[Federal Register Volume 60, Number 151 (Monday, August 7, 1995)]
[Rules and Regulations]
[Pages 40063-40064]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-19330]
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DEPARTMENT OF AGRICULTURE
7 CFR Part 984
[Docket No. FV95-984-1FR]
Walnuts Grown in California; Suspension of Deadline for Relaxing
Reserve Requirements
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Suspension order.
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SUMMARY: This document suspends the deadline by which the Walnut
Marketing Board (Board) may recommend a relaxation in reserve
requirements established for a marketing year under the walnut
marketing order. Suspension of the deadline will allow the Board, which
locally administers the order, to make such a decision based on more
current supply and shipment information. This suspension will provide
the walnut industry an opportunity for more orderly marketing.
EFFECTIVE DATE: August 7, 1995.
FOR FURTHER INFORMATION CONTACT: Mark Hessel, Marketing Specialist,
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; or Mark Kreaggor,
Marketing Specialist, Marketing Order Administration Branch, Fruit and
Vegetable Division, AMS, USDA, room 2526-S, P.O. Box 96456, Washington,
D.C. 20050-6456; telephone: (202) 720-3610, or FAX (202) 720-5698.
SUPPLEMENTARY INFORMATION: This suspension order is issued under
Marketing Agreement and Order No. 984 (7 CFR part 984), regulating the
handling of walnuts 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 action
in conformance with Executive Order 12866.
This action has been reviewed under Executive Order 12778, Civil
Justice Reform. This suspension is not intended to have retroactive
effect. This action 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 requesting a modification of the order or to be exempted
therefrom. A handler is afforded the opportunity for a hearing on the
petition. After a 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.
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 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 65 handlers of California walnuts who are
subject to regulation under the walnut marketing order, and
approximately 5,000 producers in the regulated area. Small agricultural
service firms have been defined by the Small Business Administration
(13 CFR 121.601) as those whose annual receipts are less than
$5,000,000 and small agricultural producers have been defined as those
having annual receipts of less than $500,000. The majority of
California walnut handlers and producers may be classified as small
entities.
The walnut marketing order provides authority for volume control in
the form of free, reserve, and export percentages. The free percentage
is the percentage of certified merchantable walnuts that may be shipped
freely to any market during the marketing year. The reserve percentage
is the amount of certified merchantable walnuts that may be shipped to
export markets, government agencies, charitable institutions, poultry
or animal feed, walnut oil, or other markets noncompetitive with
markets for certified merchantable free walnuts. The export percentage
is the percentage of reserve walnuts that may be shipped to export
markets. Certified merchantable walnuts are walnuts which have been
inspected and certified by the Dried Fruit Association of California as
meeting the minimum grade and size requirements specified under the
order.
The marketing order also provides that handlers may meet their
reserve requirements by either delivering reserve walnuts to the Board
for disposition by the Board or by selling or disposing of their own
walnuts, as agents of the Board, in specified reserve outlets. Any
reserve walnuts the Board receives would be pooled and sold by the
Board in markets specified for reserve walnuts at the highest returns
available. The proceeds from the sale of pooled walnuts, minus all
expenses incurred by the Board in receiving, holding, and disposing of
the walnuts, would be distributed to handlers who delivered walnuts to
the pool in proportion to each handler's contribution.
In a marketing year (August 1-July 31) that a reserve program is
implemented,
[[Page 40064]]
the Board recommends the initial percentages in September and has the
option of recommending an increase in the free and export percentages
and a decrease in the reserve percentage later in the marketing year.
If the Department concurs with the Board's recommendation, the
recommended percentages may be established or modified.
Section 984.49(b)(1) establishes a deadline of February 15 for the
Board to recommend to the Secretary an increase in the free percentage
and a decrease in the reserve percentage. On February 10, 1995, the
Board unanimously recommended suspension of that deadline. This action
will suspend the phrase ``On or before February 15 of the marketing
year,'' in section 984.49(b)(1) and will authorize the Board to
recommend an increase in the free percentage and a decrease in the
reserve percentage at any time during the marketing year, which ends on
July 31.
In the past, many export markets were undeveloped and the domestic
market provided better returns than export markets. The reserve
percentage was used as a tool to keep the domestic walnut market from
being oversupplied and the export percentage was used as a tool to
place an orderly flow of California walnuts into the export market at
prices that were competitive with foreign walnuts. Even though the free
walnuts were allowed to be shipped to export markets, free walnuts were
not price competitive with walnuts from other countries and
consequently were not diverted to export markets. Under former
marketing conditions, sufficient information relating to the domestic
market was available prior to February 15 so that the Board could make
an appropriate recommendation for final free and reserve percentages.
Under present marketing conditions, walnut export markets are well
established and have returns equal to or higher than those received in
the domestic market. As a result, the Board can recommend setting an
export percentage of 0 percent which will preclude the shipment of
reserve walnuts to export markets. The export market will then be
supplied with only free walnuts. By setting a reserve percentage and
keeping the export percentage at 0 percent, the Board can remove a
quantity of walnuts in excess of domestic and export market demands.
When large shipments of reserve walnuts were exported, the February
15 deadline for recommending a decrease in the reserve gave handlers
approximately five months to export the remainder of their reserve
after the final reserve percentage was known. Since exports have now
become a viable market for free walnuts, the Board may need more
flexibility to consider later data on free shipments to revise its
estimate of trade demand. The Board may also need more flexibility to
consider the July forecast of the next crop to decide if the desirable
carryout should be increased to supplement a short crop.
In addition, the order requires handlers to file monthly shipment
reports that are due on the fifth day of the following month. Each
additional monthly report the Board receives from handlers after the
February 15 deadline, gives the Board a more accurate picture of the
levels of shipments of walnuts for the current marketing year. More
information is also available at that time on the foreign walnut crop,
the pecan supply which directly, competes with walnuts, exchange rates,
and foreign and domestic economic conditions. This information will
allow the Board to better estimate the current and prospective domestic
and export demand and supply conditions for California walnuts.
Finally, later in the marketing year, the Board can better estimate the
amount of the current crop of walnuts that should be carried over to
the next marketing year. By allowing decisions to be made later in the
season on a reserve program, the industry can better evaluate marketing
conditions.
The Board estimates that sufficient information will be available
by early June, but marketing conditions may cause the Board to wait
longer before making a final recommendation on the free and reserve
percentages. The suspension of the February 15 deadline will allow the
Board more flexibility in dealing with the dynamic marketing conditions
of the California walnut industry and in turn provide for more orderly
marketing of walnuts.
A proposed suspension order was published in the Federal Register
on June 2, 1995, (60 FR 28744). That action provided a 30-day comment
period which ended on July 3, 1995. No comments were received.
Based on available information, the Administrator of the AMS has
determined that this action will not have a significant economic impact
on a substantial number of small entities.
After consideration of all relevant matter presented, including the
information and recommendation submitted by the Board, it is determined
that, under the conditions presently existing in the walnut industry,
the February 15 deadline in section 984.49(b)(1) does not tend to
effectuate the declared policy of the Act.
It is further found that good cause exists for not postponing the
effective date of this rule until 30 days after publication in the
Federal Register (5 U.S.C. 533) because: (1) The Board will meet
September 1995 to consider the need for volume control during the 1995-
96 marketing year; (2) preliminary industry discussions on the need for
volume control during 1995-96 are expected to begin soon and prompt
implementation of the suspension will foster more meaningful
discussions; (3) the industry is aware of this action, which was
unanimously recommended by the Board at a public meeting and all
interested persons in attendance were given the opportunity to provide
input; and (4) interested persons were given the opportunity to submit
written comments on the suspension of the February 15 deadline and none
were received.
List of Subjects in 7 CFR Part 984
Marketing agreements, Nuts, Reporting and recordkeeping
requirements, Walnuts.
For the reasons set forth in the preamble, 7 CFR part 984 is
amended as follows:
PART 984--WALNUTS GROWN IN CALIFORNIA
1. The authority citation for 7 CFR part 984 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
Sec. 984.49 [Suspended in part]
2. In Sec. 984.49 paragraph (b)(1), the words ``On or before
February 15 of the marketing year,'' are suspended.
Dated: July 31, 1995.
David R. Shipman,
Acting Deputy Assistant Secretary, Marketing and Regulatory Programs.
[FR Doc. 95-19330 Filed 8-4-95; 8:45 am]
BILLING CODE 3410-02-P
