 2005 have corrected and the total world supply in 2007-2008 is 
predicted to be near the historically high levels seen in 2006. Product 
prices in the world market have trended downward in the expectation of 
the large available supply. While the U.S. hazelnut industry continues 
to experience high demand for their large sized and high quality 
product, the prices that producers receive are tied to the global 
market. In light of the anticipated world supply situation, regulation 
of the domestic inshell market is important to the U.S. hazelnut 
industry to insulate that specialty market from the supply related 
challenges of the global hazelnut market.
    In Oregon and Washington, lower hazelnut production years typically 
follow higher production years (a historically consistent cyclical 
pattern), and such was the case in 2007. The 2006 crop of 43,000 tons 
was 20 percent above the 10-year average (34,000 tons for 1997-2006) 
for hazelnut production. The 2007 crop (36,720 tons, according to the 
survey of handlers conducted by the Board) is estimated to be 16 
percent below the previous year. Using the NASS estimate of 33,000 
tons, the crop is 23 percent lower. It is predicted that the 2008 crop 
will follow the recent production pattern and will be larger than the 
current crop year. This cyclical trait also leads to an inversely 
corresponding cyclical price pattern for hazelnuts. The intrinsic 
cyclical nature of the hazelnut industry lends credibility to the 
volume control measures enacted by the Board under the marketing order.
    Recent production and price data reflect the stabilizing effect of 
volume control regulations. Industry statistics show that total 
hazelnut production has varied widely over the 10-year period between 
1997 and 2006, from a low of 15,500 tons in 1998 to a high of 49,500 
tons in 2001. Production in the smallest crop year and the largest crop 
year were 48 percent and 145 percent, respectively, of the 10-year 
average of 34,000 tons. Grower price, however, has not fluctuated to 
the extent of production. Prices in the lowest price year and the 
highest price year were 63 percent and 200 percent, respectively, of 
the 10-year average price of $1,114 per ton. If the extraordinarily 
high price for the 2005 crop year is excluded as an aberration that 
stems from a global production crisis, the percentage variation in 
price drops to 70 percent and 145 percent of a $988 per ton average 
price, respectively.
    The lower level of variability of price versus the variability of 
production provides an illustration of the order's price-stabilizing 
impact. The coefficient of variation (a standard statistical measure of 
variability; ``CV'') for hazelnut production over the 10-year period is 
0.33. In contrast, the coefficient of variation for hazelnut grower 
prices, excluding the 2005 price, is only 0.20, dramatically lower than 
the CV for production. The lower level of variability of price versus 
the variability of production provides an illustration of the order's 
price-stabilizing impact.
    Comparing grower revenue to cost is useful in highlighting the 
impact on growers of recent product and price levels. A recent hazelnut 
production cost study from Oregon State University estimated cost-of-
production per acre to be approximately $1,340 for a typical 100-acre 
hazelnut enterprise. Average grower revenue per bearing acre (based on 
NASS acreage and value of production data) equaled or exceeded that 
typical cost level only four times from 1997 to 2006. Average grower 
revenue was below typical costs in the other years. Without the 
stabilizing influence of the order, growers may have lost more money. 
While crop size has fluctuated, volume regulations contribute to 
orderly marketing and market stability by moderating the variation in 
returns for all producers and handlers, both large and small.
    While the level of benefits of this rulemaking is difficult to 
quantify, the stabilizing effects of volume regulation impact both 
small and large handlers positively by helping them maintain and expand 
markets even though hazelnut supplies fluctuate widely from season to 
season. This regulation provides equitable allotment of the most 
profitable market, the domestic inshell market. That market is 
available to all handlers, regardless of size.
    As an alternative to this regulation, the Board discussed not 
regulating the marketing of the 2007 hazelnut crop. However, without 
any regulation in effect, the Board believes that the industry would 
tend to oversupply the inshell domestic market. The 2007 hazelnut crop 
is smaller than last year's crop but is still 7 percent above the ten-
year average. The unregulated release of 36,732 tons on the domestic 
inshell market could easily oversupply the small, but lucrative 
domestic inshell market. The Board believes that any oversupply would 
completely disrupt the market, causing producer returns to decrease 
dramatically.
    Section 982.40 of the order establishes a procedure and 
computations for the Board to follow in recommending to USDA 
establishment of preliminary, interim final, and final percentages of 
hazelnuts to be released to the free and restricted markets each 
marketing year. The program results in a plentiful supply of hazelnuts 
for consumers and for market expansion while retaining the mechanism 
for dealing with oversupply situations.
    Hazelnuts produced under the order comprise virtually all of the 
hazelnuts produced in the U.S. This production represents, on average, 
less than 3 percent of total U.S. production of all tree nuts, and less 
than 5 percent of the world's hazelnut production.
    Last season, 73 percent of the domestically produced hazelnut 
kernels were marketed in the domestic market and 27 percent were 
exported. Domestically produced kernels generally command a higher 
price in the domestic market than imported kernels. The industry is 
continuing its efforts to develop and expand other markets with 
emphasis on the domestic kernel market. Small business entities, both 
producers and handlers, benefit from the expansion efforts resulting 
from this program.
    Inshell hazelnuts produced under the order compete well in export 
markets because of their high quality. Based on Board statistics, 
Europe has historically been the primary export market for U.S. 
produced inshell hazelnuts. Shipments have also been relatively 
consistent, not varying much from the 10-year average of 4,906 tons. 
Recent years, though, have seen a significant increase in export 
destinations. Last season, inshell shipments to Europe totaled 4,401 
tons, representing just 16 percent of exports, with the largest share 
going to Germany. Inshell shipments to Southwest Pacific countries, 
Hong Kong in particular, have increased dramatically in the past few 
years, rising to 79 percent of total inshell exports of 27,259 tons for 
the 2006-2007 marketing year. The industry

[[Page 9005]]

continues to pursue export opportunities.
    There are some reporting, recordkeeping, and other compliance 
requirements under the order. The reporting and recordkeeping burdens 
are necessary for compliance purposes and for developing statistical 
data for maintenance of the program. The information collection 
requirements have been previously approved by the Office of Management 
and Budget under OMB No. 0581-0178, Vegetable and Specialty Crops. The 
forms require information which is readily available from handler 
records and which can be provided without data processing equipment or 
trained statistical staff. As with all Federal marketing order 
programs, reports and forms are periodically reviewed to reduce 
information requirements and duplication by industry and public sector 
agencies. This rule does not change those requirements.
    The AMS is committed to complying with the E-Government Act, to 
promote the use of the Internet and other information technologies to 
provide increased opportunities for citizen access to Government 
information and services, and for other purposes.
    In addition, USDA has not identified any relevant Federal rules 
that duplicate, overlap, or conflict with this rule.
    Further, the Board's meetings were widely publicized throughout the 
hazelnut industry and all interested persons were invited to attend the 
meetings and participate in Board deliberations. Like all Board 
meetings, those held on August 23, 2007, and November 15, 2007, were 
public meetings and all entities, both large and small, were able to 
express their views on this issue. Finally, interested persons are 
invited to submit information on the regulatory and informational 
impacts of this action on small businesses.
    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 address 
in the FOR FURTHER INFORMATION CONTACT section.
    This rule invites comments on the establishment of interim final 
and final free and restricted percentages for the 2007-2008 marketing 
year under the hazelnut marketing order. Any comments received will be 
considered prior to finalization of this rule.
    After consideration of all relevant material presented, including 
the Board's recommendation, and other information, it is found that 
this interim final rule, as hereinafter set forth, 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 action until 30 days after publication in the Federal Register 
because: (1) The 2007-2008 marketing year began July 1, 2007, and the 
percentages established herein apply to all merchantable hazelnuts 
handled from the beginning of the crop year; (2) the percentages make 
the full trade demand available so handlers can take advantage of 
inshell marketing opportunities; (3) handlers are aware of this rule, 
which was recommended at an open Board meeting, and need no additional 
time to comply with this rule; and (4) interested persons are provided 
a 60-day comment period in which to respond, and all comments timely 
received will be considered prior to finalization of this action.

List of Subjects in 7 CFR Part 982

    Filberts, Hazelnuts, Marketing agreements, Nuts, Reporting and 
recordkeeping requirements.

0
For the reasons set forth in the preamble, 7 CFR Part 982 is amended as 
follows:

PART 982--HAZELNUTS GROWN IN OREGON AND WASHINGTON

0
1. The authority citation for 7 CFR Part 982 continues to read as 
follows:

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


0
2. A new section 982.255 is added to read as follows:


Sec.  982.255  Free and restricted percentages--2007-2008 marketing 
year.

    (a) The interim final free and restricted percentages for 
merchantable hazelnuts for the 2007-2008 marketing year shall be 8.1863 
and 91.8137 percent, respectively.
    (b) On May 1, 2008, the final free and restricted percentages for 
merchantable hazelnuts for the 2007-2008 marketing year shall be 9.2671 
and 90.7329 percent, respectively.

    Dated: February 12, 2008.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 08-739 Filed 2-15-08; 8:45 am]
BILLING CODE 3410-02-P


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