Hazelnuts Grown in Oregon and Washington; Establishment of Interim Final and Final Free and Restricted Percentages for the 2007-2008 Marketing Year, 35888-35893 [E8-14338]
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Federal Register / Vol. 73, No. 123 / Wednesday, June 25, 2008 / Rules and Regulations
arriving at this budget, the Committee
considered information from various
sources, including the Finance and the
Promotion sub-committees. Alternative
expenditure levels were discussed at
length by all parties. The assessment
rate of $0.22 per 50-pound bag or
equivalent of assessable Walla Walla
sweet onions was then determined by
dividing the total recommended budget
by the quantity of assessable Walla
Walla sweet onions, estimated at
510,250 50-pound units for the 2008
fiscal period. Anticipated assessment
revenue is expected to be approximately
$4,000 below the budgeted expenses,
which the Committee determined to be
acceptable. The Committee expects that
interest income for the year will
compensate for the $4,000 deficit, but is
prepared to use reserve funds if
necessary.
A review of historical information and
preliminary information pertaining to
the upcoming crop year indicates that
the producer price for Walla Walla
sweet onions for the 2008 season could
range between $10.00 and $12.00 per
50-pound bag or equivalent. Therefore,
the estimated assessment revenue for
the 2008 crop year as a percentage of
total producer revenue could range
between 1.83 and 2.20 percent.
This action increases the assessment
obligation imposed on handlers. While
assessments impose some additional
costs on handlers, the costs are minimal
and uniform on all handlers. Some of
the additional costs may be passed on
to producers. However, these costs are
offset by the benefits derived by the
operation of the marketing order. In
addition, the Committee’s meeting was
widely publicized throughout the Walla
Walla sweet onion industry and all
interested persons were invited to
attend the meeting and participate in
Committee deliberations on all issues.
Like all Committee meetings, the
December 11, 2007, meeting was a
public meeting and all entities, both
large and small, were able to express
views on this issue.
This rule imposes no additional
reporting or recordkeeping requirements
on either small or large Walla Walla
sweet onion handlers. 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.
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.
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As noted in the initial regulatory
flexibility analysis, USDA has not
identified any relevant Federal rules
that duplicate, overlap, or conflict with
this final rule.
A proposed rule concerning this
action was published in the Federal
Register on March 14, 2008 (73 FR
13798). Copies of the proposed rule
were also mailed or sent via facsimile to
all Walla Walla sweet onion handlers.
Finally, the proposal was made
available through the Internet by USDA
and the Office of the Federal Register. A
60-day comment period ending May 13,
2008, was provided for interested
persons to respond to the proposal. No
comments were received.
A small business guide on complying
with fruit, vegetable, and specialty crop
marketing agreements and orders may
be viewed at:
https://www.ams.usda.gov/
AMSv1.0/ams.fetchTemplate
Data.do?template=TemplateN
&page=MarketingOrdersSmall
BusinessGuide. Any questions about the
compliance guide should be sent to Jay
Guerber at the previously mentioned
address in the FOR FURTHER INFORMATION
CONTACT section.
After consideration of all relevant
material presented, including the
information and recommendation
submitted by the Committee and other
available information, it is hereby found
that this rule, as hereinafter set forth,
will tend to effectuate the declared
policy of the Act.
Pursuant to 5 U.S.C. 553, it also found
and determined that good cause exists
for not postponing the effective date of
this rule until 30 days after publication
in the Federal Register because
handlers are already receiving 2008 crop
Walla Walla sweet onions from
producers. The crop year began on
January 1, 2008, and the assessment rate
applies to all Walla Walla sweet onions
received during the 2008 and
subsequent seasons. Also, the
Committee needs funds to pay its
expenses, which are incurred on a
continuing basis. Further, handlers are
aware of this rule which was
recommended at a public meeting.
Finally, a 60-day comment period was
provided for in the proposed rule.
List of Subjects in 7 CFR Part 956
Marketing agreements, Onions,
Reporting and recordkeeping
requirements.
For the reasons set forth in the
preamble, 7 CFR part 956 is amended as
follows:
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PART 956—SWEET ONIONS GROWN
IN THE WALLA WALLA VALLEY OF
SOUTHEAST WASHINGTON AND
NORTHEAST OREGON
1. The authority citation for 7 CFR
part 956 continues to read as follows:
I
Authority: 7 U.S.C. 601–674.
2. Section 956.202 is revised to read
as follows:
I
§ 956.202
Assessment rate.
On and after January 1, 2008, an
assessment rate of $0.22 per 50-pound
bag or equivalent is established for
Walla Walla sweet onions.
Dated: June 19, 2008.
Lloyd C. Day,
Administrator, Agricultural Marketing
Service.
[FR Doc. E8–14339 Filed 6–24–08; 8:45 am]
BILLING CODE 3410–02–P
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 982
[Docket No. AMS–FV–07–0150; FV08–982–
1 FIR]
Hazelnuts Grown in Oregon and
Washington; Establishment of Interim
Final and Final Free and Restricted
Percentages for the 2007–2008
Marketing Year
Agricultural Marketing Service,
USDA.
ACTION: Final rule.
AGENCY:
SUMMARY: The Department of
Agriculture (USDA) is adopting, as a
final rule, without change, an interim
final rule establishing 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. This rule
continues in effect the interim final free
and restricted percentages of 8.1863 and
91.8137 percent, respectively, and the
final free and restricted percentages of
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
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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 Date: July 25, 2008.
This rule applies to all 2007–2008
marketing year restricted hazelnuts until
they are properly disposed of in
accordance with marketing order
requirements.
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:
Barry.Broadbent@usda.gov or
GaryD.Olson@usda.gov.
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–
2491, Fax: (202) 720–8938, or E-mail:
Jay.Guerber@usda.gov.
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.’’
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
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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 continues in effect 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 the 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 § 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
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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 orchardrun 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.
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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 OregonWashington producers 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).
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 orchardrun 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
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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,
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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 § 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 of 3007 tons of inshell hazelnuts
from the 2007–2008 supply that may be
marketed in domestic markets.
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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
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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:
Total available supply
Tons
(1) Production forecast (11/15/07 crop estimate) ................................................................................................................................
(2) Minus: Disappearance (three year average—4.32 percent of Item 1) ..........................................................................................
36,270
¥1,567
(3) Merchantable production (Item 1 minus Item 2) ............................................................................................................................
(4) Plus: Undeclared carry-in as of July 1, 2007 (subject to 2007–2008 regulation) .........................................................................
34,703
+ 2,029
(5) Available supply subject to regulation (Item 3 plus Item 4) ..........................................................................................................
36,732
Inshell trade demand
(6) Average trade acquisition (ATA) of inshell hazelnuts (three prior years domestic sales) ............................................................
(7) Plus: Increase to encourage increased sales (25% of average trade acquisitions) .....................................................................
(8) Minus: Declared carry-in as of July 1, 2007 (not subject to 2007–2008 regulation) ....................................................................
2,649
+ 662
¥304
(9) Adjusted inshell trade demand (Item 6 plus Item 7 minus Item 8) ...............................................................................................
3,007
Percentages
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(10)
(11)
(12)
(13)
(14)
(15)
Free
Interim final percentages (Item 9 divided by Item 5) × 100 ............................................................................
Interim final free tonnage (Item 9) ...................................................................................................................
Interim final restricted in tons (Item 5 minus Item 9) .......................................................................................
Final percentages (Item 14 divided by Item 5) × 100 .....................................................................................
Final free tonnage (Interim final free tonnage (Item 11) plus 15% of ATA(397)) ...........................................
Final restricted tonnage (Item 5 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.
Final Regulatory Flexibility Analysis
Pursuant to requirements set forth in
the Regulatory Flexibility Act (RFA), the
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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 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
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Restricted
8.1863
3,007
........................
9.2671
3,404
........................
91.8137
........................
33,725
90.7329
........................
33,328
$83,200. 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
producers 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
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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 producer 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
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 producer 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.
VerDate Aug<31>2005
18:16 Jun 24, 2008
Jkt 214001
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 of (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. Producer 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
producer 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 pricestabilizing impact.
Comparing producer revenue to cost
is useful in highlighting the impact on
producers of recent product and price
levels. A recent hazelnut production
cost study from Oregon State University
PO 00000
Frm 00010
Fmt 4700
Sfmt 4700
estimated cost-of-production per acre to
be approximately $1,340 for a typical
100-acre hazelnut enterprise. Average
producer 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 producer
revenue was below typical costs in the
other years. Without the stabilizing
influence of the order, producers 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 tenyear 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.
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Federal Register / Vol. 73, No. 123 / Wednesday, June 25, 2008 / Rules and Regulations
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
continues to pursue export
opportunities.
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.
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. 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
VerDate Aug<31>2005
18:16 Jun 24, 2008
Jkt 214001
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.
An interim final rule concerning this
action was published in the Federal
Register on February 19, 2008. Copies of
the rule were mailed by the Board’s staff
to all Board members and hazelnut
handlers. In addition, the rule was made
available through the Internet by USDA
and the Office of the Federal Register.
That rule provided for a 60-day
comment period which ended April 21,
2008. No comments were received.
A small business guide on complying
with fruit, vegetable, and specialty crop
marketing agreements and orders may
be viewed at: https://www.ams.usda.gov/
AMSv1.0/ams.fetchTemplateData.
do?template=TemplateN
&page=MarketingOrders
SmallBusinessGuide. Any questions
about the compliance guide should be
sent to Jay Guerber at the previously
mentioned address in the FOR FURTHER
INFORMATION CONTACT section.
After consideration of all relevant
material presented, including the
information and recommendation
submitted by the Board and other
available information, it is hereby found
that finalizing the interim final rule,
without change, as published in the
Federal Register (73 FR 9000, February
19, 2008) 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
35893
DEPARTMENT OF HOUSING AND
URBAN DEVELOPMENT
Office of Federal Housing Enterprise
Oversight
12 CFR Part 1750
RIN 2550–AA38
Risk-Based Capital Regulation—Loss
Severity Amendments
Office of Federal Housing
Enterprise Oversight, HUD.
ACTION: Final rule.
AGENCY:
SUMMARY: The Office of Federal Housing
Enterprise Oversight (OFHEO) is
amending its regulations related to RiskBased Capital (Risk-Based Capital
Regulation) to enhance the
transparency, sensitivity to risk, and
accuracy of the calculation of the riskbased capital requirement for the
Federal National Mortgage Association
(Fannie Mae) and the Federal Home
Loan Mortgage Corporation (Freddie
Mac). OFHEO is amending the RiskBased Capital Regulation by changing
the current loss severity equations that
understate losses on defaulted singlefamily conventional and government
guaranteed loans and by changing the
treatment of Federal Housing
Administration insurance in the RiskBased Capital Regulation to conform the
treatment to current law.
DATES: Effective Date: June 25, 2008.
FOR FURTHER INFORMATION CONTACT:
David A. Felt, Deputy General Counsel,
telephone (202) 414–3750, or Jamie
Schwing, Associate General Counsel,
telephone (202) 414–3787 (not toll free
numbers), Office of Federal Housing
Enterprise Oversight, Fourth Floor, 1700
G Street, NW., Washington, DC 20552.
The telephone number for the
Telecommunications Device for the Deaf
is (800) 877–8339.
SUPPLEMENTARY INFORMATION:
Background
Accordingly, the interim final rule
amending 7 CFR part 982 which was
published at 73 FR 9000 on February 19,
2008, is adopted as a final rule without
change.
I
Dated: June 19, 2008.
Lloyd C. Day,
Administrator, Agricultural Marketing
Service.
[FR Doc. E8–14338 Filed 6–24–08; 8:45 am]
BILLING CODE 3410–02–P
PO 00000
Frm 00011
Fmt 4700
Sfmt 4700
Title XIII of the Housing and
Community Development Act of 1992,
Public Law 102–550, titled the Federal
Housing Enterprises Financial Safety
and Soundness Act of 1992 (Act) (12
U.S.C. 4501 et seq.), established OFHEO
as an independent office within the
Department of Housing and Urban
Development to ensure that Fannie Mae
and Freddie Mac (collectively the
Enterprises) are adequately capitalized,
operate safely and soundly, and comply
with applicable laws, rules and
regulations. The Act provides that the
Director of OFHEO (Director) is
authorized to make such determinations
E:\FR\FM\25JNR1.SGM
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]]>Agencies
[Federal Register Volume 73, Number 123 (Wednesday, June 25, 2008)]
[Rules and Regulations]
[Pages 35888-35893]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-14338]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 982
[Docket No. AMS-FV-07-0150; FV08-982-1 FIR]
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: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Department of Agriculture (USDA) is adopting, as a final
rule, without change, an interim final rule establishing 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. This rule continues
in effect the interim final free and restricted percentages of 8.1863
and 91.8137 percent, respectively, and the final free and restricted
percentages of 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
[[Page 35889]]
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 Date: July 25, 2008. This rule applies to all 2007-
2008 marketing year restricted hazelnuts until they are properly
disposed of in accordance with marketing order requirements.
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: Barry.Broadbent@usda.gov or GaryD.Olson@usda.gov.
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)
720-2491, Fax: (202) 720-8938, or E-mail: Jay.Guerber@usda.gov.
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.''
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 continues in effect 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
the 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.
[[Page 35890]]
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 producers 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).
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 of 3007 tons of
inshell hazelnuts from the 2007-2008 supply that may be marketed in
domestic markets.
[[Page 35891]]
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:
------------------------------------------------------------------------
Total available supply Tons
------------------------------------------------------------------------
(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.
Final 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 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 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
$83,200. 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 producers 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
[[Page 35892]]
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 producer 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 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 producer 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 of (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. Producer 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 producer
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 producer revenue to cost is useful in highlighting the
impact on producers 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 producer 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 producer revenue was below typical costs in the other years.
Without the stabilizing influence of the order, producers 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.
[[Page 35893]]
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 continues to pursue export
opportunities.
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.
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. 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.
An interim final rule concerning this action was published in the
Federal Register on February 19, 2008. Copies of the rule were mailed
by the Board's staff to all Board members and hazelnut handlers. In
addition, the rule was made available through the Internet by USDA and
the Office of the Federal Register. That rule provided for a 60-day
comment period which ended April 21, 2008. No comments were received.
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/AMSv1.0/
ams.fetchTemplateData.do?template=TemplateN&page=MarketingOrdersSmallBus
inessGuide. Any questions about the compliance guide should be sent to
Jay Guerber at the previously mentioned address in the FOR FURTHER
INFORMATION CONTACT section.
After consideration of all relevant material presented, including
the information and recommendation submitted by the Board and other
available information, it is hereby found that finalizing the interim
final rule, without change, as published in the Federal Register (73 FR
9000, February 19, 2008) 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
0
Accordingly, the interim final rule amending 7 CFR part 982 which was
published at 73 FR 9000 on February 19, 2008, is adopted as a final
rule without change.
Dated: June 19, 2008.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. E8-14338 Filed 6-24-08; 8:45 am]
BILLING CODE 3410-02-P
