Almonds Grown in California; Increased Assessment Rate, 92559-92564 [2016-30264]

Download as PDF mstockstill on DSK3G9T082PROD with RULES Federal Register / Vol. 81, No. 244 / Tuesday, December 20, 2016 / Rules and Regulations for interested persons to respond to the proposal. One comment was received during the comment period in response to the proposal. The commenter was concerned about the impact that the increased assessment rate would have on growers. The commenter also questioned why the assessment is only applied to certain counties in Washington, and not others. In addition, the commenter stated that the opinions of sweet cherry growers and handlers should be taken into consideration when establishing assessment rates, and that there should be flexibility during the transitional period when a new assessment rate is implemented. Lastly, the commenter offered recommendations with regards to the assessment rate establishment process and took exception to the indefinite period that assessment rates are in effect. Under the order, it is handlers that are assessed, not growers. As such, growers will not be directly impacted by this action. However, as mentioned previously in this rule, some of the additional costs to handlers as a result of this action may be passed on to growers. Nevertheless, USDA believes that such additional costs will be offset by the benefits derived by the operation of the order. Furthermore, the commenter’s request for clarity with regards to why only certain counties are covered by this regulatory change is addressed in the order’s provisions. Section 923.4 defines the order’s production area as the counties of Okanogan, Chelan, Kittitas, Yakima, Klickitat in the State of Washington and all of the counties in Washington lying east thereof. Only handlers who handle cherries grown within the specific production area are subject to assessment. Lastly, the commenter’s thoughts regarding the assessment rate establishment process and effective period have been previously addressed in this rule. The Committee meets prior to, or during, each fiscal period to recommend a budget of expenses and consider recommendations for modification of the assessment rate. The dates and times of Committee meetings are available from the Committee or USDA. Committee meetings are open to the public and interested persons may express their views at these meetings. Meetings are widely publicized throughout the Washington cherry industry and all interested persons are invited to attend the meetings and participate in Committee deliberations on all issues. In addition, interested persons are invited to submit comments VerDate Sep<11>2014 19:50 Dec 19, 2016 Jkt 241001 on any proposed assessment rules. All comments are considered prior to finalization of a proposed rule. Once established, assessment rates remain in effect until modified by USDA upon the recommendation of the Committee. Accordingly, no changes will be made to the rule as proposed, based on the comment 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/ rules-regulations/moa/small-businesses. Any questions about the compliance guide should be sent to Richard Lower 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: (1) The 2016–2017 fiscal period began on April 1, 2016, and the order requires that the assessment rate for each fiscal period apply to all assessable Washington cherries handled during such fiscal period; (2) the Committee needs to have sufficient funds to pay its expenses, which are incurred on a continuous basis; (3) handlers have already shipped Washington cherries from the 2016 crop; and (4) handlers are aware of this action, which was unanimously recommended by the Committee at a public meeting and is similar to other assessment rate actions issued in past years. List of Subjects in 7 CFR Part 923 Cherries, Marketing agreements, Reporting and recordkeeping requirements. For the reasons set forth in the preamble, 7 CFR part 923 is amended as follows: PART 923—CHERRIES GROWN IN DESIGNATED COUNTIES IN WASHINGTON 1. The authority citation for 7 CFR part 923 continues to read as follows: ■ Authority: 7 U.S.C. 601–674. 2. Section 923.236 is revised to read as follows: ■ PO 00000 Frm 00011 Fmt 4700 Sfmt 4700 § 923.236 92559 Assessment rate. On and after April 1, 2016, an assessment rate of $0.25 per ton is established for the Washington Cherry Marketing Committee. Dated: December 12, 2016. Bruce Summers, Associate Administrator, Agricultural Marketing Service. [FR Doc. 2016–30302 Filed 12–19–16; 8:45 am] BILLING CODE 3410–02–P DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 981 [Doc. No. AMS–SC–16–0045; SC16–981–2 FR] Almonds Grown in California; Increased Assessment Rate Agricultural Marketing Service, USDA. ACTION: Final rule. AGENCY: This rule implements a recommendation from the Almond Board of California (Board) for an increase of the assessment rate established for the 2016–17 through the 2018–19 crop years from $0.03 to $0.04 per pound of almonds handled under the marketing order (order). Of the $0.04 per pound assessment, 60 percent (or $0.024 per pound) is available as creditback for handlers who conduct their own promotional activities. The assessment rate will return to $0.03 for the 2019–20 and subsequent crop years, and the amount available for handler credit-back will return to $0.018 per pound (60 percent). The Board locally administers the order and is comprised of growers and handlers of almonds grown in California. Assessments upon almond handlers are used by the Board to fund reasonable and necessary expenses of the program. The crop year began on August 1 and ends on July 31. The $0.04 assessment rate will remain in effect until July 31, 2019. Beginning August 1, 2019, the assessment rate will return to $0.03 and will remain in effect indefinitely unless modified, suspended, or terminated. Two comments period were provided to interested individuals. Comments will be addressed later in this document. DATES: Effective December 21, 2016. FOR FURTHER INFORMATION CONTACT: Marketing Specialist Andrea Ricci, or Regional Director Jeffrey Smutny, California Marketing Field Office, Marketing Order and Agreement Division, Specialty Crops Program, SUMMARY: E:\FR\FM\20DER1.SGM 20DER1 92560 Federal Register / Vol. 81, No. 244 / Tuesday, December 20, 2016 / Rules and Regulations AMS, USDA; Telephone: (559) 487– 5901, Fax: (559) 487–5906, or Email: with Andrea.Ricci@ams.usda.gov or Jeffrey.Smutny@ams.usda.gov. Small businesses may request information on complying with this regulation by contacting Richard Lower, Marketing Order and Agreement Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW., STOP 0237, Washington, DC 20250–0237; Telephone: (202) 720– 2491, Fax: (202) 720–8938, or Email: Richard.Lower@ams.usda.gov. SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Order No. 981, as amended (7 CFR part 981), regulating the handling of almonds grown in California, hereinafter referred to as the ‘‘order.’’ The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601–674), hereinafter referred to as the ‘‘Act.’’ The Department of Agriculture (USDA) is issuing this rule in conformance with Executive Orders 12866, 13563, and 13175. This rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the marketing order now in effect, California almond handlers are subject to assessments. Funds to administer the order are derived from such assessments. It is intended that the assessment rate as issued herein will be applicable to all assessable almonds beginning on August 1, 2016, through July 31, 2019. Beginning August 1, 2019, the assessment rate will return to $0.03 and will remain in effect indefinitely unless modified, suspended, or terminated. 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. Such 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 increases the assessment rate established for the Board for the 2016–17 through 2018–19 crop years from $0.03 to $0.04 per pound of almonds received. Of the $0.04 per pound assessment, 60 percent (or $0.024 per pound) is available as credit-back for handlers who conduct their own promotional activities. The assessment rate will return to $0.03 for the 2019– 20 and subsequent crop years, and the amount available for handler credit-back will return to $0.018 per pound (60 percent). The California almond marketing order provides authority for the Board, with the approval of USDA, to formulate an annual budget of expenses and collect assessments from handlers to administer the program. The members of the Board are growers and handlers of California almonds. They are familiar with the Board’s needs and with the costs for goods and services in their local area and thus are in a position to formulate an appropriate budget and assessment rate. The assessment rate is formulated and discussed in a public meeting. Therefore, all directly affected persons have an opportunity to participate and provide input. For the 2005–06 and subsequent crop years, the Board recommended, and USDA approved, an assessment rate of $0.03 per pound that would continue in effect from crop year to crop year unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Board or other information available to USDA. Of the $0.03 per pound assessment, 60 percent ($0.018) per pound was made available as credit-back for handlers who conducted their own promotional activities. The Board met on April 12, 2016, and unanimously recommended 2016–17 expenditures of $69,897,626 and an assessment rate of $0.04 per pound of almonds received. In comparison, last year’s budgeted expenditures were $58,998,976. The assessment rate of $0.04 is $0.01 higher than the rate currently in effect, and the credit-back portion of the assessment rate ($0.024 per pound) is $0.006 more than the credit-back portion currently in effect. The Board estimates a production increase of thirty percent, or 600 million pounds, by the 2019–20 crop year. This increase is nearly as much as is consumed by the industry’s largest market. Due to the size of the increase in forecasted production, the Board believes that increased market development projects and new marketing programs are required to successfully market the additional supply. Accordingly, the Board has recommended a new ‘‘Nut of Choice’’ marketing program. The Board also anticipates needing additional funding for the industry’s new ‘‘Crop of Choice’’ research program, as well as additional research to address concerns such as changing water supply and quality systems; air quality and how it relates to harvesting, pesticide, and energy use; and bee health. The three-year higher assessment rate is needed to fund the increase in marketing and research activities. The Board anticipates that by the 2019–20 crop year, the increase in production assessed at the reinstated $0.03 per pound rate should generate sufficient revenue to cover the anticipated expenditures at that time. Therefore, beginning August 1, 2019, the assessment rate will return to $0.03 per pound. The following table compares major budget expenditures recommended by the Board for the 2015–16 and 2016–17 crop years: mstockstill on DSK3G9T082PROD with RULES Budget expense categories 2015–16 Operations Expenses .............................................................................................................................................. Board Accelerated Innovation Management (AIM) Initiatives ................................................................................. Crop of Choice Initiatives ........................................................................................................................................ Reputation Management ......................................................................................................................................... Production Research ............................................................................................................................................... Environmental Research ......................................................................................................................................... Scientific Affairs/Nutrition ......................................................................................................................................... Global Market Development .................................................................................................................................... Nut of Choice Initiatives ........................................................................................................................................... Technical & Regulatory Affairs ................................................................................................................................ Industry Services ..................................................................................................................................................... Almond Quality & Food Safety ................................................................................................................................ Corporate Technology ............................................................................................................................................. VerDate Sep<11>2014 19:50 Dec 19, 2016 Jkt 241001 PO 00000 Frm 00012 Fmt 4700 Sfmt 4700 E:\FR\FM\20DER1.SGM 20DER1 2016–17 $ 7,904,000 1,500,000 0 1,826,350 1,843,331 1,039,790 1,640,000 38,583,756 0 1,045,500 2,436,220 790,800 389,229 $ 8,404,000 1,000,000 5,625,000 2,000,000 1,843,331 1,039,790 1,640,000 38,583,756 5,100,000 1,045,500 2,436,220 790,800 389,229 mstockstill on DSK3G9T082PROD with RULES Federal Register / Vol. 81, No. 244 / Tuesday, December 20, 2016 / Rules and Regulations The assessment rate recommended by the Board was derived by considering the anticipated 30-percent production increase in the next three years, anticipated expenditures plus additional program expenses, current production level, and maintaining adequate operating reserve funds. In its recommendation, the Board utilized an estimate of 1,835,290,000 pounds of assessable almonds for the 2016–17 crop year. If realized, this should provide estimated assessment revenue of $62,262,213, which reflects credit-back reimbursements and organic exemptions. In addition, it is anticipated that $20,907,722 will be provided by other sources, including interest income, Market Access Program (MAP) funds, and operating reserve funds. When combined, revenue from these sources should be adequate to cover budgeted expenses. Section 981.81 of the order authorizes the Board to maintain operating reserve funds consisting of an administrativeresearch portion and a marketing promotion portion, and states that the amount allocated to each portion shall not exceed six months’ budgeted expenses for that activity area. Funds in the reserve at the end of the 2016–17 crop year are estimated to be approximately $16,581,222, well within the amount permitted by the order. A proposed rule concerning this action was published in the Federal Register on July 18, 2016 (81 FR 46616). A 15-day comment period ending August 2, 2016, was provided for interested persons to respond to the proposal. One commenter raised concern that notification of the proposal was not promptly circulated within industry and asked for an extension of the comment period. After reviewing the request, USDA published a notice reopening the comment period for an additional 30 days in the Federal Register on September 12, 2016 (81 FR 62668). All comments will be addressed further in this document. The assessment rate established in this rule will continue in effect until July 31, 2019. Beginning August 1, 2019, the assessment rate will return to $0.03 and will continue in effect indefinitely unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Board or other available information. Although this assessment rate will be in effect for a specified period, the Board will continue to meet prior to or during each crop year to recommend a budget of expenses and consider recommendations for modification of the assessment rate. The dates and times VerDate Sep<11>2014 19:50 Dec 19, 2016 Jkt 241001 of Board meetings are available from the Board or USDA. Board meetings are open to the public, and interested persons may express their views at these meetings. USDA would evaluate Board recommendations and other available information to determine whether modification of the assessment rate is needed. Further rulemaking would be undertaken as necessary. The Board’s 2016–17 budget and those for subsequent crop years would be reviewed and, as appropriate, approved by USDA. Final Regulatory Flexibility Analysis Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601–612), the Agricultural Marketing Service (AMS) has considered the economic impact of this rule 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 businesses 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. There are approximately 6,800 almond growers in the production area and approximately 100 handlers subject to regulation under the marketing order. Small agricultural producers are defined by the Small Business Administration (SBA) as those having annual receipts of less than $750,000, and small agricultural service firms are defined as those whose annual receipts are less than $7,500,000 (13 CFR 121.201). The National Agricultural Statistics Service (NASS) reported in its 2012 Agricultural Census that there were 6,841 almond farms in the production area (California), of which 6,204 had bearing acres. The following computation provides an estimate of the proportion of producers (farms) and agricultural service firms (handlers) that would be considered small under the SBA definitions. The NASS Census data indicates that out of the 6,204 California farms with bearing acres of almonds, 4,471 (72 percent) have fewer than 100-bearing acres. In its most recently reported crop year (2015), NASS reported an average yield of 2,130 pounds per acre and a season average grower price of $2.84 per pound. A 100-acre farm with an average yield of 2,130 pounds per acre would produce about 213,000 pounds of PO 00000 Frm 00013 Fmt 4700 Sfmt 4700 92561 almonds. At $2.84 per pound, that farm’s production would be valued at $604,920. Because the Census of Agriculture indicates that the majority of California’s almond farms are smaller than 100 acres, it could be concluded that the majority of growers had annual receipts from the sale of almonds in 2015 of less than $604,920, well below the SBA threshold of $750,000. Thus, over 70 percent of California’s almond growers would be considered small growers according to SBA’s definition. According to information supplied by the Board, approximately 30 percent of California’s almond handlers shipped almonds valued under $7,500,000 during the 2014–15 crop year and would therefore be considered small handlers according to the SBA definition. This rule increases the assessment rate collected from handlers for the 2016–17 through the 2018–19 crop years from $0.03 to $0.04 per pound of almonds received. Of the $0.04 per pound assessment, 60 percent (or $0.024 per pound) is available as credit-back for handlers who conduct their own promotional activities, consistent with § 981.441 of the order’s regulations and subject to Board approval. The Board unanimously recommended 2016–17 expenditures of $69,897,626 and an assessment rate of $0.04 per pound of almonds received. The assessment rate of $0.04 is $0.01 higher than the 2015– 16 rate, and the credit-back portion of $0.024 per pound is $0.006 higher than the current credit-back portion of $0.018. The quantity of assessable almonds for the 2016–17 crop year is estimated at 1,835,290,000 pounds. This should provide estimated assessment revenue of $62,262,213, which reflects credit-back reimbursements and organic exemptions. In addition, it is anticipated that $20,907,722 will be provided by other sources, including interest income, MAP funds, and operating reserve funds. When combined, revenue from these sources should be adequate to cover budgeted expenses. The major expenditures recommended by the Board for the 2016–17 crop year include $8,404,000 for Operations Expenses, $1,000,000 for Board AIM Initiatives, $5,625,000 for Crop of Choice Initiatives, $2,000,000 for Reputation Management, $1,843,331 for Production Research, $1,039,790 for Environmental Research, $1,640,000 for Scientific Affairs/Nutrition, $38,583,756 for Global Market Development, $5,100,000 for Nut of Choice Initiatives, $1,045,500 for Technical & Regulatory Affairs, $2,436,220 for Industry E:\FR\FM\20DER1.SGM 20DER1 mstockstill on DSK3G9T082PROD with RULES 92562 Federal Register / Vol. 81, No. 244 / Tuesday, December 20, 2016 / Rules and Regulations Services, $790,800 for Almond Quality & Food Safety, and $389,229 for Corporate Technology. Budgeted expenses for these items in 2015–16 were $7,904,000 for Operations Expenses, $1,500,000 for Board AIM Initiatives, $0 for Crop of Choice Initiatives, $1,826,350 for Reputation Management, $1,843,331 for Production Research, $1,039,790 for Environmental Research, $1,640,000 for Scientific Affairs/Nutrition, $38,583,756 for Global Market Development, $0 for Nut of Choice Initiatives, $1,045,500 for Technical & Regulatory Affairs, $2,436,220 for Industry Services, $790,800 for Almond Quality & Food Safety, and $389,229 for Corporate Technology. The Board estimates a production increase of 30 percent, or 600 million pounds, by the 2019–20 crop year. This increase is nearly as large as the current consumption of the industry’s largest market. Increased market development investment as well as new marketing programs will be required to successfully market the additional supply. Additional investment in research is also needed to address concerns such as changing water supply and quality systems; air quality and how it relates to harvesting, pesticide, and energy use; and bee health. Accordingly, the three-year higher assessment rate is needed to fund the Board’s new Nut of Choice marketing program and Crop of Choice research activities. The Board anticipates that by the 2019–20 crop year, the increased production assessed at the reinstated $0.03 per pound rate should generate sufficient revenue to cover the anticipated expenditures at that time. Prior to arriving at this budget and assessment rate, the Board held a strategic planning session in February 2016. The Board also considered recommendations made from its various committees, including the Global Market Development Committee, Production Research Committee, and Environmental Committee. Alternative expenditure levels were discussed, based upon the relative value of various activities to the almond industry. Ultimately, the Board unanimously determined that 2016–17 expenditures of $69,897,626 were appropriate and that the recommended assessment rate, plus income from other sources and operation reverse funds, would generate sufficient revenue to meet its expenses. A review of historical information and preliminary information pertaining to the upcoming crop year indicates that the grower price for the 2016–17 season could range between $4.00 and $2.84 per pound of almonds. Therefore, the VerDate Sep<11>2014 19:50 Dec 19, 2016 Jkt 241001 estimated assessment revenue for the 2016–17 crop year (disregarding any amounts credited pursuant to § 981.41 and § 981.441) as a percentage of total grower revenue could range between 1.00 and 1.41 percent, respectively. 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 growers. However, these costs would be offset by the benefits derived by the operation of the marketing order. In addition, the Board’s meeting was widely publicized throughout the California almond industry, and all interested persons were invited to attend the meeting and participate in Board deliberations on all issues. Like all Board meetings, the April 12, 2016, meeting was a public meeting, and all entities, both large and small, were able to express views on this issue. In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the order’s information collection requirements have been previously approved by the Office of Management and Budget (OMB) and assigned OMB No. 0581–0178 (Vegetable and Specialty Crops.) No changes in those requirements as a result of this action are necessary. Should any changes become necessary, they would be submitted to OMB for approval. This rule imposes no additional reporting or recordkeeping requirements on either small or large California almond 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. As previously noted, a proposed rule concerning this action was published providing a 15-day comment period for interested persons to respond to the proposal. In addition, on September 12, 2016, the comment period was reopened for an additional 30 days. Copies of the proposed rule were provided to all almond handlers. Finally, the proposal was made available through the internet by USDA and the Office of the Federal Register. A total of forty-six comments were received. Twenty-eight supported and eighteen opposed the proposal. Of the eighteen in opposition, three were PO 00000 Frm 00014 Fmt 4700 Sfmt 4700 grower/handlers, eleven were growers, two individuals were from outside of the production area, and two individuals did not identify themselves. Of those who supported the proposal, twenty-three were growers. The majority of the commenters in support of the proposal stated that increasing the assessment rate now was necessary to fund market development programs and new marketing and promotion activities to create demand prior to the onset of the increased production. Commenters noted that the industry is aware of the increasing almond acreage and the need to invest prior to the larger crop materializing. The commenters also noted that the three-year ‘‘sunset’’ feature will ensure that once the additional 30 percent increase in production is realized, the assessment rate will return to the current $0.03 rate. One commenter noted the need to develop demand for the increased supplies to ensure the carry-over inventory is kept near zero each year, which will help stabilize prices at the grower level and negate the effect of the increased assessment. Another commenter noted that the recent volatility in almond prices illustrates how critically important it is to make investments now. Several commenters stated the Board has had proven success in the areas of marketing and promotion; nutrition, environmental, and production research; and grower outreach; and they are pleased overall with the work of the Board. Commenters also expressed the need for continued investment in research, specifically in areas that will provide resources for growers to continue to remain profitable in the face of continued challenges. One commenter stated that programs such as the almond order are a good example of a public/private partnership which has worked for the consumer, farmer, and food safety while expanding markets around the world. The majority of commenters in opposition of the proposal stated the increase of production over the next several years should generate adequate income to fund Board programs. In the development of the budget, the Board contemplated the production forecast of a 30 percent increase in the next three years. The Board anticipates the 2016– 17 crop year production at 1.835 billion pounds, 2017–18 crop year production at 2.184 billion pounds, 2018–19 crop year production at 2.277 billion pounds, and 2019–20 crop year production at 2.354 billion pounds. The Board discussed the need to build demand before this increased production is realized. The Board strongly believes E:\FR\FM\20DER1.SGM 20DER1 mstockstill on DSK3G9T082PROD with RULES Federal Register / Vol. 81, No. 244 / Tuesday, December 20, 2016 / Rules and Regulations not doing so in advance will negatively impact prices. The Board is concerned that without market expansion and new market development programs, the anticipated 600 million pounds’ increase in production will lead to oversupply. This year, after Committee input and Board strategic planning, the Board decided an increase in the assessment rate was necessary. The increase in revenue will be used to fund new marketing programs and increase the budgets of existing market research and development projects. At the $0.03 assessment rate, the Board determined funding generated would not be adequate to cover anticipated expenses necessary to establish outlets for the increased production. In its recommendation to have the assessment rate revert back to $0.03 after three years, the Board considered current program needs at the current production level against the anticipated production in the next three years, while recognizing that the increased production will generate adequate income once realized. In its discussion, the Board also considered the time and resources needed to develop new marketing and promotion programs. The Global Market Demand Committee developed a comprehensive marketing plan, which includes the Nut of Choice program. The plan encompasses expanding the Germany and Japan markets by increasing funding in order to increase impressions; accelerating momentum by increasing budgets and impressions for the U.S./Canada, France, United Kingdom, India, and South Korea markets; maintaining budget levels in the China market and Global Initiative; and allocating spending for one to two additional exploratory markets (i.e., Mexico, Indonesia, and Saudi Arabia regions). Prior to the Committee recommending the marketing plan, it reviewed key factors for each market, including market attractiveness, total market demand forecast, market outlook, opportunities and challenges, historical spending data, and low-end and high-end demand potential. The Board also determined that with the current environment of the agriculture industry, investing in new and innovative techniques would be key to the viability of the almond industry moving forward. Key areas of focus are water management, food safety, production, pest management, pollination, biomass, and soil health. Additionally, several commenters stated that for growers, with the decline in prices and the rising production costs, it is difficult to remain profitable. The Board has had considerable VerDate Sep<11>2014 19:50 Dec 19, 2016 Jkt 241001 strategic discussions about the continued challenges facing growers, including rising production costs, water availability, and regulatory impacts, and ways to address the issues. As a result, a substantial portion of the revenue generated by the increased assessment rate is designated for research. More specifically, the newly established nine capabilities of the Crop of Choice Program will fund research at a level of $5.625 million. Areas of focus include Irrigation and Nutrients; Orchard, Tree, Rootstock; Harvesting; Value-Added Orchard Utilization; Soil Health Management; Pest Management; Food Safety; Pollination; Energy; and the Sustainability Program update and outreach. This investment is intended to develop new and innovative techniques to help the almond industry continue to remain profitable. In addition, the increased investment in market development and new marketing programs is intended to create demand to absorb the anticipated increase in production. In turn, these activities should stabilize prices. Three commenters raised concern that only 23 percent of the additional funding generated is allocated to direct marketing. The commenters further stated that if at least 80 percent of the additional funding was not allocated to direct marketing and promotion activities, they were opposed to the increase. The Board utilizes a comprehensive strategy that includes a balanced approach for research and marketing and promotion activities to sustain and develop market outlets. The Board-funded research plays an integral part in supporting the almond industry, which continues to face new challenges as the landscape of agriculture changes. The Board triennially holds strategic planning retreats to develop tactics that directly address the needs of the almond industry as well as ever-changing market demands. The Board recommends a budget each year utilizing recommendations made by each Committee. Committees are comprised of industry members and meet regularly to deliberate and prioritize programs. Marketing and promotion has been set as a priority, and recommendations have been made to increase spending. Along with the marketing activities, the Board has a robust research program. Nutrition, production, environmental, and food safety research has been utilized by the marketing programs to better position almonds in the marketplace. Specifically, in the past several years with the drought in California, the almond industry came under media fire PO 00000 Frm 00015 Fmt 4700 Sfmt 4700 92563 for its water use. Through the research programs funded by the Board, the marketing team was able to provide data regarding almonds and water use. This research was pivotal in transitioning the conversation from negative to neutral or positive. Additionally, almonds have a qualified heart-healthy claim, which can be directly linked to the research funded as part of the nutrition research program. The almond industry’s ability to utilize the heart-health claim is a vital part of the marketing program. Further, the Board is celebrating the tenth year of its California Almond Sustainability Program. As consumer demand continues to shift towards products that are sustainable, the Sustainability Program has been a great resource to the marketing program to provide data regarding the sustainability of the almond industry. The research and marketing and promotion activities work interdependently, ensuring the viability of the industry. Two commenters stated an assessment rate increase should be approved by growers prior to implementation. Two of the commenters questioned the outreach to the growing community, stating growers should have a larger role in the discussion. One of the commenters requested a grower referendum prior to implementation of an assessment rate change. All Board and Committee meetings are open to the public, allowing directly affected persons and other interested parties an opportunity to participate and provide input. On April 14, 2016, the Board sent a memo to almond handlers and growers as part of its mailer, providing notice of the Board’s unanimous recommendation to increase the assessment rate. The Board also included an article regarding the recommendation in the April California Almonds Outlook e-newsletter. In addition, two comment periods were provided, which gave interested parties the opportunity to comment on the recommended proposal. The Board included notice of the comment periods in its industry e-newsletters, on its Web site (specifically, on the grower site), on its social media platforms, and announced this information at its Committee and Board meetings. Notices of the comment periods were also made available on the USDA Web site. In response to the request to hold a grower referendum, under the California almond marketing order, referenda are conducted every five years to ascertain whether continuation of the order is favored by growers. The last continuance referendum was held in 2014, and results indicated continued E:\FR\FM\20DER1.SGM 20DER1 mstockstill on DSK3G9T082PROD with RULES 92564 Federal Register / Vol. 81, No. 244 / Tuesday, December 20, 2016 / Rules and Regulations grower support for the order. Furthermore, annual budget and assessment rate recommendations are among the many duties the Board, which is comprised of grower and handler members, is required to perform as authorized under the order. One commenter raised concern that the additional funding will be used to increase the size and salaries of the organization, which will lead to the continuation of increasing the assessment rate year after year. Also, the commenter expressed concerns about transparency and availability of financial information. The majority of the funds generated by the increased assessment are allotted to research programs and marketing and promotion activities. For the past several years, operating expenses have fluctuated between 12 percent and 15 percent of the total budget. In the recommended budget for the 2016–17 crop year, operating expenses are approximately 12 percent of the total budget. In addition, in its unanimous recommendation, the Board stipulated that the increased assessment rate continue only through the 2018–19 crop year. The assessment rate will revert to the current $0.03 rate beginning August 1, 2019. All Board and Committee meetings are open to the public. On a quarterly basis, the Board reviews and approves financial statements at its public meetings. Those documents are made available to the public, and interested persons are encouraged to participate in all meetings. One commenter expressed concern about the order’s credit-back program and that it is not advantageous to nonbranded handlers. While credit-back is associated with the assessment rate, the Board did not discuss the program as part of this proposal. This rule does not modify the percentage rate available for handler credit-back. One commenter raised concern that the Nut of Choice and Crop of Choice programs appear to be an effort to improve the image of almonds at the expense of other California commodities. USDA has a strict policy against any marketing order boards, committees, or councils disparaging other commodities. USDA reviews all marketing and communication materials prior to publication to ensure that policy is being followed. Accordingly, no changes will be made to the rule as proposed, based on the comments 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/ rules-regulations/moa/small-businesses. VerDate Sep<11>2014 19:50 Dec 19, 2016 Jkt 241001 Any questions about the compliance guide should be sent to Richard Lower 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 this rule, as hereinafter set forth, will tend to effectuate the declared policy of the Act. It is further found that good cause exists for not postponing the effective date of this rule until 30 days after publication in the Federal Register (5 U.S.C. 553) because the 2016–17 crop year began August 1, 2016, and the marketing order requires that the rate of assessment for each crop year apply to all assessable almonds handled during such crop year. Further, handlers are aware of this rule, which was recommended at a public meeting. Also, a 15-day comment period was provided for in the proposed rule, followed by an additional 30-day comment period. List of Subjects in 7 CFR Part 981 Almonds, Marketing agreements, Nuts, Reporting and recordkeeping requirements. For the reasons set forth in the preamble, 7 CFR part 981 is amended as follows: PART 981—ALMONDS GROWN IN CALIFORNIA 1. The authority citation for 7 CFR part 981 continues to read as follows: ■ Authority: 7 U.S.C. 601–674. 2. Section 981.343 is revised to read as follows: ■ § 981.343 Assessment rate. For the period August 1, 2016, through July 31, 2019, the assessment rate shall be $0.04 per pound for California almonds. Of the $0.04 assessment rate, 60 percent per assessable pound is available for handler credit-back. On and after August 1, 2019, an assessment rate of $0.03 per pound is established for California almonds. Of the $0.03 assessment rate, 60 percent per assessable pound is available for handler credit-back. Dated: November 12, 2016. Elanor Starmer, Administrator, Agricultural Marketing Service. [FR Doc. 2016–30264 Filed 12–19–16; 8:45 am] BILLING CODE P PO 00000 Frm 00016 Fmt 4700 Sfmt 4700 DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 987 [Doc. No. AMS–SC–16–0084; SC16–987–1 FIR] Domestic Dates Produced or Packed in Riverside County, California; Decreased Assessment Rate Agricultural Marketing Service, USDA. ACTION: Affirmation of interim rule as final rule. AGENCY: The Department of Agriculture (USDA) is adopting, as a final rule, without change, an interim rule that implemented a recommendation from the California Date Administrative Committee (committee) to decrease the assessment rate established for the committee for the 2016–17 and subsequent crop years from $0.10 to $0.05 per hundredweight of dates handled under the marketing order (order). The committee locally administers the order and is comprised of producers and handlers of dates operating within the area of production. The interim rule was necessary to allow the committee to reduce its financial reserve while still providing adequate funding to meet program expenses. DATES: Effective December 21, 2016. FOR FURTHER INFORMATION CONTACT: Terry Vawter, Senior Marketing Specialist Jeffrey Smutny, Regional Director, California Marketing Field Office, Marketing Order and Agreement Division, Specialty Crops Program, AMS, USDA; Telephone: (559) 487– 5901, Fax: (559) 487–5906, or Email: Terry.Vawter@ams.usda.gov or Jeffrey.Smutny@ams.usda.gov. Small businesses may obtain information on complying with this regulation by viewing a guide at the following Web site: http:// www.ams.usda.gov/rules-regulations/ moa/small-businesses; or by contacting Richard Lower, Marketing Order and Agreement Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW., STOP 0237, Washington, DC 20250–0237; Telephone: (202) 720–2491, Fax: (202) 720–8938, or Email: Richard.Lower@ ams.usda.gov. SUMMARY: This rule is issued under Marketing Agreement and Order No. 987, both as amended (7 CFR part 987), regulating the handling of domestic dates produced or packed in Riverside County, California, hereinafter referred to as the ‘‘order.’’ The order is SUPPLEMENTARY INFORMATION: E:\FR\FM\20DER1.SGM 20DER1

Agencies

[Federal Register Volume 81, Number 244 (Tuesday, December 20, 2016)]
[Rules and Regulations]
[Pages 92559-92564]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-30264]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Doc. No. AMS-SC-16-0045; SC16-981-2 FR]


Almonds Grown in California; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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

SUMMARY: This rule implements a recommendation from the Almond Board of 
California (Board) for an increase of the assessment rate established 
for the 2016-17 through the 2018-19 crop years from $0.03 to $0.04 per 
pound of almonds handled under the marketing order (order). Of the 
$0.04 per pound assessment, 60 percent (or $0.024 per pound) is 
available as credit-back for handlers who conduct their own promotional 
activities. The assessment rate will return to $0.03 for the 2019-20 
and subsequent crop years, and the amount available for handler credit-
back will return to $0.018 per pound (60 percent). The Board locally 
administers the order and is comprised of growers and handlers of 
almonds grown in California. Assessments upon almond handlers are used 
by the Board to fund reasonable and necessary expenses of the program. 
The crop year began on August 1 and ends on July 31. The $0.04 
assessment rate will remain in effect until July 31, 2019. Beginning 
August 1, 2019, the assessment rate will return to $0.03 and will 
remain in effect indefinitely unless modified, suspended, or 
terminated. Two comments period were provided to interested 
individuals. Comments will be addressed later in this document.

DATES: Effective December 21, 2016.

FOR FURTHER INFORMATION CONTACT: Marketing Specialist Andrea Ricci, or 
Regional Director Jeffrey Smutny, California Marketing Field Office, 
Marketing Order and Agreement Division, Specialty Crops Program,

[[Page 92560]]

AMS, USDA; Telephone: (559) 487-5901, Fax: (559) 487-5906, or Email: 
with Andrea.Ricci@ams.usda.gov or Jeffrey.Smutny@ams.usda.gov.
    Small businesses may request information on complying with this 
regulation by contacting Richard Lower, Marketing Order and Agreement 
Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue 
SW., STOP 0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, 
Fax: (202) 720-8938, or Email: Richard.Lower@ams.usda.gov.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Order 
No. 981, as amended (7 CFR part 981), regulating the handling of 
almonds grown in California, hereinafter referred to as the ``order.'' 
The order is effective under the Agricultural Marketing Agreement Act 
of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the 
``Act.''
    The Department of Agriculture (USDA) is issuing this rule in 
conformance with Executive Orders 12866, 13563, and 13175.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. Under the marketing order now in effect, California 
almond handlers are subject to assessments. Funds to administer the 
order are derived from such assessments. It is intended that the 
assessment rate as issued herein will be applicable to all assessable 
almonds beginning on August 1, 2016, through July 31, 2019. Beginning 
August 1, 2019, the assessment rate will return to $0.03 and will 
remain in effect indefinitely unless modified, suspended, or 
terminated.
    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. Such 
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 increases the assessment rate established for the Board 
for the 2016-17 through 2018-19 crop years from $0.03 to $0.04 per 
pound of almonds received. Of the $0.04 per pound assessment, 60 
percent (or $0.024 per pound) is available as credit-back for handlers 
who conduct their own promotional activities. The assessment rate will 
return to $0.03 for the 2019-20 and subsequent crop years, and the 
amount available for handler credit-back will return to $0.018 per 
pound (60 percent).
    The California almond marketing order provides authority for the 
Board, with the approval of USDA, to formulate an annual budget of 
expenses and collect assessments from handlers to administer the 
program. The members of the Board are growers and handlers of 
California almonds. They are familiar with the Board's needs and with 
the costs for goods and services in their local area and thus are in a 
position to formulate an appropriate budget and assessment rate. The 
assessment rate is formulated and discussed in a public meeting. 
Therefore, all directly affected persons have an opportunity to 
participate and provide input.
    For the 2005-06 and subsequent crop years, the Board recommended, 
and USDA approved, an assessment rate of $0.03 per pound that would 
continue in effect from crop year to crop year unless modified, 
suspended, or terminated by USDA upon recommendation and information 
submitted by the Board or other information available to USDA. Of the 
$0.03 per pound assessment, 60 percent ($0.018) per pound was made 
available as credit-back for handlers who conducted their own 
promotional activities.
    The Board met on April 12, 2016, and unanimously recommended 2016-
17 expenditures of $69,897,626 and an assessment rate of $0.04 per 
pound of almonds received. In comparison, last year's budgeted 
expenditures were $58,998,976. The assessment rate of $0.04 is $0.01 
higher than the rate currently in effect, and the credit-back portion 
of the assessment rate ($0.024 per pound) is $0.006 more than the 
credit-back portion currently in effect.
    The Board estimates a production increase of thirty percent, or 600 
million pounds, by the 2019-20 crop year. This increase is nearly as 
much as is consumed by the industry's largest market. Due to the size 
of the increase in forecasted production, the Board believes that 
increased market development projects and new marketing programs are 
required to successfully market the additional supply. Accordingly, the 
Board has recommended a new ``Nut of Choice'' marketing program.
    The Board also anticipates needing additional funding for the 
industry's new ``Crop of Choice'' research program, as well as 
additional research to address concerns such as changing water supply 
and quality systems; air quality and how it relates to harvesting, 
pesticide, and energy use; and bee health.
    The three-year higher assessment rate is needed to fund the 
increase in marketing and research activities. The Board anticipates 
that by the 2019-20 crop year, the increase in production assessed at 
the reinstated $0.03 per pound rate should generate sufficient revenue 
to cover the anticipated expenditures at that time. Therefore, 
beginning August 1, 2019, the assessment rate will return to $0.03 per 
pound.
    The following table compares major budget expenditures recommended 
by the Board for the 2015-16 and 2016-17 crop years:

------------------------------------------------------------------------
        Budget expense categories             2015-16         2016-17
------------------------------------------------------------------------
Operations Expenses.....................     $ 7,904,000     $ 8,404,000
Board Accelerated Innovation Management        1,500,000       1,000,000
 (AIM) Initiatives......................
Crop of Choice Initiatives..............               0       5,625,000
Reputation Management...................       1,826,350       2,000,000
Production Research.....................       1,843,331       1,843,331
Environmental Research..................       1,039,790       1,039,790
Scientific Affairs/Nutrition............       1,640,000       1,640,000
Global Market Development...............      38,583,756      38,583,756
Nut of Choice Initiatives...............               0       5,100,000
Technical & Regulatory Affairs..........       1,045,500       1,045,500
Industry Services.......................       2,436,220       2,436,220
Almond Quality & Food Safety............         790,800         790,800
Corporate Technology....................         389,229         389,229
------------------------------------------------------------------------


[[Page 92561]]

    The assessment rate recommended by the Board was derived by 
considering the anticipated 30-percent production increase in the next 
three years, anticipated expenditures plus additional program expenses, 
current production level, and maintaining adequate operating reserve 
funds. In its recommendation, the Board utilized an estimate of 
1,835,290,000 pounds of assessable almonds for the 2016-17 crop year. 
If realized, this should provide estimated assessment revenue of 
$62,262,213, which reflects credit-back reimbursements and organic 
exemptions. In addition, it is anticipated that $20,907,722 will be 
provided by other sources, including interest income, Market Access 
Program (MAP) funds, and operating reserve funds. When combined, 
revenue from these sources should be adequate to cover budgeted 
expenses.
    Section 981.81 of the order authorizes the Board to maintain 
operating reserve funds consisting of an administrative-research 
portion and a marketing promotion portion, and states that the amount 
allocated to each portion shall not exceed six months' budgeted 
expenses for that activity area. Funds in the reserve at the end of the 
2016-17 crop year are estimated to be approximately $16,581,222, well 
within the amount permitted by the order.
    A proposed rule concerning this action was published in the Federal 
Register on July 18, 2016 (81 FR 46616). A 15-day comment period ending 
August 2, 2016, was provided for interested persons to respond to the 
proposal. One commenter raised concern that notification of the 
proposal was not promptly circulated within industry and asked for an 
extension of the comment period. After reviewing the request, USDA 
published a notice reopening the comment period for an additional 30 
days in the Federal Register on September 12, 2016 (81 FR 62668). All 
comments will be addressed further in this document.
    The assessment rate established in this rule will continue in 
effect until July 31, 2019. Beginning August 1, 2019, the assessment 
rate will return to $0.03 and will continue in effect indefinitely 
unless modified, suspended, or terminated by USDA upon recommendation 
and information submitted by the Board or other available information.
    Although this assessment rate will be in effect for a specified 
period, the Board will continue to meet prior to or during each crop 
year to recommend a budget of expenses and consider recommendations for 
modification of the assessment rate. The dates and times of Board 
meetings are available from the Board or USDA. Board meetings are open 
to the public, and interested persons may express their views at these 
meetings. USDA would evaluate Board recommendations and other available 
information to determine whether modification of the assessment rate is 
needed. Further rulemaking would be undertaken as necessary. The 
Board's 2016-17 budget and those for subsequent crop years would be 
reviewed and, as appropriate, approved by USDA.

Final Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) 
has considered the economic impact of this rule 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 
businesses 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.
    There are approximately 6,800 almond growers in the production area 
and approximately 100 handlers subject to regulation under the 
marketing order. Small agricultural producers are defined by the Small 
Business Administration (SBA) as those having annual receipts of less 
than $750,000, and small agricultural service firms are defined as 
those whose annual receipts are less than $7,500,000 (13 CFR 121.201).
    The National Agricultural Statistics Service (NASS) reported in its 
2012 Agricultural Census that there were 6,841 almond farms in the 
production area (California), of which 6,204 had bearing acres. The 
following computation provides an estimate of the proportion of 
producers (farms) and agricultural service firms (handlers) that would 
be considered small under the SBA definitions.
    The NASS Census data indicates that out of the 6,204 California 
farms with bearing acres of almonds, 4,471 (72 percent) have fewer than 
100-bearing acres.
    In its most recently reported crop year (2015), NASS reported an 
average yield of 2,130 pounds per acre and a season average grower 
price of $2.84 per pound. A 100-acre farm with an average yield of 
2,130 pounds per acre would produce about 213,000 pounds of almonds. At 
$2.84 per pound, that farm's production would be valued at $604,920.
    Because the Census of Agriculture indicates that the majority of 
California's almond farms are smaller than 100 acres, it could be 
concluded that the majority of growers had annual receipts from the 
sale of almonds in 2015 of less than $604,920, well below the SBA 
threshold of $750,000. Thus, over 70 percent of California's almond 
growers would be considered small growers according to SBA's 
definition.
    According to information supplied by the Board, approximately 30 
percent of California's almond handlers shipped almonds valued under 
$7,500,000 during the 2014-15 crop year and would therefore be 
considered small handlers according to the SBA definition.
    This rule increases the assessment rate collected from handlers for 
the 2016-17 through the 2018-19 crop years from $0.03 to $0.04 per 
pound of almonds received. Of the $0.04 per pound assessment, 60 
percent (or $0.024 per pound) is available as credit-back for handlers 
who conduct their own promotional activities, consistent with Sec.  
981.441 of the order's regulations and subject to Board approval. The 
Board unanimously recommended 2016-17 expenditures of $69,897,626 and 
an assessment rate of $0.04 per pound of almonds received. The 
assessment rate of $0.04 is $0.01 higher than the 2015-16 rate, and the 
credit-back portion of $0.024 per pound is $0.006 higher than the 
current credit-back portion of $0.018. The quantity of assessable 
almonds for the 2016-17 crop year is estimated at 1,835,290,000 pounds. 
This should provide estimated assessment revenue of $62,262,213, which 
reflects credit-back reimbursements and organic exemptions. In 
addition, it is anticipated that $20,907,722 will be provided by other 
sources, including interest income, MAP funds, and operating reserve 
funds. When combined, revenue from these sources should be adequate to 
cover budgeted expenses.
    The major expenditures recommended by the Board for the 2016-17 
crop year include $8,404,000 for Operations Expenses, $1,000,000 for 
Board AIM Initiatives, $5,625,000 for Crop of Choice Initiatives, 
$2,000,000 for Reputation Management, $1,843,331 for Production 
Research, $1,039,790 for Environmental Research, $1,640,000 for 
Scientific Affairs/Nutrition, $38,583,756 for Global Market 
Development, $5,100,000 for Nut of Choice Initiatives, $1,045,500 for 
Technical & Regulatory Affairs, $2,436,220 for Industry

[[Page 92562]]

Services, $790,800 for Almond Quality & Food Safety, and $389,229 for 
Corporate Technology.
    Budgeted expenses for these items in 2015-16 were $7,904,000 for 
Operations Expenses, $1,500,000 for Board AIM Initiatives, $0 for Crop 
of Choice Initiatives, $1,826,350 for Reputation Management, $1,843,331 
for Production Research, $1,039,790 for Environmental Research, 
$1,640,000 for Scientific Affairs/Nutrition, $38,583,756 for Global 
Market Development, $0 for Nut of Choice Initiatives, $1,045,500 for 
Technical & Regulatory Affairs, $2,436,220 for Industry Services, 
$790,800 for Almond Quality & Food Safety, and $389,229 for Corporate 
Technology.
    The Board estimates a production increase of 30 percent, or 600 
million pounds, by the 2019-20 crop year. This increase is nearly as 
large as the current consumption of the industry's largest market. 
Increased market development investment as well as new marketing 
programs will be required to successfully market the additional supply. 
Additional investment in research is also needed to address concerns 
such as changing water supply and quality systems; air quality and how 
it relates to harvesting, pesticide, and energy use; and bee health. 
Accordingly, the three-year higher assessment rate is needed to fund 
the Board's new Nut of Choice marketing program and Crop of Choice 
research activities. The Board anticipates that by the 2019-20 crop 
year, the increased production assessed at the reinstated $0.03 per 
pound rate should generate sufficient revenue to cover the anticipated 
expenditures at that time.
    Prior to arriving at this budget and assessment rate, the Board 
held a strategic planning session in February 2016. The Board also 
considered recommendations made from its various committees, including 
the Global Market Development Committee, Production Research Committee, 
and Environmental Committee. Alternative expenditure levels were 
discussed, based upon the relative value of various activities to the 
almond industry. Ultimately, the Board unanimously determined that 
2016-17 expenditures of $69,897,626 were appropriate and that the 
recommended assessment rate, plus income from other sources and 
operation reverse funds, would generate sufficient revenue to meet its 
expenses.
    A review of historical information and preliminary information 
pertaining to the upcoming crop year indicates that the grower price 
for the 2016-17 season could range between $4.00 and $2.84 per pound of 
almonds. Therefore, the estimated assessment revenue for the 2016-17 
crop year (disregarding any amounts credited pursuant to Sec.  981.41 
and Sec.  981.441) as a percentage of total grower revenue could range 
between 1.00 and 1.41 percent, respectively.
    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 growers. However, these costs 
would be offset by the benefits derived by the operation of the 
marketing order. In addition, the Board's meeting was widely publicized 
throughout the California almond industry, and all interested persons 
were invited to attend the meeting and participate in Board 
deliberations on all issues. Like all Board meetings, the April 12, 
2016, meeting was a public meeting, and all entities, both large and 
small, were able to express views on this issue.
    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the order's information collection requirements have been 
previously approved by the Office of Management and Budget (OMB) and 
assigned OMB No. 0581-0178 (Vegetable and Specialty Crops.) No changes 
in those requirements as a result of this action are necessary. Should 
any changes become necessary, they would be submitted to OMB for 
approval.
    This rule imposes no additional reporting or recordkeeping 
requirements on either small or large California almond 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.
    As previously noted, a proposed rule concerning this action was 
published providing a 15-day comment period for interested persons to 
respond to the proposal. In addition, on September 12, 2016, the 
comment period was reopened for an additional 30 days. Copies of the 
proposed rule were provided to all almond handlers. Finally, the 
proposal was made available through the internet by USDA and the Office 
of the Federal Register. A total of forty-six comments were received. 
Twenty-eight supported and eighteen opposed the proposal. Of the 
eighteen in opposition, three were grower/handlers, eleven were 
growers, two individuals were from outside of the production area, and 
two individuals did not identify themselves.
    Of those who supported the proposal, twenty-three were growers.
    The majority of the commenters in support of the proposal stated 
that increasing the assessment rate now was necessary to fund market 
development programs and new marketing and promotion activities to 
create demand prior to the onset of the increased production. 
Commenters noted that the industry is aware of the increasing almond 
acreage and the need to invest prior to the larger crop materializing. 
The commenters also noted that the three-year ``sunset'' feature will 
ensure that once the additional 30 percent increase in production is 
realized, the assessment rate will return to the current $0.03 rate. 
One commenter noted the need to develop demand for the increased 
supplies to ensure the carry-over inventory is kept near zero each 
year, which will help stabilize prices at the grower level and negate 
the effect of the increased assessment. Another commenter noted that 
the recent volatility in almond prices illustrates how critically 
important it is to make investments now. Several commenters stated the 
Board has had proven success in the areas of marketing and promotion; 
nutrition, environmental, and production research; and grower outreach; 
and they are pleased overall with the work of the Board. Commenters 
also expressed the need for continued investment in research, 
specifically in areas that will provide resources for growers to 
continue to remain profitable in the face of continued challenges. One 
commenter stated that programs such as the almond order are a good 
example of a public/private partnership which has worked for the 
consumer, farmer, and food safety while expanding markets around the 
world.
    The majority of commenters in opposition of the proposal stated the 
increase of production over the next several years should generate 
adequate income to fund Board programs. In the development of the 
budget, the Board contemplated the production forecast of a 30 percent 
increase in the next three years. The Board anticipates the 2016-17 
crop year production at 1.835 billion pounds, 2017-18 crop year 
production at 2.184 billion pounds, 2018-19 crop year production at 
2.277 billion pounds, and 2019-20 crop year production at 2.354 billion 
pounds. The Board discussed the need to build demand before this 
increased production is realized. The Board strongly believes

[[Page 92563]]

not doing so in advance will negatively impact prices. The Board is 
concerned that without market expansion and new market development 
programs, the anticipated 600 million pounds' increase in production 
will lead to oversupply. This year, after Committee input and Board 
strategic planning, the Board decided an increase in the assessment 
rate was necessary. The increase in revenue will be used to fund new 
marketing programs and increase the budgets of existing market research 
and development projects. At the $0.03 assessment rate, the Board 
determined funding generated would not be adequate to cover anticipated 
expenses necessary to establish outlets for the increased production. 
In its recommendation to have the assessment rate revert back to $0.03 
after three years, the Board considered current program needs at the 
current production level against the anticipated production in the next 
three years, while recognizing that the increased production will 
generate adequate income once realized.
    In its discussion, the Board also considered the time and resources 
needed to develop new marketing and promotion programs. The Global 
Market Demand Committee developed a comprehensive marketing plan, which 
includes the Nut of Choice program. The plan encompasses expanding the 
Germany and Japan markets by increasing funding in order to increase 
impressions; accelerating momentum by increasing budgets and 
impressions for the U.S./Canada, France, United Kingdom, India, and 
South Korea markets; maintaining budget levels in the China market and 
Global Initiative; and allocating spending for one to two additional 
exploratory markets (i.e., Mexico, Indonesia, and Saudi Arabia 
regions). Prior to the Committee recommending the marketing plan, it 
reviewed key factors for each market, including market attractiveness, 
total market demand forecast, market outlook, opportunities and 
challenges, historical spending data, and low-end and high-end demand 
potential. The Board also determined that with the current environment 
of the agriculture industry, investing in new and innovative techniques 
would be key to the viability of the almond industry moving forward. 
Key areas of focus are water management, food safety, production, pest 
management, pollination, biomass, and soil health.
    Additionally, several commenters stated that for growers, with the 
decline in prices and the rising production costs, it is difficult to 
remain profitable. The Board has had considerable strategic discussions 
about the continued challenges facing growers, including rising 
production costs, water availability, and regulatory impacts, and ways 
to address the issues. As a result, a substantial portion of the 
revenue generated by the increased assessment rate is designated for 
research. More specifically, the newly established nine capabilities of 
the Crop of Choice Program will fund research at a level of $5.625 
million. Areas of focus include Irrigation and Nutrients; Orchard, 
Tree, Rootstock; Harvesting; Value-Added Orchard Utilization; Soil 
Health Management; Pest Management; Food Safety; Pollination; Energy; 
and the Sustainability Program update and outreach. This investment is 
intended to develop new and innovative techniques to help the almond 
industry continue to remain profitable. In addition, the increased 
investment in market development and new marketing programs is intended 
to create demand to absorb the anticipated increase in production. In 
turn, these activities should stabilize prices.
    Three commenters raised concern that only 23 percent of the 
additional funding generated is allocated to direct marketing. The 
commenters further stated that if at least 80 percent of the additional 
funding was not allocated to direct marketing and promotion activities, 
they were opposed to the increase. The Board utilizes a comprehensive 
strategy that includes a balanced approach for research and marketing 
and promotion activities to sustain and develop market outlets. The 
Board-funded research plays an integral part in supporting the almond 
industry, which continues to face new challenges as the landscape of 
agriculture changes. The Board triennially holds strategic planning 
retreats to develop tactics that directly address the needs of the 
almond industry as well as ever-changing market demands. The Board 
recommends a budget each year utilizing recommendations made by each 
Committee. Committees are comprised of industry members and meet 
regularly to deliberate and prioritize programs. Marketing and 
promotion has been set as a priority, and recommendations have been 
made to increase spending. Along with the marketing activities, the 
Board has a robust research program. Nutrition, production, 
environmental, and food safety research has been utilized by the 
marketing programs to better position almonds in the marketplace. 
Specifically, in the past several years with the drought in California, 
the almond industry came under media fire for its water use. Through 
the research programs funded by the Board, the marketing team was able 
to provide data regarding almonds and water use. This research was 
pivotal in transitioning the conversation from negative to neutral or 
positive. Additionally, almonds have a qualified heart-healthy claim, 
which can be directly linked to the research funded as part of the 
nutrition research program. The almond industry's ability to utilize 
the heart-health claim is a vital part of the marketing program. 
Further, the Board is celebrating the tenth year of its California 
Almond Sustainability Program. As consumer demand continues to shift 
towards products that are sustainable, the Sustainability Program has 
been a great resource to the marketing program to provide data 
regarding the sustainability of the almond industry. The research and 
marketing and promotion activities work interdependently, ensuring the 
viability of the industry.
    Two commenters stated an assessment rate increase should be 
approved by growers prior to implementation. Two of the commenters 
questioned the outreach to the growing community, stating growers 
should have a larger role in the discussion. One of the commenters 
requested a grower referendum prior to implementation of an assessment 
rate change. All Board and Committee meetings are open to the public, 
allowing directly affected persons and other interested parties an 
opportunity to participate and provide input. On April 14, 2016, the 
Board sent a memo to almond handlers and growers as part of its mailer, 
providing notice of the Board's unanimous recommendation to increase 
the assessment rate. The Board also included an article regarding the 
recommendation in the April California Almonds Outlook e-newsletter. In 
addition, two comment periods were provided, which gave interested 
parties the opportunity to comment on the recommended proposal. The 
Board included notice of the comment periods in its industry e-
newsletters, on its Web site (specifically, on the grower site), on its 
social media platforms, and announced this information at its Committee 
and Board meetings. Notices of the comment periods were also made 
available on the USDA Web site. In response to the request to hold a 
grower referendum, under the California almond marketing order, 
referenda are conducted every five years to ascertain whether 
continuation of the order is favored by growers. The last continuance 
referendum was held in 2014, and results indicated continued

[[Page 92564]]

grower support for the order. Furthermore, annual budget and assessment 
rate recommendations are among the many duties the Board, which is 
comprised of grower and handler members, is required to perform as 
authorized under the order.
    One commenter raised concern that the additional funding will be 
used to increase the size and salaries of the organization, which will 
lead to the continuation of increasing the assessment rate year after 
year. Also, the commenter expressed concerns about transparency and 
availability of financial information. The majority of the funds 
generated by the increased assessment are allotted to research programs 
and marketing and promotion activities. For the past several years, 
operating expenses have fluctuated between 12 percent and 15 percent of 
the total budget. In the recommended budget for the 2016-17 crop year, 
operating expenses are approximately 12 percent of the total budget. In 
addition, in its unanimous recommendation, the Board stipulated that 
the increased assessment rate continue only through the 2018-19 crop 
year. The assessment rate will revert to the current $0.03 rate 
beginning August 1, 2019. All Board and Committee meetings are open to 
the public. On a quarterly basis, the Board reviews and approves 
financial statements at its public meetings. Those documents are made 
available to the public, and interested persons are encouraged to 
participate in all meetings.
    One commenter expressed concern about the order's credit-back 
program and that it is not advantageous to non-branded handlers. While 
credit-back is associated with the assessment rate, the Board did not 
discuss the program as part of this proposal. This rule does not modify 
the percentage rate available for handler credit-back.
    One commenter raised concern that the Nut of Choice and Crop of 
Choice programs appear to be an effort to improve the image of almonds 
at the expense of other California commodities. USDA has a strict 
policy against any marketing order boards, committees, or councils 
disparaging other commodities. USDA reviews all marketing and 
communication materials prior to publication to ensure that policy is 
being followed.
    Accordingly, no changes will be made to the rule as proposed, based 
on the comments 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/rules-regulations/moa/small-businesses. Any questions 
about the compliance guide should be sent to Richard Lower 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 this rule, as 
hereinafter set forth, will tend to effectuate the declared policy of 
the Act.
    It is further found that good cause exists for not postponing the 
effective date of this rule until 30 days after publication in the 
Federal Register (5 U.S.C. 553) because the 2016-17 crop year began 
August 1, 2016, and the marketing order requires that the rate of 
assessment for each crop year apply to all assessable almonds handled 
during such crop year. Further, handlers are aware of this rule, which 
was recommended at a public meeting. Also, a 15-day comment period was 
provided for in the proposed rule, followed by an additional 30-day 
comment period.

List of Subjects in 7 CFR Part 981

    Almonds, Marketing agreements, Nuts, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 7 CFR part 981 is 
amended as follows:

PART 981--ALMONDS GROWN IN CALIFORNIA

0
1. The authority citation for 7 CFR part 981 continues to read as 
follows:

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


0
2. Section 981.343 is revised to read as follows:


Sec.  981.343  Assessment rate.

    For the period August 1, 2016, through July 31, 2019, the 
assessment rate shall be $0.04 per pound for California almonds. Of the 
$0.04 assessment rate, 60 percent per assessable pound is available for 
handler credit-back. On and after August 1, 2019, an assessment rate of 
$0.03 per pound is established for California almonds. Of the $0.03 
assessment rate, 60 percent per assessable pound is available for 
handler credit-back.

    Dated: November 12, 2016.
Elanor Starmer,
Administrator, Agricultural Marketing Service.
[FR Doc. 2016-30264 Filed 12-19-16; 8:45 am]
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