The Board of Directors for the Almond Board of California is proposing a change to the federal marketing order for California almonds. If approved by growers through the referendum vote, the change would allow ABC to use a seasonal line of credit, if needed, to help manage a timing gap in its cash flow.
ABC programs begin or continue at the start of each crop year in August, prior to receipt of the first handler assessments in December which is only 25% of the obligation. A seasonal line of credit would provide temporary cash flow during that timing gap where work and expenses are incurred, but revenue has not yet been collected.
The line of credit would make short-term funding available, if necessary, during that gap. Once assessment revenue is received, the borrowed money will be repaid.
What the Line of Credit Would Do
The proposed authority would:
- Provide short-term funding, if needed, when approved expenses come due before assessment revenue is received.
- Help ABC continue approved programs without interruptions.
- Require borrowed funds to be repaid within no more than 12 months.
What the Line of Credit Would Not Do
The proposed authority would NOT:
- Won’t allow ABC to carry the same loan for longer than 12 months.
- Will NOT increase ABC’s approved crop-year budget or the assessment
- Won’t give ABC unlimited borrowing authority.
The proposal specifically states that borrowed funds would have to be repaid within a maximum of 12 months. The proposal also describes the financing as a seasonal line of credit intended to address short-term cash-flow flexibility, if necessary. ABC’s industry-led Finance and Audit Committee may also employ additional safeguards such as considerations for interest rates, debt levels, and timing of loans, and making the amount of credit needed proportional to the net position.
USDA published the proposed amendment in the Federal Register on October 6. Voting for the referendum change will take place November 2 through November 20. California almond growers are encouraged to keep an eye out for USDA-sent ballots in their mailbox.
