The United States Department of Agriculture's Agricultural Marketing Service AMS has announced a proposed rule to amend Marketing Order No. 981, which regulates the handling of almonds grown in California. This significant development, published in the Federal Register on October 8, 2026, seeks to empower the Almond Board of California Board with the authority to borrow funds through a seasonal line of credit from commercial lending institutions. The objective is to ensure the continuous operation of Board functions and programs by bridging cash flow gaps that occur due to the seasonal nature of assessment revenue collection versus year-round expenditures.
The Need for Borrowing Authority
The Almond Board of California, comprised of growers and handlers, administers Marketing Order No. 981. The Board funds its operations, including research activities and marketing programs, through assessments collected from almond handlers. A persistent challenge has been the timing of these revenues. While many Board-approved programs commence early in the marketing year, necessitating prompt payment for services, a substantial portion of assessment revenue is not collected until later quarters. For instance, only about 18 percent of assessment revenue is typically paid when the first invoices are issued in October. The Board's existing reserve fund has proven insufficient to cover these early expenses, leading to cash flow constraints.
This proposed amendment, specifically establishing Section 981.81 f of the Order, would allow the Board to access short-term funds. Any borrowed funds would be required to be repaid within a maximum period of 12 months, aligning with the seasonal nature of the cash flow needs.
Historical Context and Board Rationale
This is not the first instance the borrowing authority has been considered. A similar proposal was presented to California almond growers in April 2023, culminating in a referendum held between October 30 and November 20, 2023. Although the proposal garnered support from 63.59 percent of voting growers, representing 56.15 percent of the production volume, it failed to meet the Act's two-thirds threshold required for enactment. Following this outcome, the Board conducted extensive reviews in 2023 and 2024. It concluded that the previous failure stemmed from grower confusion regarding the regulatory language on the ballot and a lack of coordinated communication with stakeholders. Despite the setback, the Board continues to assert that borrowing authority is crucial for efficient management of approved expenditures and maintaining consistent cash flow.
Stakeholder Engagement and AMS Considerations
The current proposed rulemaking follows a public comment period, during which AMS received four comments. Two comments supported the proposal, with one emphasizing the need for borrowing authority while also suggesting a review of alternative solutions, such as adjusting the timing of assessment collection. The two opposing comments raised concerns about the potential impacts of borrowing costs, the need for greater oversight of Board spending, and the lack of definitive terms, repayment regulations, or borrowing caps.
AMS has acknowledged these comments. The agency noted that during its discussions, the Board extensively reviewed the proposal and identified parameters such as short-term loan durations and maximum borrowing limits not to exceed approved crop year budget ceilings. These parameters, the Board believes, would promote fiscal responsibility and mitigate debt accumulation. AMS further highlighted that short-term borrowing against a seasonal line of credit is a common and authorized practice in other Federal marketing orders used to manage cash flow. Based on the information and comments received, AMS determined that no substantive changes would be made to the proposed amendment, aside from a minor grammatical correction.
Financial Oversight and Transparency
To address concerns about fiscal responsibility and oversight, the Almond Board has articulated a strong commitment to implementing robust monitoring and oversight policies. These revised internal control policies would include ongoing tracking by the finance department of interest rates and debt levels. Parameters and control mechanisms governing loan timing, limits, and terms would be publicly discussed and communicated to the industry at annual Board meetings and through other outreach efforts. Key elements of these policies would involve allowing the lending institution to determine the maximum line of credit available, ensuring the amount of credit is proportional to the Board's net position, and structuring line of credit advances as short-term, with preferred lengths and timelines decided by the industry-led finance and audit committee.
Regulatory Framework and Next Steps
This action is pursued under the Agricultural Marketing Agreement Act of 1937, as amended. It is exempt from review by the Office of Management and Budget OMB under Executive Order 12866, and from the requirements of Executive Order 14192, "Unleashing Prosperity Through Deregulation." AMS has also determined that the proposed rule is unlikely to have substantial direct effects on Indian Tribal governments, as per Executive Order 13175, and has reviewed it under Executive Order 12988 concerning Civil Justice Reform.
A producer referendum is scheduled to be conducted from November 2 through November 20, 2026. The outcome of this referendum will be crucial. If producers favor the amendment, AMS will then issue a final rule to formally implement this change, granting the California Almond Board the sought-after borrowing authority.
