[Federal Register Volume 63, Number 98 (Thursday, May 21, 1998)]
[Rules and Regulations]
[Pages 27815-27817]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-13524]
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Rules and Regulations
Federal Register
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Federal Register / Vol. 63, No. 98 / Thursday, May 21, 1998 / Rules
and Regulations
[[Page 27815]]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 982
[Docket No. FV98-982-1 FIR]
Hazelnuts Grown in Oregon and Washington; Establishment of
Interim and Final Free and Restricted Percentages for the 1997-98
Marketing Year
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: The Department of Agriculture (Department) is adopting, as a
final rule, without change, the provisions of an interim final rule
which established interim and final free and restricted percentages for
domestic inshell hazelnuts for the 1997-98 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.
EFFECTIVE DATE: June 22, 1998.
FOR FURTHER INFORMATION CONTACT: Teresa L. Hutchinson, Marketing
Specialist, 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, 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 compliance 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) 205-6632.
SUPPLEMENTARY INFORMATION: This final 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 Reform. It is intended that this action apply to all
merchantable hazelnuts handled during the 1997-98 marketing year (July
1, 1997, through June 30, 1998). 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 continues in effect 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 released
percentages are specified in section 982.40 of the order.
The National Agricultural Statistics Service (NASS) estimated
hazelnut production at 40,000 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
percentage portions to make available hazelnuts which may be marketed
in domestic inshell markets (free) and hazelnuts which must be
exported, shelled or otherwise disposed of (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 28, 1997, meeting, the Board computed and announced
preliminary free and restricted percentages of 8 percent and 92
percent, respectively. The Board used the NASS crop estimate of 40,000
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.
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The preliminary free percentage released 3,003 tons of hazelnuts from
the 1997 supply for domestic inshell use. The preliminary restricted
percentage portion of the 1997 supply for export and kernel markets
totaled 34,296 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 the 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. 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 section 982.40(e).
The Board met on November 13, 1997, and reviewed and approved an
amended marketing policy. The Board recommended that the three-year
average trade acquisition figure of 4,279 tons be increased by 214 tons
for market expansion. The Board also recommended the establishment of
interim final and final free and restricted percentages. Interim final
percentages were recommended at 10 percent free and 90 percent
restricted. The interim final percentage made an additional 965 tons of
inshell hazelnuts available for the domestic inshell market, including
product for market expansion. The interim final marketing percentages
were based on the Board's final production estimate (42,000 tons) and
released 3,968 tons to the domestic inshell market from the 1997 supply
subject to regulation. The interim final restricted percentage resulted
in a restricted obligation of 35,173 tons.
The final free and restricted percentages were recommended at 12
percent and 88 percent, respectively. The Board also recommended that
the final percentages be effective on April 30, 1997. The established
final marketing percentages release for domestic inshell use an
additional 642 tons from the supply subject to regulation. Thus, a
total of 4,610 tons of inshell hazelnuts will be released from the 1997
supply for domestic inshell use. The final restricted percentage
resulted in a restricted obligation of 34,531 tons.
The marketing percentages are based on the Board's production
estimates and the following supply and demand information for the 1997-
98 marketing year:
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Tons
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Inshell Supply Tons
(1) Total production (Board's 42,000
estimate).
(2) Less substandard, farm use 2,860
(disappearance).
(3) Merchantable production 39,140
(Board's adjusted crop
estimate).
(4) Plus undeclared carryin as of 1
July 1, 1997, subject to
regulation.
(5) Supply subject to regulation 39,141
(Item 3 plus Item 4).
Inshell Trade Demand
(6) Average trade acquisitions of 4,279
inshell hazelnuts for three
prior years.
(7) Increase to encourage increased 214
sales (5 percent of Item 6).
(8) Less declared carryin as of 525
July 1, 1996, not subject to
regulation.
(9) Adjusted Inshell Trade Demand.. 3,968
(10) 15 percent of the average trade 642
acquisitions of inshell
hazelnuts for three prior
years (Item 6).
(11) Adjusted Inshell Trade Demand 4,610
plus 15 percent for carryout
(Item 9 plus Item 10).
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Percentages
Free Restricte
d
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(12) Interim final percentages (Item 10 90
9 divided by Item 5) x 100.
(13) Final percentages (Item 11 12 88
divided by Item 5) x 100.
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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 oversupply situations. At its November 13,
1997, meeting, the Board recommended that an increase of 5 percent (214
tons) for market expansion be included in the inshell trade demand
which was used to compute the interim percentages. The established
final percentages are based on the final inshell trade demand, and will
make available an additional 642 tons for desirable carryout. The total
free supply for the 1997-98 marketing year is 5,135 tons of hazelnuts,
which is the final trade demand of 4,610 tons plus the declared carryin
of 525 tons. This amount is 120 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 action on small entities. Accordingly, 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
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small entities acting on their own behalf. Thus, both statutes have
small entity orientation and compatibility.
There are approximately 1,000 producers of hazelnuts in the
production area and approximately 23 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 20 of the 23 handlers are
small agricultural service firms. Thus, the great 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, provide for market expansion,
and help prevent 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 41,000 tons in 1993, with another record crop of 42,000 tons in
1997. Average production has been around 24,000 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 growers and handlers, both large and small. For
instance, production in the shortest crop year (1989) was 53 percent of
the 10-year average (1987-1996). Production in the biggest crop year
(1996) was 170 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 grower price per pound has increased
steadily over the last 4 years, from $.28 in 1992 to $.43 in 1996.
The Board discussed the only alternative to this rule which was not
to regulate. Without any regulations in effect, the Board believed that
the industry would oversupply the inshell domestic market. With the
1997 hazelnut crop the largest in history, the release of 42,000 tons
on the domestic inshell market would cause grower returns to decrease
drastically, and completely disrupt the market.
While the level of benefits of this rulemaking are 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 U.S. This production represents, on average,
approximately 3 percent of total U.S. tree nut production and
approximately 3 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 U.S. 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 1996-97. 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 final rule does not change those requirements.
The Department has not identified any relevant Federal rules that
duplicate, overlap, or conflict with this regulation.
The interim final rule was published in the Federal Register on
January 22, 1998 (63 FR 3251). The Board manager mailed information
concerning that action to all known industry members, and it was also
made available through the Internet by the Office of the Federal
Register. That rule provided a 60-day comment period which ended March
23, 1998. No comments were received.
After consideration of all relevant material presented, including
the Board's recommendation and other information, it is found that
finalizing the interim final rule, without change, as published in the
Federal Register (63 FR 3251, January 22, 1998), will tend to
effectuate the declared policy of the Act.
List of Subjects in 7 CFR Part 982
Filberts, Hazelnuts, Marketing agreements, Nuts, Reporting and
recordkeeping requirements.
PART 982--HAZELNUTS GROWN IN OREGON AND WASHINGTON
Accordingly, the interim final rule amending 7 CFR part 982 which
was published at 63 FR 3251 on January 22, 1998, is adopted as a final
rule without change.
Dated: May 14, 1998.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 98-13524 Filed 5-20-98; 8:45 am]
BILLING CODE 3410-02-P