[Federal Register Volume 64, Number 9 (Thursday, January 14, 1999)]
[Rules and Regulations]
[Pages 2422-2425]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-841]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 982
[Docket No. FV99-982-1 IFR]
Hazelnuts Grown in Oregon and Washington; Establishment of Final
Free and Restricted Percentages for the 1998-99 Marketing Year
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Interim final rule with request for comments.
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SUMMARY: This rule establishes final free and restricted percentages
for domestic inshell hazelnuts for the 1998-99 marketing year under the
Federal marketing order for hazelnuts grown in Oregon and Washington.
The percentages allocate the quantity of domestically produced
hazelnuts which may be marketed in the domestic inshell market. The
percentages are intended to stabilize the supply of domestic inshell
hazelnuts to meet the limited domestic demand for such hazelnuts and
provide reasonable returns to producers. This rule was recommended
unanimously by the Hazelnut Marketing Board (Board), which is the
agency responsible for local administration of the order.
DATES: Effective January 15, 1999. Comments which are received by March
15, 1999, 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, Fruit
and Vegetable Programs, AMS, USDA, Room 2525-S, P.O. Box 96456,
Washington, DC 20090-6456; Fax: (202) 205-6632, or E-mail:
moabdocket__clerk@usda.gov. All comments should reference the docket
number and the date and page number of this issue of the Federal
Register and will be available for public inspection in the Office of
the Docket Clerk during regular business hours.
FOR FURTHER INFORMATION CONTACT: Teresa L. Hutchinson, Northwest
Marketing Field Office, Fruit and Vegetable Programs, Agricultural
Marketing Service, USDA, 1220 SW Third Avenue, Room 369, Portland, OR
97204; telephone: (503) 326-2724, Fax: (503) 326-7440 or George J.
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) 205-
6632. Small businesses may request information on complying with this
regulation, or obtain a guide on complying with fruit, vegetable, and
specialty crop marketing agreements and orders 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) 205-6632, or E-mail:
Jay__N__Guerber@usda.gov. You may view the marketing agreement and
order small business compliance guide at the following web site: http:/
/www.ams.usda.gov/fv/moab.html.
SUPPLEMENTARY INFORMATION: This rule is issued under Marketing
Agreement No. 115 and Order No. 982 (7 CFR Part 982), both as amended,
regulating the handling of hazelnuts grown in Oregon and Washington,
hereinafter referred to as the ``order.'' The marketing agreement and
order are 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
conformance with Executive Order 12866.
This rule has been reviewed under Executive Order 12988, Civil
Justice
[[Page 2423]]
Reform. It is intended that this action apply to all merchantable
hazelnuts handled during the 1998-99 marketing year (July 1, 1998,
through June 30, 1999). 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 to review the Secretary'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 marketing percentages which allocate the
quantity of inshell hazelnuts that may be marketed in domestic markets.
The Board is required to meet prior to September 20 of each marketing
year to compute its marketing policy for that year and compute and
announce an inshell trade demand if it determines that volume
regulations would tend to effectuate the declared policy of the Act.
The Board also computes and announces preliminary free and restricted
percentages for that year.
The inshell trade demand is the amount of inshell hazelnuts that
handlers may ship to the domestic market throughout the marketing
season. The order specifies that the inshell trade demand be computed
by averaging the preceding three ``normal'' years' trade acquisitions
of inshell hazelnuts, rounded to the nearest whole number. The Board
may increase the three-year average by up to 25 percent, if market
conditions warrant an increase. The Board's authority to recommend
volume regulations and the computations used to determine the
percentages are specified in Sec. 982.40 of the order.
The National Agricultural Statistics Service (NASS) estimated
hazelnut production at 16,500 tons for the Oregon and Washington area.
The majority of domestic inshell hazelnuts are marketed in October,
November, and December. By November, the marketing season is well under
way.
The quantity marketed is broken down into free and restricted
percentages to make available hazelnuts which may be marketed in
domestic inshell markets (free) and hazelnuts which must be exported,
shelled or otherwise disposed of by handlers (restricted). The
preliminary free percentage releases 80 percent of the adjusted inshell
trade demand. The preliminary free percentage is expressed as a
percentage of the total supply subject to regulation (supply) and is
based on the preliminary crop estimate.
At its August 27, 1998, meeting, the Board computed and announced
preliminary free and restricted percentages of 18 percent and 82
percent, respectively. The Board used the NASS crop estimate of 16,500
tons. The purpose of releasing only 80 percent of the inshell trade
demand under the preliminary percentage was to guard against an
underestimate of crop size. The preliminary free percentage released
2,763 tons of hazelnuts from the 1998 supply for domestic inshell use.
The preliminary restricted percentage of the 1998 supply for export and
kernel markets totaled 12,623 tons.
Under the order, the Board must meet a second time, on or before
November 15, to recommend interim final and final percentages. The
Board uses current crop estimates to calculate interim final and final
percentages. The interim final percentages are calculated in the same
way as the preliminary percentages and release the remaining 20 percent
(to total 100 percent of the inshell trade demand) previously computed
by the Board. Final free and restricted percentages may release up to
an additional 15 percent of the average of the preceding three years'
trade acquisitions to provide an adequate carryover into the following
season; (i.e., desirable carryout). The final free and restricted
percentages must be effective by June 1, at least 30 days prior to the
end of the marketing year, June 30. The final free and restricted
percentages can be made effective earlier, if recommended by the Board
and approved by the Secretary. 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 on November 12, 1998, and reviewed and approved an
amended marketing policy and recommended the establishment of final
free and restricted percentages. The Board decided that market
conditions were such that immediate release of an additional 15 percent
for desirable carryout would not adversely affect the 1998-99 domestic
inshell market. Accordingly, no interim final free and restricted
percentages were recommended. Final percentages were recommended at 30
percent free and 70 percent restricted. The final percentages release
4,115 tons of inshell hazelnuts from the 1998 supply for domestic use.
The final marketing percentages are based on the Board's final
production estimate (14,500 tons) and the following supply and demand
information for the 1998-99 marketing year:
------------------------------------------------------------------------
Tons
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Inshell Supply:
(1) Total production (Board's estimate)...................... 14,500
(2) Less substandard, farm use (disappearance)............... 1,077
(3) Merchantable production (Board's adjusted crop
estimate; Item 1 minus Item 2).............................. 13,423
(4) Plus undeclared carryin as of July 1, 1997, subject to
regulation.................................................. 120
(5) Supply subject to regulation (Item 3 plus Item 4)........ 13,543
Inshell Trade Demand:
(6) Average trade acquisitions of inshell hazelnuts for three
prior years................................................. 4,408
(7) Less declared carryin as of July 1, 1997, not subject to
regulation.................................................. 954
(8) Adjusted Inshell Trade Demand............................ 3,454
(9) Desirable carryout on August 31, 1999 (15 percent of Item
6).......................................................... 661
(10) Adjusted Inshell Trade Demand plus desirable carryout
(Item 8 plus Item 9)........................................ 4,115
------------------------------------------------------------------------
Free Restricted
------------------------------------------------------------------------
Percentages:
(11) Final percentages (Item 10 divided by Item
5) x 100...................................... 30 70
------------------------------------------------------------------------
In addition to complying with the provisions of the order, the
Board also considered the Department'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
secondary market allocations are approved. This provides for plentiful
supplies for consumers and for market expansion, while retaining the
mechanism for dealing with
[[Page 2424]]
oversupply situations. The established final percentages are based on
the final inshell trade demand, and will make available an additional
661 tons for desirable carryout. The total free supply for the 1998-99
marketing year is 5,069 tons of hazelnuts, which is the final trade
demand of 4,408 tons plus the 661 tons for desirable carryout. This
amount is 115 percent of prior years' sales and exceeds the goal of the
Guidelines.
Pursuant to requirements set forth in the Regulatory Flexibility
Act (RFA), the Agricultural Marketing Service (AMS) has considered the
economic impact of this rule 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.
There are approximately 800 producers of hazelnuts in the
production area and approximately 22 handlers subject to regulation
under the marketing order. Small agricultural producers have been
defined by the Small Business Administration (13 CFR 121.601) as those
having annual receipts of less than $500,000, and small agricultural
service firms are defined as those whose annual receipts are less than
$5,000,000. Using these criteria, virtually all of the producers are
small agricultural producers and an estimated 19 of the 22 handlers are
small agricultural service firms. 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.
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. The current volume control procedures
fully supply the domestic inshell market while preventing oversupplies
in that market.
Inshell hazelnuts sold to the domestic market provide higher
returns to the industry than are obtained from shelling. The inshell
market is inelastic and is characterized as having limited demand and
being prone to oversupply.
Industry statistics show that total hazelnut production has varied
widely over the last 10 years, from a low of 13,000 tons in 1989 to a
high of 47,000 tons in 1997. Average production has been around 27,000
tons. While crop size has fluctuated, the volume regulations contribute
toward orderly marketing and market stability, and help moderate the
variation in returns for all producers and handlers, both large and
small. For instance, production in the shortest crop year (1989) was 48
percent of the 10-year average (1988-1997). Production in the biggest
crop year (1997) was 173 percent of the 10-year average. The percentage
releases provide all handlers with the opportunity to benefit from the
most profitable domestic inshell market. That market is available to
all handlers, regardless of handler size.
NASS statistics show that the producer price per pound has
increased over the last 5 years, from $.32 in 1993 to $.45 in 1997.
The Board discussed the only alternative to this rule which was not
to regulate. Without any regulations in effect, the Board believes that
the industry would oversupply the inshell domestic market. Although the
1998 hazelnut crop is much smaller than last year, the release of
14,500 tons on the domestic inshell market would cause producer returns
to decrease drastically, and completely disrupt the market.
While the level of benefits of this rulemaking is difficult to
quantify, the stabilizing effects of the volume regulations impact both
small and large handlers positively by helping them maintain and expand
markets even though hazelnut supplies fluctuate widely from season to
season.
Hazelnuts produced under the order comprise virtually all of the
hazelnuts produced in the United States. This production represents, on
average, less than 5 percent of total U.S. tree nut production, and
less than 5 percent of the world's hazelnut production.
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 United States. Section 982.40 of the order
establishes a procedure and computations for the Board to follow in
recommending to the Secretary release of preliminary, interim final,
and final quantities of hazelnuts to be released to the free and
restricted markets each marketing year. The program results in
plentiful supplies for consumers and for market expansion while
retaining the mechanism for dealing with oversupply situations.
Currently, U.S. hazelnut production can be successfully allocated
between the inshell domestic and secondary markets. One of the best
secondary markets for hazelnuts is the export market. Inshell hazelnuts
produced under the marketing order compete well in export markets
because of quality. Europe, and Germany in particular, is historically
the primary world market for U.S. produced inshell hazelnuts, although
China was the largest importer in 1997-98. A third market is for
shelled hazelnuts sold domestically. 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
secondary markets, especially the domestic kernel market. Small
business entities, both producers and handlers, benefit from the
expansion efforts resulting from this program.
There are some reporting, recordkeeping and other compliance
requirements under the order. The reporting and recordkeeping burdens
have been accepted by the handlers as necessary for compliance purposes
and for developing statistical data for maintenance of the program. 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 other marketing order programs,
reports and forms are periodically studied to reduce or eliminate
duplicate information collection burdens by industry and public sector
agencies. This interim final rule does not change those requirements.
In addition, the Department has not identified any relevant Federal
rules that duplicate, overlap or conflict with this regulation.
Further, the Board's meeting was widely publicized throughout the
hazelnut industry and all interested persons were invited to attend the
meeting and participate in Board deliberations. Like all Board
meetings, the November 12, 1998, meeting was a public meeting and all
entities, both large and small, were able to express their views on
this issue. The Board itself is composed of 10 members, of which 4 are
handlers, 5 are producers, and one is a public member.
[[Page 2425]]
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 1998-99 marketing year began July 1,
1998, and the percentages established herein apply to all merchantable
hazelnuts handled from the beginning of the crop year; (2) 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 (3) 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.
For the reasons set forth in the preamble, 7 CFR Part 982 is
amended as follows:
PART 982--HAZELNUTS GROWN IN OREGON AND WASHINGTON
1. The authority citation for 7 CFR part 982 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
2. Section 982.246 is added to read as follows:
Note: This section will not be published in the annual Code of
Federal Regulations.
Sec. 982.246 Free and restricted percentages--1998-99 marketing year.
The final free and restricted percentages for merchantable
hazelnuts for the 1998-99 marketing year shall be 30 and 70 percent,
respectively.
Dated: January 7, 1999.
Larry B. Lace,
Acting Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 99-841 Filed 1-13-99; 8:45 am]
BILLING CODE 3410-02-P
