AGENDA - Growers California Avocado Commission by xumiaomaio

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									                                          AGENDA
                                    REGULAR MEETING
                                   BOARD OF DIRECTORS
                             CALIFORNIA AVOCADO COMMISSION

                                            Board Room
                                  California Avocado Commission
                                        12 Mauchly, Suite L
                                          Irvine, CA 92618

                                     Thursday, January 20, 2011
                                             8:30 a.m.
______________________________________________________________________________________

8:30 a.m.      1. CALL TO ORDER
               A. Roll Call / Establish
               B. Introductions

8:35 a.m.      2. CONSENT CALENDAR

Consent Calendar items are expected to be routine and non-controversial, to be acted upon by the Board of
Directors at one time without discussion. If any Board member, staff member, or interested person requests
that an item be removed from the Consent Calendar, it shall be removed so that it may be acted upon
separately.
                 A. Consider Approval of Board of Director’s Meeting Minutes of November 18, 2010
                 B. Consider Approval of Committee Appointments
                 C. Consider Approval of CAC as Provider of Avocado Inspection Program Administrative
                     Services for the CDFA for the period from July 2011 through June 2012

8:40 a.m.      3.   TREASURER’S REPORT
               A.   Consider Acceptance of 2009-10 Audited Financial Statements
               B.   Consider Approval for Establishing New Bank Account
               C.   Finance Committee 2010-11 Activity Calendar and Operational Plans
               D.   2010-11 Financial and Crop Update

9:10 a.m.      4.   CHAIRMAN’S REPORT
               A.   Consider Approval of Research Strategic Initiatives
               B.   Consider Approval of International Alternate Bearing Project MOU
               C.   Participation at the World Avocado Congress, September 2011
               D.   Consider Assessment Penalty Waiver Requests (Rincon Farms and South Coast
                    Packing)

10:10 a.m.     5.   PRESIDENT’S REPORT
               A.   2011 Referendum and Redistricting Update
               B.   Report on Exploration of Export Market Opportunities
               C.   Status Report on GAP Project

10:40 a.m.     6. MARKETING REPORT
               A. Consumer Advertising Update / 2010-11 Creative & Media Presentation
               B. Report of November 18, 2010 Marketing Advisory Committee Meeting

11:40 a.m.     7. HASS AVOCADO BOARD REPORT
11:45 a.m.      8. CLOSED SESSION
                A. Discussion of possible litigation in connection with the CDFA Audit #08-082 - Pursuant to
                   Section 11126(e)(1) of the California Government Code
                B. Return to Open Session and Report of Action Taken, if any, in Closed Session

12:15 p.m.      9. OPPORTUNITY FOR PUBLIC COMMENT

Any person may address the Board at this time on any subject within the jurisdiction of the California Avocado
Commission.

12:30 p.m.      ADJOURN MEETING (LUNCH PROVIDED)

The times listed for each agenda item are estimated and subject to change. It is possible that some of the
agenda items may not be able to be discussed prior to adjournment. Consequently, those items will be
rescheduled to appear on a subsequent agenda. All meetings of the California Avocado Commission are
open to the public and subject to the Bagley-Keene Open Meeting Act.

All agenda items are subject to discussion and possible action. For more information, or to make a request
regarding a disability-related modification or accommodation for the meeting, please contact April Aymami at
1-800-344-4333, California Avocado Commission, 12 Mauchly, Suite L, Irvine, CA 92618, or via email at
aaymami@avocado.org. Requests for disability-related modification or accommodation for the meeting
should be made at least 48 hours prior to the meeting time. For individuals with sensory disabilities, this
document is available in Braille, large print, audiocassette or computer disk. This meeting schedule notice
and agenda is available on the internet at Http://www.californiaavocadogrowers.com/upcoming-meetings-
events/ and http://it.cdfa.ca.gov/igov/postings/detail.aspx?type=Notices.

If you have questions on the above agenda, please contact April Aymami at aaymami@avocado.org or 1-800-
344-4333.

SUMMARY DEFINITION OF CONFLICT OF INTEREST
It is each member’s and alternate’s responsibility to determine whether they have a conflict of interest and
whether they should excuse themselves from a particular discussion or vote during a meeting. To assist you
in this evaluation, the following Summary Definition of Conflict of Interest may be helpful.

A Commission member or employee has a conflict of interest in a decision of the Commission if it is
reasonably foreseeable that the decision will have a material effect, financial or otherwise, on the member or
employee or a member of his or her immediate family that is distinguishable from its effect on all persons
subject to the Commission’s jurisdiction.

No Commission member or employee shall make, or participate in making, any decision in which he or she
knows or should know he or she has a conflict of interest.

No Commission member or employee shall, in any way, use his or her position to influence any decision in
which he or she knows or should know he or she has a conflict of interest.
              BOARD OF DIRECTORS MEETING, January 20, 2011

                                                                     BOARD ACTION

ITEM 2.A:     CONSIDER APPROVAL OF BOARD OF DIRECTOR’S MEETING MINUTES
              OF NOVEMBER 18, 2010

SUMMARY:

       The minutes of the Board of Directors’ regular meeting of November 18, 2010 are
attached for the Board’s review and approval.

FISCAL ANALYSIS:

   •   Not applicable.

BOARD OPTIONS:

   •   Adopt minutes as presented
   •   Amend minutes
   •   Take no action

STAFF RECOMMENDATION:

Approve minutes as presented.

       Proposed motion:

       The California Avocado Commission Board of Directors approves the November 18,
       2010 Board Meeting minutes as presented.

EXHIBITS / ATTACHMENTS:

   •   Minutes of the Board of Directors’ Regular Meeting of November 18, 2010




                                                                                   Item 2.A-1
                     CALIFORNIA AVOCADO COMMISSION
                         BOARD MEETING MINUTES
                            November 18, 2010
A meeting of the California Avocado Commission (CAC) Board was held on Thursday,
November 18, 2010 in the CAC board room in Irvine, California, with the following people
present:

MEMBERS PRESENT                ALTERNATES PRESENT                 GUESTS PRESENT
Scott Bauwens                  Ron Araiza                         Betty Bohrk
Gene Carbone                   Keith Reeder                       Wayne Brydon
Reuben Hofshi                  Joanne Robles                      Will Carleton
Ben Holtz                      Bob Schaar                         Chris Henry
Ohannes Karaoghlanian          Rick Shade                         Doug Koegeboehn
John Lamb (Alt. Pecht)         Donna Singmaster                   James McCormac
Bob Lucy                       Jerome Stehly                      Steven Muro
Ed McFadden                    Nick Stehly, Jr.                   Don Reeder
Bradley Miles                  San Vaccaro                        Catherine Sosa
Doug O’Hara                    Bob Witt                           Ross Wileman
 Andria Pontello,
  Public Member                ALTERNATES ABSENT
Don Reeder                     Ernie Arana
Steve Taft                     Mark Bottiani
Shane Tucker                   Todd Elder
Charley Wolk
Gary Woodworth                 OFFICIALLY PRESENT
                               Dennis Manderfield, CDFA
MEMBERS ABSENT                 Jose Luis Obregón, HAB
Jim Donovan,                   Maureen Pello, USDA/AMS
  ex-officio HAB               Ken Roberts, Cooper Roberts
Tom Pecht                       Research
                               Mark Weinfeld, DGWB

CAC STAFF PRESENT
April Aymami
Tom Bellamore
Zachary Benedict
Dave Cruz
Jan DeLyser
Jonathan Dixon
Angie Hanson
Dave Howald
Stacia Kierulff
Aria Lukman




                                                                                    Item 2.A-2
ITEM #1 CALL TO ORDER
Announcement of Election Results and Introduction of New Members and Alternates –
Item 1.A.
Information Item
Dennis Manderfield, representing the California Department of Food and Agriculture
(CDFA) Marketing Branch, read the official results of the 2010-11 California Avocado
Commission (CAC) Board of Directors election for two-year terms.

Producer             Member                         Alternate
District 1           Shane Tucker                  Jerome Stehly
District 2           Ben Holtz                     Bob Schaar
District 3           Ohannes Karaoghlanian         Joanne Robles
District 4           Ed McFadden                   Keith Reeder
District 5           Bradley Miles                 Mark Bottiani

Handler Member                                     Handler Alternate
Gene Carbone (Calavo)                              Todd Elder (Index Fresh)
Scott Bauwens (West Pak Avocado)                   Ron Araiza (Mission Produce)

The complete CAC 2010-11 Board of Directors roster is identified as EXHIBIT B.

Roll Call – Item 1.B.
Mr. Manderfield called the first meeting of the 2010-11 CAC Board of Directors to order at 9:35
a.m. and announced a quorum was present. He presided over the meeting until the chairperson
was elected.

ITEM #2 ELECTION OF OFFICERS
Instructions on How Nominations and Voting for Board Officers will be Conducted –
Item 2-A.
Information Item
Mr. Manderfield provided instruction on how nominations and voting for officers would
be conducted, explaining that only grower members are eligible for officer positions.
Officers can serve one-year terms or until new officers are elected, but they cannot
serve more than three consecutive terms in any one office.

Nominations and Election of Chairperson – Item 2-B.
Action Item
Mr. Manderfield opened nominations for Chairperson and Mr. McFadden nominated Mr.
Wolk; Mr. Woodworth nominated Mr. Karaoghlanian.

It was moved by Mr. Miles, seconded by Mr. Holtz, to close nominations. Both nominees
gave oral statements to the Board.

A roll call open vote was polled that resulted in a tie, with seven votes for each nominee
and one abstention (Carbone).

A second roll call open vote was polled with the following results:
Wolk – 8 votes; Karaoghlanian – 7 votes.

                                                                                    Item 2.A-3
Chairperson Roll Call Vote
Wolk: Tucker, Wolk, McFadden, Lamb (Alt. Pecht), Miles, O’Hara, Bauwens, Carbone
Karaoghlanian: Taft, Holtz, Woodworth, Karaoghlanian, Lucy, Hofshi, Pontello

Mr. Manderfield congratulated Mr. Wolk. Mr. Wolk thanked the Board and said he was
honored to serve as its Chairperson. He took the gavel and continued with the election
of officers.

ITEM #3 CHAIRPERSON TAKES GAVEL AND PRESIDES
Nominations and Election of Vice-Chairperson, Secretary, and Treasurer – Item 3.A.
Action Items

Vice-Chairperson
Chairman Wolk entertained a motion to open nominations for Vice- Chairperson.
Messrs. O’Hara and Karaoghlanian were nominated and a motion by Mr. McFadden,
seconded by Mr. Holtz was unanimously approved to close nominations. A written vote
was tabulated and the final count read by Chairman Wolk:
Ohannes Karaoghlanian – 8 votes; Doug O’Hara – 6 votes.

Vice-Chairperson Written Vote
Karaoghlanian: Woodworth, Taft, Holtz, Karaoghlanian, Pontello, Lucy, Hofshi,
               and Carbone
O’Hara: Tucker, Bauwens, McFadden, O’Hara, Lamb (Alt. Pecht), Miles

Mr. Karaoghlanian was declared the new Vice-Chairman.

Secretary
Chairman Wolk entertained a motion to open nominations for Secretary of the Board.
Ed McFadden was nominated. Hearing no other nominations, a motion was made by
Mr. Holtz and seconded by Mr. Carbone to close nominations and cast a unanimous
ballot for Mr. McFadden as Secretary.

Treasurer
Chairman Wolk entertained a motion to open nominations for Treasurer. Mr. Holtz and
Mr. Miles were nominated. A motion to close nominations was made by Mr. Tucker,
seconded by Mr. Lamb and unanimously approved. A written vote was tabulated and
President Bellamore presented the final count:
Ben Holtz – 10 votes; Bradley Miles – 4 votes.

Treasurer Written Vote
Holtz: Bauwens, Karaoghlanian, Hofshi, Pontello, Woodworth, Carbone, Holtz, Taft,
       Lucy, McFadden
Miles: Tucker, O’Hara, Lamb (Alt. Pecht), Miles

Mr. Holtz was declared the new Treasurer.

Chairperson’s Opening Remarks – Item 3.B.
Chairman Wolk congratulated the new officers and added that he looked forward to
working with them on the challenges facing the Board this year.

                                                                             Item 2.A-4
ITEM #4 CONSENT CALENDAR – ITEMS 4.A,B.
Action Item
Questions or comments regarding the Consent Calendar items were requested by Chairman
Wolk. Hearing none, the following Motion was offered:

MOTION 10-11-18-1:
      The California Avocado Commission Board of Directors approves the Consent
      Calendar, Item 4, in its entirety:
      Item 4.A. Board of Directors’ Meeting Minutes of October 28, 2010;
      Item 4.B. Proposed 2010-11 Meeting Schedule
     (Carbone/McFadden) MSC Unanimous

Consent Calendar items are included in the November Board Packet (EXHIBIT A) as Item 4.A,
2-12 and Item 4.B-1-2.

ITEM #5 FINANCIAL UPDATE
2009-10 Financial Highlights – Item 5.A.
Information Item
Aria Lukman, Finance and Accounting Manager, reported that through September 2010
496 million pounds had been harvested in California; 99% were Hass and Lamb Hass. The
average price was 74.5 cents per pound; 74.7 cents per pound for Hass; 81.8 cents per pound
for Lamb Hass. October is predicted to come in at 35.6 million pounds with an average price of
90 cents per pound. If this holds true, the total 2009-10 season pounds would be 531.5 million
pounds at an estimated $358 million, and a season price average of 75.5 cents per pound. He
noted this would mark the fourth time CAC reached a 500+ million pound crop since 1972. Mr.
Lukman also noted that the near $400 million crop value for this season will be the biggest
gross dollar value in the industry’s history.

In response to questions about the growers’ price-returns, he explained the reported prices are
gross before deductions for HAB and CAC assessments.

It was noted also that expenses during the 2009-10 fiscal year are at $12.8 million, which is
lower than the original estimate of $13.6 million.

Mr. Lukman stated that there is good momentum moving forward into the 2010-11 season and
prices are good. There may be an under-supply in the U.S. next year. The 2010-11 fiscal year
of aggregate volume projected to be marketed in the U.S. is graphically shown in the November
Board Packet as Item 5.A-11.

Mr. Hofshi added that this year’s crop will cause an alternate bearing crop next year. A three-to-
five year average should be the benchmark to use on assessing the health and productivity of
the avocado industry.

The 2009-10 Financial and Crop Update is included in the November 2010 Board Packet
(EXHIBIT A), Item 5.A-1-11.

ITEM #6 USDA-AMS OVERSIGHT GUIDELINES

                                                                                       Item 2.A-5
Presentation by Maureen Pello, USDA-AMS – Item 6.A.
Information Item
Ms. Pello explained that in addition to CDFA oversight of CAC’s program there must be federal
oversight because CAC is using 85% rebate money from the Hass Avocado Board (HAB). She
noted that CAC has been adhering to the USDA Guidelines and commended CAC’s Angela
Fraser for her diligent work as liaison between CAC and USDA/AMS.

Ms. Pello next reviewed for the CAC Board the checklist of criteria for advertising, promotion
and other material. These guidelines are used by the USDA/Agricultural Marketing Service
(AMS) and its marketing order committees and research and promotion boards to provide a
framework for the review of advertising and promotional materials (all media), internet sites,
press releases, articles for magazines and industry newsletters.

Regarding the CAC/HAB fund separation for marketing activities, Mr. Bellamore noted that only
the 85% of HAB rebate funds used for CAC’s messaging must filter through USDA reviews; this
year consumer advertising and foodservice are funded with HAB rebate funds.

Discussion ensued on consequences of inappropriate actions in CAC messaging, to which Ms.
Pello responded that the Federal Trade Commission (FTC) would first write a warning letter
and, if necessary, further move to impose a fine or pull an advertising campaign. The FTC
could also take the same action with another country regarding its advertising statement, if
warranted. CAC would have to file a complaint with the FTC and the FTC would be required to
act on it with the other country involved. However, before filing a complaint, CAC discussion
with the other country might be the better first step to take.

Avocado Managers and Chairpersons Meeting – November 19, 2010
Information Item
Mr. Bellamore noted the participants and agenda for this meeting were outlined in Exhibit D and
gave a brief explanation of each item. Bob Keeney, Deputy Administrator, Fruit and Vegetable
Programs, AMS, will lead the meeting.

The second agenda item, “Importer association membership Issue,” drew interest from all
parties involved in HAB and will be discussed. CAC had sent a letter to the USDA expressing
concern about the process used by USDA to arrive at its latest position on this issue.

The third agenda item, “Program successes,” is a recap of HAB’s accomplishments in building
the U.S. market.

The fourth agenda item will cover issues raised in USDA review of the HAB program, e.g. board
composition; referendum criteria; board contract with CAC to manage promotion program; and
administration expenses.

Messrs. Wolk, Bellamore and Karaoghlanian will attend and report back to the CAC Board. Ms.
Pello noted that Mr. Keeney envisions this to be the first of a series of meetings.

The Guidelines for Committee/Board Advertising, Promotional Material, Web Sites, and Other
Publications is identified as EXHIBIT C.


                                                                                       Item 2.A-6
The Avocado Managers and Chairpersons Meeting agenda is identified as EXHIBIT D.

Change to CDFA’s Fiscal and Compliance Audit Program
CDFA’s Fiscal and Compliance Audits of California’s agricultural marketing programs, which in
the past had been performed by the Department’s Audit Unit, will now be performed by a CPA
firm selected by each program and approved by the Department. The audit will occur on an
annual basis in conjunction with the program’s annual financial audit. This change will have two
main benefits: 1) Audits will be performed annually instead of the Department’s current cycle of
once every 6 to 7 years; and 2) Efficiencies will be realized by having the same auditors perform
both the financial audit (attesting to the accuracy of the program’s financial statements) and the
compliance audit (assuring compliance with the Department’s Accounting Guidelines and
General Rules and the program’s internal policies and procedures) at the same time.

Prior to this ruling, input had been requested from a CDFA Audit Working Group, consisting of
CPAs who perform financial audits for marketing programs and staff with accounting expertise
from programs. CAC’s Mr. Lukman participated and was complimented for his knowledge and
insight offered to the group. This group developed a Manual for Performing Agreed Upon
Procedures for California Agricultural Marketing Programs for CPA firms to follow when
performing the compliance portion of the annual audit. A copy of this Manual is on file in the
CAC offices.

Mr. Manderfield added that the CDFA is hopeful that this annual audit will be a less costly
procedure over time. They are looking to get uniformity and non-inflammatory reporting of
findings without bias by the auditors.

The CAC has already approved its auditing firm for the 2009-10 season, Macias Gini &
O’Connell, and the CDFA has concurred. However, prior to the compliance audit, the CAC
Board will need to approve the agreed-upon audit procedures. Since the CDFA would like CAC
to implement these changes for the 2009-10 audit, there may be a tight timing issue. Mr. Holtz
said options will be reviewed and the final decision will be made at the Board‘s January meeting
(or sooner teleconference if necessary) to decide on the audit timing.

The Change to CDFA’s Fiscal and Compliance Audit Program is identified as EXHIBIT E.

ITEM # 7 AVOCADO ATTITUDE & USAGE TRACKING STUDY
Presentation by Ken Roberts, Cooper Roberts Research – Item 7.A.
Information Item
Mr. Bellamore introduced Mark Weinfeld, DGWB Advertising chief strategist to set the stage for
the tracking study presentation with the “2009 and First Half 2010 Competitive Spending” report.
Mr. Weinfeld reported on competitive spending, stating that in 2009 Mexico spent a total of $21
million; Chile spent $591,000 and California had $1.6 million in tracked media spending. Mexico
has been promoting usage and nutrition information and has made inroads in building the
category versus the Mexican Avocado brand.

Ken Roberts, Cooper Roberts Research, discussed the Fall 2010 Avocado Consumer Tracking
Study funded by HAB. The study monitored changes in California brand awareness and
purchase patterns in CAC’s advertised markets as well as the rest of the U.S. markets.
Note: CAC’s ad markets include Los Angeles, San Francisco, San Diego, Phoenix, Portland,
Seattle, Denver, Dallas, Houston and San Antonio.

                                                                                       Item 2.A-7
Avocado Advertising Tracking Study Methodology:
When - This wave of study was completed in mid/late September of 2010 to coincide with the
end of CAC advertising.
Who – 1,996 grocery shoppers.

Avocado Tracking Study Conclusions:
Preference – The fall tracking study showed increased preference for California Avocados;
increased importance that avocados are grown in the U.S.; increased proportion of consumers
checking the growing source for avocados. While Mexico realized some gains in Texas, their
efforts appear to have had more impact on the “it doesn’t matter” sentiment.

Advertising – Consumers aware of advertising for avocados have improved avocado purchase
and consumption behavior, e.g. more frequent purchase, use in more ways, and are more likely
to check origin. The emphasis on stronger California branding is working. There was increased
awareness in the ad markets of advertising specifically for California avocados, as well as
increased directed recall of California branding. California continues to build on the premium
ratings in the ad markets.

Ad Markets vs. Texas - The situation is different in Texas vs. the other CAC ad markets:
Mexican avocados are on par with California in terms of advertising awareness, and significantly
ahead of California for total brand awareness even though Mexico significantly outspends
California in Texas. Mexico’s efforts in Texas are helping Mexico some, but generally are
helping the category more than the brand. CAC’s inconsistent spending in Texas is evident in
this research. Avocado consumers are fairly different in Texas vs. ad markets, meaning the
messaging that works in Ad Markets may not be as appropriate for Texas.

Avocado Consumption and Imagery - Both household penetration and annual purchase of
avocados remain significantly higher in Ad Markets than the remaining U.S.
Summer remains the dominate season for consumption, but there is much cross-seasonal use.
Avocados are most associated with “contains good fats,” and “good for heart health.”

Mr. Bellamore added that this tracking study is useful in evaluating CAC advertising
effectiveness. CAC had a goal of strengthening the California branding in advertising and the
positive results in the tracking study demonstrate success. He added that Texas is an important
market but inconsistent spending and nature of the messaging in Texas are factors to review
and consider in making adjustments to the program.

The CAC 2009 and First Half 2010 Competitive Spending report is identified as EXHIBIT F.

The Cooper Roberts Research California Avocado Tracking Study CAC Presentation is
identified as EXHIBIT G.

ITEM #8 HASS AVOCADO BOARD REPORT
Jose Luis Obregón, Managing Director of the HAB, reported that the HAB Board for the
calendar year 2011 had been seated at its recent meeting. Officers are: Jim Donovan,
Chairman; Ken Roth, Vice-Chairman; Giovanni Cavaletto, Secretary; and Jimmy Lotufo,
Treasurer.



                                                                                     Item 2.A-8
The American Dietetic Association’s (ADA) annual conference was held early in November in
Boston, with a strong presence shown by CAC, HAB, CAIA ad MHAIA. 8,500 registered
dietitians attended. Mr. Obregón mentioned that HAB had its booth and participation from all
associations was phenomenal.

An extended benefit of this event will be the indirect endorsers – attendees who will broadcast
avocado information to their audiences. This ADA event will be held in San Diego next
September.

ITEM #9 OPPORTUNITY FOR PUBLIC COMMENTS
A suggestion was offered to consider purchasing logo t-shirts for the new Board to wear as
representatives of CAC.

ADJOURN MEETING
With no further business, Chairman Reeder adjourned the Board meeting at 12:25 p.m.
and a luncheon was served.

The next Board meeting will be held on Thursday, January 19, 2011 in the CAC board
room located at 12 Mauchly, Suite L, Irvine, California 92618.

Respectfully submitted,


____________________________
Betty Bohrk



I certify that the above is a true statement of the Minutes of November 18, 2010,
approved by the CAC Board of Directors on January 19, 2011.


______________________________
Ed McFadden, CAC Board Secretary


EXHIBITS
A copy of the November 18, 2010 Board Packet, in its entirety, is attached to the permanent copy of
these Minutes and identified as EXHIBIT A.

A copy of the CAC 2010-11 Board of Directors roster is attached to the permanent copy of these Minutes
and identified as EXHIBIT B.

A copy of the USDA/AMS Oversight Guidelines is attached to the permanent copy of these Minutes and
identified as EXHIBIT C                        .

A copy of the Avocado Managers and Chairpersons Meeting agenda, held in the HAB offices on
November 19, 2010, is attached to the permanent copy of these Minutes and identified as EXHIBIT D.

A copy of the Change to CDFA’s Fiscal and Compliance Audit Program, dated November 10, 2010, is
attached in its entirety, to the permanent copy of these Minutes and identified as EXHIBIT E.

                                                                                             Item 2.A-9
A copy of the DGWB CAC 2009 and First Half 2010 Competitive Spending, dated November 2010, report
is identified as EXHIBIT F.

A copy of the Cooper Roberts Research presentation, California Avocado Tracking Study, dated
November 18, 2010, is attached to the permanent copy of these Minutes and identified as EXHIBIT G.

A copy of the 2010-11 Business Plan, approved October 28, 2010, is attached to the permanent copy of
these Minutes and identified as EXHIBIT H.

A copy of the 2010-11 Projection & Budget, approved on October 28, 2010, is attached to the permanent
copy of these Minutes and identified as EXHIBIT I.

A copy of the ROR Dashboard Update including Key Performance Indicators, updated November 16,
2010, is attached to the permanent copy of these Minutes and identified as EXHIBIT J.




                                                                                         Item 2.A-10
               BOARD OF DIRECTORS MEETING, January 20, 2011

                                                                         BOARD ACTION

ITEM 2.B:      CONSIDER APPROVAL OF COMMITTEE APPOINTMENTS

SUMMARY:

        Under Commission law, CAC has the power to appoint committees composed of both
members and non-members of the Commission to advise the Commission in carrying out
Chapter 5 of Division 22 of the Food and Agricultural Code. (§67058). During the 2009 Board
Orientation, management emphasized that the Board delegates assignments to committees,
while retaining final authority on all program, projects, activities and policies adopted by any
committee of the Commission. CAC By Laws specify:

       The Chairperson of the Commission shall appoint all committee chairpersons
       and shall appoint all members of each committee after consultation with the
       committee Chairperson affected. Appointments are subject to approval by the
       Commission and may be changed from time to time as determined by the
       Chairperson and concurred in by the Commission. (Article IV, 1.b).

In addition, the By Laws allow the Chairperson to appoint committee members from among the
Board members and alternates, as well as the industry in general. (Article IV, 1.d).

        Between November 2010 and January 2011, Chairman Charley Wolk acted in
accordance with Commission law and adopted By Laws to appoint Chairpersons for several
functional committees. Chairman Wolk and the committee chairpersons then conferred
regarding committee members. The attached list has been prepared for Board approval.

FISCAL ANALYSIS:

   •   Not applicable.

BOARD OPTIONS:

   •   Approve the committee appointments, as recommended by the Chairman
   •   Modify the committee appointments
   •   Take no action

STAFF RECOMMENDATION:

   •   Staff defers to the Board’s judgment on this Item.

EXHIBITS / ATTACHMENTS:



                                                                                       Item 2.B-1
   •   Finance Committee Appointments
   •   Marketing Advisory Committee Appointments
   •   Redistricting Committee Appointments



2010-11 COMMITTEE APPOINTMENTS

Finance Committee
Ben Holtz, Chairman
Ron Araiza
Gene Carbone
Reuben Hofshi
John Lamb
Doug O’Hara
Keith Reeder
Bob Schaar
Gary Woodworth

Marketing Advisory Committee

Bob Lucy, Chairman
Phil Henry, Henry Avocado
Chris Henry, Giumarra
Ben Holtz
Jamie Johnson
Rankin McDaniel, McDaniel Avocado
Doug Meyer, West Pak
Steve Taft, Eco Farms
Dana Thomas, Index Fresh
Shane Tucker
Rob Wedin, Calavo
Ross Wileman, Mission Produce
Bob Witt, Cal Flavor

Redistricting Committee

Charley Wolk, Chairman
Nick Stehly Jr.
Rick Shade




                                                   Item 2.B-2
                BOARD OF DIRECTORS MEETING, January 20, 2011

                                                                         BOARD ACTION

ITEM 2.C:      CONSIDER APPROVAL OF CAC AS PROVIDER OF AVOCADO INSPECTION
               PROGRAM ADMINISTRATIVE SERVICES FOR THE CDFA FOR THE PERIOD
               FROM JULY 2011 THROUGH JUNE 2012

SUMMARY:

       Each year a Memo of Understanding (MOU) must be renewed with the California
Department of Food and Agriculture (CDFA) to allow CAC to continue as administrator of the
Avocado Inspection Program (AIP). The AIP oversees avocado variety maturity standards,
weight certification, uniformity of size, and ensures correct labeling of avocado cartons to
conform with applicable regulations.

        CAC staff handles the collection and disbursement of certification fees from California
avocado handlers with oversight by the Avocado Inspection Committee (AIC). CAC also
administers payroll services for the AIP. Annual approval by the Board is required for CAC to
continue administration of the funds. The item is scheduled for consideration in January each
year to allow time for the CDFA approval process.

FISCAL ANALYSIS:

        CAC has provided this administration service for since 1986, resulting in industry
savings of approximately $175,000 annually for a cumulative avocado industry savings of nearly
$4.4 million due to the minimization of state government overhead expenses. CAC is
reimbursed by AIP for providing administrative services. In 2010-11, this amount will be
$75,000, of which $64,633 is for personnel costs and $10,367 is for liability insurance. The
overall amount is slightly higher than the prior year’s amount of $74,285.

BOARD OPTIONS:

       •    Approve CAC as Provider of Administrative Services for CDFA’s Avocado Inspection
            Program
       •    Consider alternative forms of providing administrative services to AIP
       •    Take no action

STAFF RECOMMENDATION:

       •    Staff recommends approval of CAC as Provider of Administrative Services to AIP

EXHIBITS / ATTACHMENTS:

       •    None




                                                                                       Item 2.C-1
               BOARD OF DIRECTORS MEETING, January 20, 2011

                                                                           BOARD ACTION

ITEM 3.A:     CONSIDER ACCEPTANCE OF 2009-10 AUDITED FINANCIAL STATEMENTS

SUMMARY:

        Macias Gini & O’Connell (MGO) has completed its audit on CAC’s financial statements for
fiscal year ended October 31, 2010 and issued an unqualified (clean) opinion on the statements. In
relation to the audit, MGO has also issued the following reports:

   1. Annual Financial Report – October 31, 2010 and 2009, which includes CAC’s financial
      statements
   2. Report to the Board of Directors for the Year Ended October 31, 2010
   3. Independent Auditor’s Report on Internal Control Over Financial Reporting and on
      Compliance and Other Matters Based on an Audit of Financial Statements Performed in
      Accordance With Government Auditing Standards

The abovementioned reports are attached here for Board’s review.

FISCAL ANALYSIS:

   •   Not applicable.

BOARD OPTIONS:

   •   Accept the CAC 2009-10 Audited Financial Statements as presented.
   •   Do not accept the CAC 2009-10 Audited Financial Statements as presented.
   •   Take no action.

STAFF RECOMMENDATION:

   •   Accept the CAC 2009-10 Audited Financial Statements as presented.

EXHIBITS / ATTACHMENTS:

   1. Annual Financial Report – October 31, 2010 and 2009.
   2. Report to the Board of Directors for the Year Ended October 31, 2010.
   3. Independent Auditor’s Report on Internal Control Over Financial Reporting and on
      Compliance and Other Matters Based on an Audit of Financial Statements Performed in
      Accordance With Government Auditing Standards.




                                                                                          Item 3.A-1
CALIFORNIA AVOCADO COMMISSION

      Annual Financial Report

     October 31, 2010 and 2009




                                 Item 3.A-2
                                          CALIFORNIA AVOCADO COMMISSION
                                                Annual Financial Report
                                                October 31, 2010 and 2009


                                                             Table of Contents

                                                                                                                                           Page(s)

Independent Auditor’s Report....................................................................................................................... 1

Management’s Discussion and Analysis (Required Supplementary Information - Unaudited) ................... 3

Basic Financial Statements

     Statements of Net Assets ...................................................................................................................... 10

     Statements of Revenues, Expenses and Changes in Net Assets ........................................................... 11

     Statements of Cash Flows .................................................................................................................... 12

     Notes to Financial Statements .............................................................................................................. 13

Supplementary Information

     Budgetary Comparison Schedule ......................................................................................................... 26

     Note to Supplementary Information .................................................................................................... 27

     Combining Statement of Revenues, Expenses and Changes in Net Assets.......................................... 28




                                                                                                                                                     Item 3.A-3
    The Board of Directors of the
      California Avocado Commission


                                         Independent Auditor’s Report

    We have audited the accompanying basic financial statements of the California Avocado Commission
    (Commission) as of and for the years ended October 31, 2010 and 2009, as listed in the table of contents.
    These financial statements are the responsibility of the Commission’s management. Our responsibility is
    to express an opinion on these financial statements based on our audits.

    We conducted our audits in accordance with auditing standards generally accepted in the United States of
    America and the standards applicable to financial audits contained in Government Auditing Standards,
    issued by the Comptroller General of the United States. Those standards require that we plan and perform
    the audit to obtain reasonable assurance about whether the financial statements are free of material
    misstatement. An audit includes consideration of internal control over financial reporting as a basis for
    designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing
    an opinion on the effectiveness of the Commission’s internal control over financial reporting.
    Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence
    supporting the amounts and disclosures in the financial statements, assessing the accounting principles
    used and significant estimates made by management, as well as evaluating the overall financial statement
    presentation. We believe that our audits provide a reasonable basis for our opinion.

    In our opinion, the financial statements referred to above present fairly, in all material respects, the
    financial position of the California Avocado Commission as of October 31, 2010 and 2009, and the
    changes in its financial position and its cash flows for the years then ended in conformity with accounting
    principles generally accepted in the United States of America.

    In accordance with Government Auditing Standards, we have also issued our report dated January 6,
    2011, on our consideration of the Commission’s internal control over financial reporting and on our tests
    of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other
    matters for the year ended October 31, 2010. The purpose of that report is to describe the scope of our
    testing of internal control over financial reporting and compliance and the results of that testing, and not
    to provide an opinion on the internal control over financial reporting or on compliance. That report is an
    integral part of an audit performed in accordance with Government Auditing Standards and should be
    considered in assessing the results of our audit.

    The management’s discussion and analysis, as listed in the table of contents, is not a required part of the
    basic financial statements but is supplementary information required by accounting principles generally
    accepted in the United States of America. We have applied certain limited procedures, which consisted
    principally of inquiries of management regarding the methods of measurement and presentation of the
    required supplementary information. However, we did not audit the information and express no opinion
    on it.




                                                         1                                                    Item 3.A-4
Our audits were conducted for the purpose of forming an opinion on the Commission’s basic financial
statements. The budgetary comparison schedule and the combining statement of revenues, expenses
and changes in net assets for the year ended October 31, 2010, are presented for purposes of
additional analysis and are not a required part of the basic financial statements. The budgetary
comparison schedule and the combining statement of revenues, expenses and changes in net assets
have been subjected to the auditing procedures applied in the audit of the basic financial statements
and, in our opinion, are fairly stated in all material respects in relation to the basic financial
statements taken as a whole.



Certified Public Accountants
Newport Beach, California

January 6, 2011




                                                   2                                                    Item 3.A-5
                              CALIFORNIA AVOCADO COMMISSION
                                 Management’s Discussion and Analysis
                             For the Years Ended October 31, 2010 and 2009
                                              (Unaudited)


INTRODUCTION
Management’s Discussion and Analysis (MD&A) provides an overview and analysis of the financial
activities of the California Avocado Commission (Commission) for the years ended October 31, 2010 and
2009. It has been prepared by management and is required supplementary information to the financial
statements. Please read it in conjunction with the financial statements identified in the accompanying
table of contents.

FINANCIAL HIGHLIGHTS
 The Commission’s 2010 assets exceeded its liabilities as of October 31, 2010, by $9,661,722 (total
   net assets). This amount increased by $6,790,452 or 236% from the prior year amount of $2,871,270.
   Of total net assets at the end of fiscal year 2010, net assets invested in capital assets, net of related
    debt, decreased $10,121 to $42,085 or 19% from the prior year amount of $52,206.
   Net assets restricted for marketing at the end of fiscal year 2010 increased $1,986,370 to $2,224,362
    or 835% from the prior year amount of $237,992.
   Unrestricted net assets at the end of fiscal year 2010 increased $4,814,203 to $7,395,275 or 187%
    from the prior year amount of $2,581,072. This amount made up 77% of total net assets.
   The Commission’s 2009 assets exceeded its liabilities as of October 31, 2009 by $2,871,270 (total net
    assets). This amount decreased by $736,725 or 20% from the prior year amount of $3,607,995.
   Of total net assets at the end of fiscal year 2009, net assets invested in capital assets, net of related
    debt, decreased $7,512 to $52,206 or 13% from the prior year amount of $59,718.
   Net assets restricted for marketing at the end of fiscal year 2009 decreased $156,273 to $237,992 or
    40% from the prior year amount of $394,265.
   Unrestricted net assets at the end of fiscal year 2009 decreased $572,940 to $2,581,072 or 18% from
    the prior year amount of $3,154,012. This amount made up 90% of total net assets.

OVERVIEW OF THE BASIC FINANCIAL STATEMENTS
This MD&A is intended to serve as an introduction to the Commission’s financial report. The
Commission’s financial report includes three basic financial statements: Statements of Net Assets;
Statements of Revenues, Expenses and Changes in Net Assets; and Statements of Cash Flows. The
Commission’s basic financial statements include notes to the financial statements. Financial statements
are designed to present a broad overview of the financial data for the Commission, in a manner similar to
a private-sector business.

The Statements of Net Assets present information on all assets and liabilities of the Commission, using the
accrual basis of accounting, with the difference between the two reported as net assets. Over time,
increases or decreases in net assets may serve as a useful indicator of the current financial condition of the
Commission.
The Statements of Revenues, Expenses and Changes in Net Assets present information showing how the
Commission’s net assets changed during the most recent fiscal year. All changes in net assets are reported
as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash
flows.




                                                      3                                                     Item 3.A-6
                              CALIFORNIA AVOCADO COMMISSION
                                 Management’s Discussion and Analysis
                             For the Years Ended October 31, 2010 and 2009
                                              (Unaudited)

The Statements of Cash Flows present changes in cash and cash equivalents resulting from operating,
non-capital financing, capital financing and investing activities.

The notes to the financial statements provide additional information that is essential to a full
understanding of the information provided in the financial statements.

Other Information:
In addition to the required MD&A, the financial statements also present the following supplementary
information: Budgetary Comparison Schedule and Combining Statement of Revenues, Expenses and
Changes in Net Assets (broken down by Restricted and Unrestricted).

FINANCIAL ANALYSIS
Comparative data for the year ended October 31, 2009, has been presented in the accompanying financial
statements (including MD&A) to facilitate financial analysis for the current year ended October 31, 2010. A
comparative analysis of fiscal year 2009 with fiscal year 2008 is also presented in the MD&A.

STATEMENTS OF NET ASSETS:
                                                 Table 1
                                                Net Assets

                                                               2010                2009
            Current assets                                   $11,479,609          $3,890,551
            Capital assets (net)                                  54,796              77,148
              Total assets                                    11,534,405           3,967,699

            Current liabilities                                1,740,511             951,843
            Non-current liabilities                              132,172             144,586
              Total liabilities                                1,872,683           1,096,429

            Net assets:
             Invested in capital assets, net of debt              42,085              52,206
             Restricted for marketing                          2,224,362             237,992
             Unrestricted                                      7,395,275           2,581,072

              Total net assets                                $9,661,722          $2,871,270


As noted earlier, net assets may serve over time as a useful indicator of the Commission’s financial
position. The largest portion (99%) of the Commission’s assets in 2010 was current assets, consisting
primarily of cash, investments, accounts receivable and fiduciary cash and investments, amount held for
Avocado Inspection Program (AIP), totaling $11,479,609; up $7,589,058 from the prior year amount of
$3,890,551. This increase was mainly due to an increase in cash and cash equivalents due to higher
assessment revenue generated from higher production this year compared to the prior year. The increase
was also due to higher assessments receivable due to longer season compared to prior year. Total current
assets cover current liabilities 6.6 times, and indicate good liquidity.




                                                       4                                                 Item 3.A-7
                              CALIFORNIA AVOCADO COMMISSION
                                 Management’s Discussion and Analysis
                             For the Years Ended October 31, 2010 and 2009
                                              (Unaudited)

In 2009, the largest portion (98%) of the Commission’s assets were also current assets, consisting
primarily of cash, investments, and accounts receivable, totaling $3,890,551; down $935,090 from the
prior year amount of $4,825,641. This decrease was mainly due to a decrease in cash and cash equivalents
due to lower assessment revenue generated from lower production this year compared to the prior year.
The decrease was also due to lower assessments receivable due to shorter season compared to prior year.
Total current assets cover liabilities 3.5 times, and indicate good liquidity.

Liabilities as of October 31, 2010 totaled $1,872,683, which increased $776,254 from the October 31,
2009, balance of $1,096,429. The increase was mainly due to more obligations owed to vendors and
higher balance of fiduciary liability, amount held for AIP. Liabilities were primarily accounts payable,
accrued liabilities, fiduciary liabilities, amounts for AIP and deposits due which are considered current
liabilities.

Liabilities as of October 31, 2009, totaled $1,096,429, which decreased $192,229 from the October 31,
2008, balance of $1,288,658. The decrease was mainly due to fewer obligations owed to vendors.
Liabilities were primarily accounts payable, accrued liabilities and deposits due which were considered
current liabilities.

Net assets invested in capital assets, net of related debt, represent the Commission’s capital assets net of
accumulated depreciation and outstanding principal balances of debt attributable to the acquisition,
construction, or improvement of those assets. Net assets invested in capital assets (net of accumulated
depreciation) totaled $42,085 at the end of fiscal year 2010; a decrease of $10,121 from the prior year
amount of $52,206 primarily due to the depreciation and deletions of capital assets. Net assets invested in
capital assets made up 0.4% of total net assets.

At the end of fiscal year 2009, net assets invested in capital assets (net of accumulated depreciation)
totaled $52,206 at the end of fiscal year 2009; a decrease of $7,512 from the prior year amount of $59,718
primarily due to the depreciation of capital assets. 2009 net assets invested in capital assets made up 2%
of total net assets.

Restricted net assets for marketing activities are subject to imposed restrictions by federal statute
governing their use. Restricted net assets totaled $2,224,362 at the end of 2010, an increase of $1,986,370
from the prior year amount of $237,992, primarily due to higher production and therefore higher revenue
from the 85% assessment rebate funds received from the Hass Avocado Board (HAB). Restricted net
assets are 23% of total net assets and are subject to external restrictions on how they can be used.
Restricted net assets at the end of 2009 totaled $237,992, a decrease of $156,273 from the prior year
amount of $394,265, primarily due to lower production and therefore less revenue from the 85%
assessment rebate funds received from the HAB.

Unrestricted net assets available for future activities at the end of fiscal year 2010 totaled $7,395,275, an
increase of $4,814,203 from the prior year amount of $2,581,072. Unrestricted net assets available for
future activities totaled $2,581,072 at the end of fiscal year 2009, a decrease of $572,940 from the prior
year amount of $3,154,012.




                                                     5                                                     Item 3.A-8
                             CALIFORNIA AVOCADO COMMISSION
                                Management’s Discussion and Analysis
                            For the Years Ended October 31, 2010 and 2009
                                             (Unaudited)


STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS:

                                                 Table 2
                                           Changes in Net Assets

                                                              2010               2009
            Operating revenues                              $19,381,436         $9,611,649
            Operating expenses                               12,780,452         10,407,697
              Operating income (loss)                         6,600,984          (796,048)

            Non-operating revenues (expenses)                   189,468             59,323
              Changes in net assets                           6,790,452          (736,725)

            Total net assets - beginning                      2,871,270          3,607,995
            Total net assets - ending                        $9,661,722         $2,871,270


Operating revenues of $19,381,436 in 2010 were $9,769,787 or 102% higher than the $9,611,649 earned
in 2009. The increase was due to higher production compared to 2009. Total crop (all varieties) reported
to the Commission for fiscal year 2010 was 534.5 million pounds, a 206% increase from 174.5 million
pounds reported in 2009. Of the operating revenue, the largest portion, $18,629,641 (96%), reflected
assessment revenue. The remaining portion of $751,795 (4%) came from administrative and marketing
fees generated from HAB and AIP.

Operating revenues of $9,611,649 in 2009 were $6,426,036 or 40% lower than the $16,037,685 received
in 2008. The decrease was due to lower production compared to 2008. Total crop (all varieties) reported
to the Commission for fiscal year 2009 was 174.5 million pounds, a 47% decrease from 328.8 million
pounds reported in 2008. Of the operating revenue, the largest portion, $8,671,149 (90%), reflected
assessment revenue. The remaining portion of $940,500 (10%) came from administrative and marketing
fees generated from the HAB and AIP.

Operating expenses totaled $12,780,452 in 2010, which was an increase of $2,372,755 or 23% from the
prior year amount of $10,407,697. This was primarily due to an increase in marketing activities to
respond to a higher production in 2010.

Operating expenses totaled $10,407,697 in 2009, which was a decrease of $4,975,914 or 32% from the
prior year amount of $15,383,611. This was primarily due to a reduction in marketing and administration
activities.

At the end of the fiscal year 2010, the Commission reported ending net assets of $9,661,722, which was
$6,790,452 higher than the $2,871,270 reported in 2009. This was mainly due to an increase in
assessment revenue received, resulting from higher production.

At the end of the fiscal year 2009, the Commission reported ending net assets of $2,871,270, which was
$736,725 less than the 2008 year of $3,607,995. This was mainly due to a decrease in assessment revenue
received, resulting from lower production.




                                                    6                                                 Item 3.A-9
                              CALIFORNIA AVOCADO COMMISSION
                                 Management’s Discussion and Analysis
                             For the Years Ended October 31, 2010 and 2009
                                              (Unaudited)


CAPITAL ASSET AND DEBT ADMINISTRATION
The Commission’s investment in capital assets, as of October 31, 2010, totaled $54,796, which was a
decrease of $22,352 from the prior year amount of $77,148 (net of accumulated depreciation). The
decrease represented a net resultant of an increase due to capital asset acquisitions during fiscal year 2010
and a decrease caused by the depreciation on capital assets used for program activities of the Commission
and capital asset write-off during the fiscal year.

The Commission’s investment in capital assets, as of October 31, 2009, totaled $77,148, which was an
increase of $6,136 from the prior year amount of $71,012 (net of accumulated depreciation). The increase
represents capital asset acquisitions during fiscal year 2009 partially offset by the depreciation on capital
assets used for program activities of the Commission.

As of October 31, 2010, the Commission had an accrued compensated absences balance of $119,461,
which decreased by $183 from the prior year balance of $119,644. The prior year balance was a $49,861
decrease from the October 31, 2008, balance of $169,505. The decrease from 2008 to 2009 was mainly
due to a reduction of the Commission’s workforce in July 2009.

At the end of fiscal year 2010, the Commission had non-current liabilities for a copier and a mailing
machine identified as capital leases with a combined balance outstanding of $12,711, which was a
decrease of $12,231 of the prior year balance of $29,942 due to principal payments. Prior year balance
was an increase of $13,648 from 2008 year-end balance of $11,294 due to a new capital lease for a copier
offset by principal payments. Additional information can be found in Notes to the Financial Statements of
this report.

CONTACTING THE COMMISSION’S FINANCIAL MANAGEMENT
This financial report is designed to provide a general overview of the Commission’s finances and to show
the Commission’s accountability for the money it receives. Questions concerning any of the information
provided in this report or requests for additional financial information should be addressed to California
Avocado Commission, 12 Mauchly, Suite L, Irvine, California 92618; phone number 949-341-1955.




                                                     7                                                    Item 3.A-10
This page left blank intentionally.




                 8                    Item 3.A-11
BASIC FINANCIAL STATEMENTS




            9                Item 3.A-12
                              CALIFORNIA AVOCADO COMMISSION
                                     Statements of Net Assets
                                    October 31, 2010 and 2009


                                                                2010           2009
Current assets:
  Cash and cash equivalents                               $    6,835,579   $   3,259,572
  Assessments receivable                                         824,876          15,261
  Other receivables                                               28,075          31,281
  Prepaid expenses                                                86,726          49,048
  Fiduciary cash and investments, amounts held for AIP         1,043,726         257,204
  Restricted:
    Cash and cash equivalents                                    406,016         52,808
    Assessments receivable                                     2,254,611        225,377

       Total current assets                                   11,479,609       3,890,551

Non-current assets:
  Capital assets:
    Being depreciated, net                                       54,796          77,148

       Total assets                                           11,534,405       3,967,699

Current liabilities:
  Accounts payable and accrued liabilities                      227,081         544,164
  Accounts payable and accrued liabilities payable from
    restricted assets                                            436,264         40,192
  Fiduciary liabilities, amounts held for AIP                  1,043,726        257,204
  Deposits                                                        33,440         18,000
  Unearned revenue                                                   -           92,283

Non-current liabilities:
  Due within one year                                            76,232          59,351
  Due in more than one year                                      55,940          85,235

       Total liabilities                                       1,872,683       1,096,429

Net assets:
  Invested in capital assets, net of related debt                 42,085          52,206
  Restricted for marketing                                     2,224,362         237,992
  Unrestricted                                                 7,395,275       2,581,072

       Total net assets                                   $    9,661,722   $   2,871,270

See Accompanying Notes to Financial Statements.




                                                    10                                 Item 3.A-13
                            CALIFORNIA AVOCADO COMMISSION
                     Statements of Revenues, Expenses and Changes in Net Assets
                           For the Years Ended October 31, 2010 and 2009


                                                                    2010               2009
Operating revenues:
 Assessment revenue                                           $    7,858,927      $    5,263,530
 HAB rebate assessment revenue (restricted)                       10,770,714           3,407,619
 Administrative and marketing fees                                   751,795             940,500

       Total operating revenues                                   19,381,436           9,611,649

Operating expenses:
 Marketing                                                         8,779,703           5,732,181
 Non-marketing programs                                            1,553,498           1,741,803
 Administration                                                    2,447,251           2,933,713

       Total operating expenses                                   12,780,452          10,407,697

       Operating income (loss)                                     6,600,984            (796,048)

Non-operating revenues (expenses):
  Interest income                                                     24,638             41,242
  Interest (expense)                                                  (1,309)            (9,760)
  Other income                                                       166,139             27,841

       Total non-operating revenues (expenses)                       189,468             59,323

       Change in net assets                                        6,790,452            (736,725)

Total net assets - beginning                                       2,871,270           3,607,995

Total net assets - ending                                     $    9,661,722      $    2,871,270




See Accompanying Notes to Financial Statements.




                                                  11                                           Item 3.A-14
                                CALIFORNIA AVOCADO COMMISSION
                                        Statements of Cash Flows
                              For the Years Ended October 31, 2010 and 2009

                                                                          2010               2009
Cash flows from operating activities:
  Cash received from customers                                       $    17,272,950     $    9,951,653
  Cash payments to suppliers for goods and services                      (11,197,185)        (8,527,803)
  Cash payments to employees for services                                 (1,485,899)        (2,126,039)
       Net cash provided by (used in) operating activities                4,589,866           (702,189)
Cash flows from non-capital financing activities:
  Grant revenue                                                                   -              2,871
  Cash receipts from sublessee                                                133,209              -
       Net cash provided by non-capital financing activities                  133,209            2,871
Cash flows from capital and related financing activities:
  Acquisition of capital assets                                               (33,888)         (24,226)
  Proceeds from sale of capital assets                                          2,686            5,478
  Interest paid                                                                (1,309)          (9,760)
  Capital lease payments                                                      (12,231)         (11,441)
  Other                                                                        12,766           19,492
       Net cash provided by (used in) capital and related
        financing activities                                                  (31,976)         (20,457)
Cash flows from investing activities:
  Interest on investments                                                      24,638           41,242
       Net increase (decrease) in cash and cash equivalents               4,715,737           (678,533)
Cash and cash equivalents - beginning                                     3,569,584          4,248,117
Cash and cash equivalents - ending                                   $    8,285,321      $   3,569,584
Reconciliation of operating income (loss) to net cash
  provided by (used in) operating activities:
Operating income (loss)                                              $    6,600,984      $    (796,048)
Adjustments to reconcile operating income (loss) to net cash
 provided by (used in) operating activities:
    Depreciation expense                                                       39,951           43,179
    Expense of capital assets below threshold                                  16,289              -
  Change in assets and liabilities:
    (Increase) decrease in assessments receivable                         (2,838,849)          253,619
    Decrease in other receivables                                             20,684            12,489
    (Increase) in prepaid expenses                                           (37,678)           (9,550)
    Increase (decrease) in accounts payable and
       accrued liabilities                                                     78,989         (229,913)
    Increase (decrease) in fiduciary liabilities and deposits                 801,962          (18,387)
    Increase (decrease) in unearned revenue                                   (92,283)          92,283
    (Decrease) in compensated absences                                           (183)         (49,861)
       Net cash provided by (used in) operating activities           $    4,589,866      $    (702,189)
Non-cash capital and related financing activity:
  Acquired new capital lease                                         $            -      $      25,089
See Accompanying Notes to Financial Statements.


                                                        12                                               Item 3.A-15
                              CALIFORNIA AVOCADO COMMISSION
                                   Notes to Financial Statements
                                    October 31, 2010 and 2009


(1)   Summary of Significant Accounting Policies

      The following is a summary of the significant accounting policies followed by the California Avocado
      Commission (Commission):

      (a)   Activities of the Commission

            The California Avocado Commission is authorized under California law to carry on programs of
            advertising, promotion, marketing research, and production research relating to the sale of
            California avocados. The Commission is authorized to levy an assessment against producers of
            avocados for purposes of carrying out its programs. The assessment for the year ended October
            31, 2010 and 2009 was 1.95% and 2.62%, respectively, of the gross revenues paid to producers.
            The Commission also receives 85% of the assessments collected by the Federal Hass Avocado
            Board (HAB) on Hass avocados produced and sold in California in the United States, which are
            restricted for use on marketing activities.

      (b)   Measurement Focus, Basis of Accounting, and Financial Statement Presentation

            The Commission operates as an enterprise activity. An enterprise fund accounts for operations
            that are financed and operated in a manner similar to private business enterprises, where the intent
            of the Board of Directors is that the costs (expenses, including depreciation) of providing services
            to the industry on a continuing basis be financed or recovered primarily through assessment
            revenues.

            Enterprise funds distinguish operating revenues and expenses from non-operating items.
            Operating revenues and expenses generally result from providing services and producing and
            delivering goods in connection with an enterprise fund’s principal ongoing operations. The
            principal operating revenues of the Commission are assessment revenues and administrative
            and marketing fees. Operating expenses for enterprise funds include the cost of marketing
            programs, production research, industry affairs and administrative expenses, including
            depreciation on capital assets. All revenues and expenses not meeting this definition are
            reported as non-operating revenues and expenses.

            Basis of accounting refers to when revenues and expenses are recognized in the accounts and
            reported in the financial statements. Enterprise funds are accounted for on the flow of economic
            resources measurement focus and use the accrual basis of accounting, whereby revenues are
            recognized when earned and expenses are recognized when incurred, regardless of the timing of
            related cash flows. Private-sector standards of accounting and financial reporting issued prior to
            December 1, 1989, generally are followed in the basic financial statements to the extent that those
            standards do not conflict with or contradict guidance of the Governmental Accounting Standards
            Board. Governments also have the option of following subsequent private-sector guidance for
            their enterprise funds, subject to this same limitation. The Commission has elected not to follow
            subsequent private-sector guidance.




                                                      13                                                     Item 3.A-16
                         CALIFORNIA AVOCADO COMMISSION
                          Notes to Financial Statements (Continued)
                                  October 31, 2010 and 2009


      When both restricted and unrestricted resources are available for use, it is the Commission’s
      policy to use restricted resources first, then unrestricted resources as they are needed.

(c)   Assets, Liabilities, and Net Assets

      1. Cash Equivalents

      For purposes of the statement of cash flows, the Commission considers cash and funds invested
      in the Local Agency Investment Fund of the State of California for both restricted and
      unrestricted funds to be cash equivalents. Additionally, investments with original maturities of
      three months or less at the time of purchase are considered cash equivalents.

      2. Investments

      In accordance with Governmental Accounting Standards Board Statement No. 31, all investments
      are recorded at fair value, which is the value at which a financial instrument could be exchanged
      in a current transaction between willing parties other than in a forced or liquidation sale.
      Investments that are not traded on a market, such as investments in external pools, are valued
      based on the stated fair value as represented by the external pool. Restricted and unrestricted
      cash are pooled for investment purposes.

      3. Receivables

      No allowance for uncollectible accounts has been provided. Management has evaluated the
      accounts and believes they are all collectible. Management evaluates all accounts receivable and
      if it is determined that they are uncollectible they are written off directly as a bad debt expense.
      There were no charges made to bad debt expense for the years ended October 31, 2010 and 2009.

      4. Capital Assets

      Capital assets consist of furniture, office equipment and leasehold improvements. The
      Commission capitalizes assets with values of at least $10,000 and useful lives of greater than one
      year. Capital assets are valued at cost or estimated historical cost if actual historical cost is not
      available. Contributed assets are valued at fair value on the date donated. Capital assets acquired
      through lease obligations are valued at the present value of future lease payments at the date
      acquired. Capital assets are depreciated using the straight-line method using the following lives:

                                                                      Years
        Furniture                                                       5
        Office equipment                                                3
        Leasehold improvements                                Lesser of 5 years or term of lease
        Software                                                        3




                                                14                                                      Item 3.A-17
                  CALIFORNIA AVOCADO COMMISSION
                   Notes to Financial Statements (Continued)
                           October 31, 2010 and 2009


5. Unearned Revenues

Unearned revenues represent grants and program fees received in advance.

6. Compensated Absences Payable

The Commission employees receive from 10 to 20 days of vacation each year depending upon
length of service. An employee may accumulate earned vacation time to a maximum not to
exceed 40 days. Once an employee accrues 40 days of unused vacation time, the Commission
compensates the employee 10 days of accrued and unused vacation time at the employee’s
current rate of pay. Upon termination, employees are paid for all accrued but unused vacation at
their current rate of pay.

Compensated absences include accrued vacation that is available to employees in future years
either in time off or in cash (upon leaving the employment of the Commission). All compensated
absences are accrued when incurred.

7. Estimates

The preparation of these financial statements requires management to make estimates and
assumptions that affect certain amounts and disclosures. Actual results may differ from such
estimates.

8. Restricted Assets

These restricted assets are restricted to be used for marketing related activity and also include
assets held on behalf of the Avocado Inspection Program.

9. Net Assets

Net assets represent the difference between assets and liabilities. Net assets invested in capital
assets, net of related debt, consist of capital assets, net of accumulated depreciation, reduced by
the outstanding balances of any borrowings used for the acquisition, construction or improvement
of those assets. Net assets invested in capital assets, net of related debt excludes unspent debt
proceeds. Net assets are reported as restricted when there are limitations imposed on their use
through external restrictions imposed by creditors, grantors or laws or regulations of other
governments. All remaining net assets that do not meet the definition of invested in capital
assets, net of related debt, or restricted are reported as unrestricted net assets.




                                         15                                                     Item 3.A-18
                              CALIFORNIA AVOCADO COMMISSION
                               Notes to Financial Statements (Continued)
                                       October 31, 2010 and 2009


(2)   Detailed Notes on Enterprise Fund

      (a) Cash and Cash Equivalents

            Cash and cash equivalents consisted of the following:

                                                                             2010             2009

            Petty cash                                                $            200   $          200
            Demand deposits                                                    610,358          152,640
            Investments                                                      7,674,763        3,416,744

                    Total cash and investments                        $     8,285,321    $    3,569,584



      Investments Authorized by the California Government Code and the Commission’s Investment Policy

      The Commission adopted California Government Code (CGC) 16430 and the U.S. Department of
      Agriculture (USDA) Directive 2210.2 as its investment policy. The table below identifies the
      investment types that are authorized under CGC 16430. The table also identifies certain provisions of
      the CGC 16430 and USDA Directive 2210.2 that address interest rate risk and concentration of credit
      risk.

                                                                          Maximum            Maximum
           Authorized                                 Maximum             Percentage          Investment
         Investment Type                              Maturity            of Portfolio       in One Issuer

      State of California Bonds and Notes                 1 year             None               None
      U. S. Treasury Obligations                          1 year             None               None
      U. S. Agency Securities                             1 year             None               None
      Bank Loans                                          1 year             None               None
      Student Loan Notes                                  1 year             None               None
      Obligations issued for Reconstruction
         and Development                                  1 year             None              None
      Negotiable Certificates of Deposits                 1 year             None              None
      Banker’s Acceptances                                1 year             None              None
      Commercial Paper                                   180 days            30 %               10%
      Corporate Bonds and Notes                           1 year             None              None
      Local Agency Investment Fund (LAIF)                  N/A               None            $50 million




                                                    16                                                    Item 3.A-19
                         CALIFORNIA AVOCADO COMMISSION
                          Notes to Financial Statements (Continued)
                                  October 31, 2010 and 2009


Disclosures Relating to Interest Rate Risk

Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value
of an investment. Generally, the longer the maturity of an investment, the greater the sensitivity of
its fair value to changes in market interest rates. Information about the sensitivity of the fair values
of the Commission’s investments to market interest rate fluctuations is provided by the following
table that shows the Commission’s investments by maturity:

                                                                      Remaining Maturity
                                                                       12 Months or less

             Investment Type                                          2010              2009

             Local Agency Investment Fund                        $ 7,674,763       $ 3,416,744


Disclosures Relating to Credit Risk

Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the
holder of the investment. This is measured by the assignment of a rating by a nationally recognized
statistical rating organization. LAIF does not have a rating provided by a nationally recognized
statistical rating organization.

Concentration of Credit Risk

The investment policy of the Commission contains no limitations on the amount that can be
invested in any one issuer beyond that stipulated by the California Government Code 16430. The
Commission had no investments in any one issuer (other than external investment pools) that
represent 5% or more of total Commission investments at October 31, 2010 and 2009.

Custodial Credit Risk

Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial
institution, a government will not be able to recover its deposits or will not be able to recover
collateral securities that are in the possession of an outside party. The custodial credit risk for
investments is the risk that, in the event of the failure of the counterparty (e.g., broker-dealer) to a
transaction, a government will not be able to recover the value of its investment or collateral
securities that are in the possession of another party. The California Government Code and the
Commission’s investment policy do not contain legal or policy requirements that would limit the
exposure to custodial credit risk for deposits or investments, other than the following provision for
deposits: The California Government Code requires that a financial institution secure deposits made
by state or local governmental units by pledging securities in an undivided collateral pool held by a
depository regulated under state law (unless so waived by the governmental unit). The market value of
the pledged securities in the collateral pool must equal at least 110% of the total amount deposited by
the public agencies. California law also allows financial institutions to secure Commission deposits by




                                                17                                                     Item 3.A-20
                         CALIFORNIA AVOCADO COMMISSION
                          Notes to Financial Statements (Continued)
                                  October 31, 2010 and 2009


pledging first trust deed mortgage notes having a value of 150% of the secured public deposits.

With respect to investments, custodial credit risk generally applies only to direct investments in
marketable securities. Custodial credit risk does not apply to a local government’s indirect
investment in securities through the use of mutual funds or government investment pools (such as
LAIF).

Investment in State Investment Pool

The Commission is a voluntary participant in the Local Agency Investment Fund (LAIF) that is
regulated by California Government Code Section 16429 under the oversight of the Treasurer of the
State of California. The fair value of the Commission’s investment in this pool is reported in the
accompanying financial statements at amounts based upon the Commission’s pro-rata share of the fair
value provided by LAIF for the entire LAIF portfolio (in relation to the amortized cost of that portfolio).
The balance available for withdrawal is based on the accounting records maintained by LAIF, which are
recorded on an amortized cost basis.

The total amount invested by all public agencies in LAIF as of October 31, 2010 was $21.4 billion.
LAIF is part of the California Pooled Money Investment Account (PMIA), which at October 31, 2010
had a balance of $68.6 billion. Of that amount, 4.71 % was invested in medium-term and short-term
structured notes and asset-backed securities. The average maturity of PMIA investments was 191 days
as of October 31, 2010.

The total amount invested by all public agencies in LAIF as of October 31, 2009 was $22.2 billion.
LAIF is part of the California Pooled Money Investment Account (PMIA), which at October 31, 2009
had a balance of $63.3 billion. Of that amount, 10.10 % was invested in medium-term and short-term
structured notes and asset-backed securities. The average maturity of PMIA investments was 253 days
as of October 31, 2009.




                                                18                                                      Item 3.A-21
                            CALIFORNIA AVOCADO COMMISSION
                             Notes to Financial Statements (Continued)
                                     October 31, 2010 and 2009


 (b)   Capital Assets

       Changes in capital assets were as follows:

                                            November 1,                                         October 31,
                                               2009               Additions        Deletions       2010
Capital assets, being depreciated:
  Furniture                                 $        90,480   $      26,159    $      (9,074)   $   107,565
  Office equipment                                  156,320             -            (68,118)        88,202
  Leasehold improvements                             22,042           7,729          (15,271)        14,500
  Software                                            8,876             -             (8,876)           -

       Total capital assets, being
         depreciated                                277,718          33,888         (101,339)       210,267
Less accumulated depreciation for:
  Furniture                                          64,700          16,718           (9,074)        72,344
  Office equipment                                  115,969          19,361          (66,703)        68,627
  Leasehold improvements                             19,655           1,406           (6,561)        14,500
  Software                                              246           2,466           (2,712)           -
       Total accumulated depreciation               200,570          39,951          (85,050)       155,471
       Net capital assets                   $        77,148   $      (6,063)   $     (16,289)   $    54,796

                                            November 1,                                         October 31,
                                               2008               Additions        Deletions       2009
Capital assets, being depreciated:
  Furniture                                 $        90,480   $         -      $         -      $    90,480
  Office equipment                                  140,736          40,439          (24,855)       156,320
  Leasehold improvements                             22,042             -                -           22,042
  Software                                              -             8,876              -            8,876

       Total capital assets, being
         depreciated                                253,258          49,315          (24,855)       277,718
Less accumulated depreciation for:
  Furniture                                          48,419          16,281              -           64,700
  Office equipment                                  115,681          25,143          (24,855)       115,969
  Leasehold improvements                             18,146           1,509              -           19,655
  Software                                              -               246              -              246
       Total accumulated depreciation               182,246          43,179          (24,855)       200,570
       Net capital assets                   $        71,012   $       6,136    $         -      $    77,148




                                                19                                                    Item 3.A-22
                         CALIFORNIA AVOCADO COMMISSION
                          Notes to Financial Statements (Continued)
                                  October 31, 2010 and 2009



 Depreciation expense was $39,951 and $43,179 for the years ended October 31, 2010 and 2009,
 respectively.

 (c) Long-term Liabilities
                                                                                                  Amount
                             November 1,                                       October 31,       Due within
                                2009        Additions          Deletions          2010           One Year

Capital leases               $    24,942   $       -       $     (12,231)     $     12,711      $       12,711
Compensated absences             119,644        71,348           (71,531)          119,461              63,521
  Total                      $   144,586   $    71,348    $      (83,762)     $    132,172      $       76,232
                                                                                                  Amount
                             November 1,                                       October 31,       Due within
                                2008        Additions          Deletions          2009           One Year

Capital leases               $    11,294   $  25,089       $  (11,441)         $    24,942      $       12,231
Compensated absences             169,505      94,639         (144,500)             119,644              47,120
  Total                      $   180,799   $ 119,728       $ (155,941)        $    144,586      $       59,351



       Capital Leases:

       During the year ended October 31, 2008, the Commission entered into a capital lease agreement
       for a mailing system in the amount of $11,576, bearing interest 8.79%. Monthly principal
       payments are due on the 30th of every month, ranging from $284 to 364 through September 30,
       2011.

       During the year ended October 31, 2009, the Commission entered into a capital lease agreement
       for a copier in the amount of $25,089, bearing interest 5.74%. Monthly principal payments are
       due on the 1st of every month, ranging from $640 to 757 through October 1, 2011.

       The annual requirements to amortize the capital lease obligations as of October 31, 2010 are as
       follows:

          Year Ending
          October 31,                                                      Principal         Interest

              2011                                                    $       12,711    $           461




                                               20                                                         Item 3.A-23
                              CALIFORNIA AVOCADO COMMISSION
                               Notes to Financial Statements (Continued)
                                       October 31, 2010 and 2009


(3)   Other Information

      (a)   Avocado Inspection Program

            During February 1986, the Commission contracted with the State Department of Food and
            Agriculture to administer the Avocado Inspection Program (AIP) for the State of California.
            Since the Commission is in substance an agent for the State, the fiduciary cash and investment,
            amounts held for AIP held by the Commission are off-set by fiduciary liabilities, amounts held
            for AIP. As of October 31, 2010 and 2009, $1,043,726 and $257,204, respectively, was held by
            the Commission for the Avocado Inspection Program.

      (b)   Line of Credit

            On September 28, 2010, the Commission obtained a revolving line of credit from Wells
            Fargo Bank, in the amount of $3,000,000 with a variable interest rate at prime rate plus 1
            percent with a floor of 4.75%. The maturity date for the line of credit is October 1, 2011. The
            Commission did not utilize this line of credit during the year ended October 31, 2010.

            On September 22, 2009, the Commission obtained a revolving line of credit from Wells
            Fargo Bank, in the amount of $3,000,000 with a variable interest rate at prime rate plus 0.500
            percent with a floor of 4.5%. The maturity date for the line of credit is October 1, 2010. The
            Commission did not utilize this line of credit during the year ended October 31, 2010.

      (c)   Risk Management

            Insurance Programs of the Commission

            The Commission utilizes insurance broker Brown & Brown of California, Inc. to obtain its
            insurance coverage from various insurers. Their coverages are as follows:

            Commercial General Liability insured by Associated Indemnity Corporation – General aggregate
            coverage of $2,000,000 and $1,000,000 for each occurrence.

            Automobile Liability insured by Associated Indemnity Corporation – Coverage is $1,000,000 per
            bodily injury or property damage, subject to a $500 deductible.

            Crime Liability insured by Travelers Casualty & Surety – Coverage is $1,000,000, subject to a
            $5,000 deductible provided by.

            Umbrella Liability insured by Fireman’s Fund Insurance Company – General aggregate coverage
            of $5,000,000 and $5,000,000 for each occurrence.

            Travel Accident Liability insured by Hartford Life Insurance Company – Coverage is $100,000
            per person and $500,000 per accident.




                                                    21                                                  Item 3.A-24
                        CALIFORNIA AVOCADO COMMISSION
                         Notes to Financial Statements (Continued)
                                 October 31, 2010 and 2009


      Directors and Officers Liability and Employment Practices Liability insured by Great American
      Assurance Company – Coverage is $5,000,000 aggregate limit with a $15,000 retention.

      Employed Lawyers Professional Liability insured by Executive Risk Indemnity, Inc.– Coverage
      is $1,000,000 aggregate limit.

      Fiduciary Liability insured by U.S. Specialty Insurance Company – Coverage is $1,000,000 each
      claim and aggregate, subject to a $2,500 deductible.

      Advertiser Liability insured by Axis Insurance/Media Professional – Coverage is $1,000,000 each
      loss and any one policy period, with a $10,000 self insurance retention for each loss.

      Workers’ Compensation Coverage

      The Commission is a member of the State Compensation Insurance Fund (SCIF), a self-
      supporting, non-profit enterprise that provides workers’ compensation insurance to California
      employers. The coverage is $1 million per occurrence.

      Adequacy of Protection

      During the past three fiscal (claims) years, none of the above programs of protection have had
      settlements or judgments that exceeded insured coverage. The Commission cancelled Foreign
      Insurance coverage as of June 23, 2010, because commissioners and employees no longer travel
      internationally.

(d)   Employee Retirement Plan

      The Board of Directors of the California Avocado Commission implemented a Profit Sharing
      Plan (PSP) for eligible Commission employees, effective November 1, 2000. The
      Commission’s payroll for the nine employees eligible to participate in the PSP for the plan
      year ended October 31, 2010, was $993,896. The total payroll for the fifteen employees
      eligible to participate in the PSP for the plan year ended October 31, 2009 was $1,607,820.
      The total contributions for the years ended October 31, 2010 and 2009, were $99,390 and
      $166,101, respectively.

      The Commission determines, in its discretion, the contribution which will be made to the
      PSP. With a few exceptions, each eligible employee received an allocation of 10% of
      compensation up to a maximum of $49,000 for the Plan Year ended October 31, 2010. To
      receive an allocation, each employee must meet a minimum service requirement of one year
      and must be credited with at least 1,000 hours of service.




                                              22                                                  Item 3.A-25
                         CALIFORNIA AVOCADO COMMISSION
                          Notes to Financial Statements (Continued)
                                  October 31, 2010 and 2009



(e)   Operating Leases

      On November 5, 2009, the Commission entered into a lease agreement for a new office space
      under a five-year lease ending November 30, 2014. On November 20, 2009, the Commission
      subleased its previous office space, with a lease ending July 31, 2011, to Location Based
      Technologies, Inc. During the years ended October 31, 2010 and 2009, the Commission paid
      $96,302 and $291,780, respectively, for the office rent, inclusive of operating expenses. The
      Commission received $150,687 in the year ended October 31, 2010. There was no sublease
      income in the year ended October, 31, 2009.

      On September 7, 2009, the Commission entered into an agreement to lease two printers. During
      the years ended October 31, 2010 and 2009, the Commission paid $6,039 and $567, respectively,
      including tax for the printers lease.

  The annual requirements to amortize the operating lease obligations as of October 31, 2010 are as
  follows:

      Year Ending
      October 31,                                              Office Space        Printers

          2011                                                 $   207,912     $      5,424
          2012                                                      56,960            4,972
          2013                                                      62,802              -
          2014                                                      66,307              -
          2015                                                       5,550              -
         Total                                                     399,531     $     10,396
      Less Sublease Income
          2011                                                     (138,956)
          Total                                                    (138,956)
      Net Payment
          2011                                                      68,956
          2012                                                      56,960
          2013                                                      62,802
          2014                                                      66,307
          2015                                                       5,550
          Total                                                $   260,575




                                             23                                                 Item 3.A-26
This page left blank intentionally.




                24                    Item 3.A-27
SUPPLEMENTARY INFORMATION




           25               Item 3.A-28
                                  CALIFORNIA AVOCADO COMMISSION
                                        Budgetary Comparison Schedule
                                     For the Year Ended October 31, 2010
                        (with comparative actual total for the year ended October 31, 2009)

                                                             2010
                                                                                      Variance
                                   Original         Final                             Positive         2009
                                   Budget          Budget            Actual          (Negative)       Actual
Revenues:
  Assessment revenue           $ 6,142,500      $ 6,142,500     $ 7,858,927      $     1,716,427    $ 5,263,530
  HAB rebate assessment
    revenue (restricted)           8,893,125       8,893,125        10,770,714         1,877,589      3,407,619
  Administrative and
    marketing fees                  647,200          660,485          751,795             91,310        940,500
  Investment and
    interest income                    2,200           2,200           24,638             22,438         41,242
  Other income:
    Grant revenue                        -               -              9,825              9,825          2,871
    Other income                         -           146,410          156,314              9,904         24,970
        Total other income               -           146,410          166,139             19,729         27,841
        Total revenues            15,685,025      15,844,720        19,572,213         3,727,493      9,680,732
Expenses:
  Marketing:
    Consumer advertising           5,300,000       5,300,000         5,254,597            45,403      3,236,590
    Merchandising/trade            1,328,200       1,328,200         1,301,879            26,321        805,547
    Foodservice                      860,000         860,000           813,186            46,814        623,541
    Public relations and
       nutrition                    900,000          869,200          840,332             28,868        699,873
    Internet marketing              550,000          580,800          569,709             11,091        366,630
       Total marketing             8,938,200       8,938,200         8,779,703          158,497       5,732,181
  Non-marketing programs:
    Industry affairs               1,066,250       1,067,250           394,197          673,053         722,784
    Production research            1,175,900       1,175,900         1,149,476           26,424       1,016,148
    Grant expenses                       -               -               9,825           (9,825)          2,871
       Total non-marketing         2,242,150       2,243,150         1,553,498          689,652       1,741,803
         programs
  Administration:
    Administration                 2,196,450       2,339,450         2,364,159           (24,709)     2,812,547
    Information systems               68,500          68,500            43,141            25,359         77,987
    Depreciation                      22,200          22,200            39,951           (17,751)        43,179
    Interest expense                  32,500          32,500             1,309            31,191          9,760
       Total administration        2,319,650       2,462,650         2,448,560            14,090      2,943,473
       Total expenses             13,500,000      13,644,000        12,781,761          862,239      10,417,457
       Change in net assets        2,185,025       2,200,720         6,790,452         4,589,732       (736,725)
Total net assets - beginning       2,871,270       2,871,270         2,871,270                -       3,607,995
Total net assets - ending      $ 5,056,295      $ 5,071,990     $ 9,661,722      $     4,589,732    $ 2,871,270

See Accompanying Note to Supplementary Information.

                                                        26                                                  Item 3.A-29
                           CALIFORNIA AVOCADO COMMISSION
                            Notes to Financial Statements (Continued)
                                    October 31, 2010 and 2009


(1)   BUDGETARY INFORMATION:

      (a)     Budgets and Budgetary Accounting:

      Each year the Commission adopts a budget, which provides for its general operations. Budgets are
      prepared on the accrual basis of accounting. Department Heads are responsible for preparing and
      presenting their departmental budgets. Each Department Head is required to meet with the President
      and Finance and Accounting Manager to review each line item. The overall combined budget is
      prepared by the President and Finance and Accounting Manager and presented to the Board. Line
      item transfers do not need Board approval, but require notification to the Finance Committee. Any
      increases or decreases in a department’s budget must be approved by the Board.




                                                 27                                                  Item 3.A-30
                              CALIFORNIA AVOCADO COMMISSION
                  Combining Statement of Revenues, Expenses and Changes in Net Assets
                                 For the Year Ended October 31, 2010


                                                       Restricted        Unrestricted         Total
Operating revenues:
 Assessment revenue                                $    10,770,714   $      7,858,927    $   18,629,641
 Administrative and marketing fees                             -              751,795           751,795

        Total operating revenues                        10,770,714          8,610,722        19,381,436

Operating expenses:
 Marketing                                               8,779,703                -           8,779,703
 Non-marketing programs                                        -            1,553,498         1,553,498
 Administration                                              4,641          2,442,610         2,447,251

       Total operating expenses                          8,784,344          3,996,108        12,780,452

       Operating income                                  1,986,370          4,614,614         6,600,984

Non-operating revenues (expenses):
  Interest income                                              -               24,638           24,638
  Interest (expense)                                           -               (1,309)          (1,309)
  Other income                                                 -              166,139          166,139

       Total non-operating revenues (expenses)                 -              189,468          189,468

       Changes in net assets                             1,986,370          4,804,082         6,790,452

Total net assets - beginning                               237,992          2,633,278         2,871,270

Total net assets - ending                          $     2,224,362   $      7,437,360    $    9,661,722




                                                  28                                              Item 3.A-31
CALIFORNIA AVOCADO COMMISSION

    Report to the Board of Directors

  For the Year Ended October 31, 2010




                                        Item 3.A-32
                                           CALIFORNIA AVOCADO COMMISSION
                                                Report to the Board of Directors
                                              For the Year Ended October 31, 2010


                                                                Table of Contents

                                                                                                                                                   Page

Transmittal Letter ...................................................................................................................................... 1

Required Communications ........................................................................................................................ 3

Current Year Recommendations............................................................................................................... 5

Status of Prior Year Recommendations:

Significant Deficiency
    2009-1 Cash Disbursements .................................................................................................................. 6

Other Matters Related to Internal Controls:
    2009-2 Policies and Procedures ............................................................................................................ 6
    2009-3 Financial Reporting .................................................................................................................. 7
    2009-4 Risk Assessment and Monitoring Over Financial Reporting.................................................... 7

Schedule of Uncorrected Misstatements ................................................................................................... 9




                                                                                                                                                       Item 3.A-33
    The Board of Directors of the
     California Avocado Commission


    In planning and performing our audit of the basic financial statements of the California Avocado
    Commission (Commission) as of and for the year ended October 31, 2010, in accordance with auditing
    standards generally accepted in the United States of America, we considered the Commission’s internal
    control over financial reporting (internal control) as a basis for designing our auditing procedures for the
    purpose of expressing an opinion on the financial statements but not for the purpose of expressing an
    opinion on the effectiveness of the Commission’s internal control. Accordingly, we do not express an
    opinion on the effectiveness of the Commission’s internal control.

    A deficiency in internal control exists when the design or operation of a control does not allow
    management or employees, in the normal course of performing their assigned functions, to prevent, or
    detect and correct misstatements on a timely basis. A material weakness is a deficiency or combination of
    deficiencies in internal control, such that there is a reasonable possibility that a material misstatement of
    the entity’s financial statements will not be prevented, or detected and corrected on a timely basis.

    Our consideration of internal control was for the limited purpose described in the first paragraph and was
    not designed to identify all deficiencies in internal control that might be significant deficiencies or
    material weaknesses and, therefore, there can be no assurance that all such deficiencies have been
    identified. We did not identify any deficiencies in internal control that we consider to be material
    weaknesses.

    We have included in this letter a summary of communications with the Commission as required by
    professional auditing standards. We would also like to thank management and staff for the courtesy and
    cooperation extended to us during the course of our engagement.

    The accompanying required communications, comments and recommendations are intended solely for the
    information and use of the Board of Directors of the Commission, Commission management and others
    within the Commission and are not intended to be and should not be used by anyone other than these
    specified parties.

    Very truly yours,



    Certified Public Accountants
    Newport Beach, California

    January 6, 2011




                                                         1                                                    Item 3.A-34
This page left blank intentionally.




                2                     Item 3.A-35
                              CALIFORNIA AVOCADO COMMISSION
                                   Report to the Board of Directors
                                 For the Year Ended October 31, 2010


REQUIRED COMMUNICATIONS

Professional standards require that we provide you with information about our responsibilities under
generally accepted auditing standards and Government Auditing Standards, as well as certain information
related to the planned scope and timing of our audit. We have communicated such information in our
letter to you dated October 20, 2010. Professional standards also require that we communicate to you the
following information related to our audit.

Significant Audit Findings

Qualitative Aspects of Accounting Practices

Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the Commission are described in Note (1) to the financial statements. No new
accounting policies were adopted and the application of existing policies was not changed during the year.
We noted no transactions entered into by the Commission during the year for which there is a lack of
authoritative guidance or consensus. All significant transactions have been recognized in the financial
statements in the proper period.

Accounting estimates are an integral part of the financial statements prepared by management and are
based on management’s knowledge and experience about past and current events and assumptions about
future events. Certain accounting estimates are particularly sensitive because of their significance to the
financial statements and because of the possibility that future events affecting them may differ
significantly from those expected. The most sensitive estimate affecting the Commission’s financial
statements was depreciation. Management’s estimate of the depreciation is based on the useful-lives of the
capital assets. We evaluated the key factors and assumptions used to develop the useful-lives of the
capital assets in determining that it is reasonable in relation to the financial statements taken as a whole.

Difficulties Encountered in Performing the Audit

We encountered no significant difficulties in dealing with management in performing and completing our
audit.

Corrected and Uncorrected Misstatements

Professional standards require us to accumulate all known and likely misstatements identified during the
audit, other than those that are trivial, and communicate them to the appropriate level of management.
The attached schedule summarizes uncorrected misstatements of the financial statements. Management
has determined that their effects are immaterial, both individually and in the aggregate, to the financial
statements taken as a whole. In addition, none of the misstatements detected as a result of audit
procedures and corrected by management were material, either individually or in the aggregate, to the
financial statements taken as a whole.




                                                     3                                                    Item 3.A-36
                             CALIFORNIA AVOCADO COMMISSION
                                  Report to the Board of Directors
                                For the Year Ended October 31, 2010


REQUIRED COMMUNICATIONS (continued)

Disagreements with Management

For purposes of this letter, professional standards define a disagreement with management as a financial
accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be
significant to the financial statements or the auditor’s report. We are pleased to report that no such
disagreements arose during the course of our audit.

Management Representations

We have requested certain representations from management that are included in the management
representation letter dated January 6, 2011.

Management Consultations with Other Independent Accountants

In some cases, management may decide to consult with other accountants about auditing and accounting
matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves
application of an accounting principle to the Commission’s financial statements or a determination of the
type of auditor’s opinion that may be expressed on those statements, our professional standards require
the consulting accountant to check with us to determine that the consultant has all the relevant facts. To
our knowledge, there were no such consultations with other accountants.

Other Audit Findings or Issues

We generally discuss a variety of matters, including the application of accounting principles and auditing
standards, with management each year prior to retention as the Commission’s auditors. However, these
discussions occurred in the normal course of our professional relationship and our responses were not a
condition to our retention.




                                                    4                                                  Item 3.A-37
                 CALIFORNIA AVOCADO COMMISSION
                      Report to the Board of Directors
                    For the Year Ended October 31, 2010


CURRENT YEAR RECOMMENDATIONS

None noted.




                                   5                      Item 3.A-38
                             CALIFORNIA AVOCADO COMMISSION
                                  Report to the Board of Directors
                                For the Year Ended October 31, 2010


STATUS OF PRIOR YEAR RECOMMENDATIONS

2009-1 Cash Disbursements
(Significant Deficiency)

Observation

During the information gathering process, we noted subsequent to September 15, 2009, the Accounting
Manager was established as an authorized signer on the Commission’s bank accounts. We further noted that
only one signature is required for checks equal to or less than $1,000 and that the Accounting Manager
maintains the blank check stock and is also responsible for preparing the bank reconciliation.

Recommendation

We recommend that blank check stock be maintained by an individual independent of the accounts payable
and check writing process. We further recommend that this individual maintain a check log of checks issued
to ensure that there are no gaps in the check sequence.

Status

Implemented. For fiscal year 2009-2010, the blank check stock and check log of checks issued are
maintained by the Office Administrator.

2009-2 Policies and Procedures
(Other Matters Related to Internal Control)

Observation

During review of the Commission’s policies and procedures, we noted that most accounting policies had not
been updated since 1996; however, policies and procedures relating to cash disbursements were updated in
fiscal year 2007-2008 and cash management and investments were updated in fiscal year 2008-2009. This
comment was included in the management letter dated December 31, 2008.

Recommendation

We recommend the Commission periodically review and update its accounting policies and procedures, to
ensure that procedures are consistent and effective. We also recommend that when significant changes occur
relating to finance personnel that the policies be reviewed to determine if changes should be made.

Status

Implemented. The Commission management and Finance Committee worked together to update the
outdated accounting and internal control policies and procedures. The updated internal control policies
and procedures were adopted by the Board on June 17, 2010.




                                                    6                                                  Item 3.A-39
                               CALIFORNIA AVOCADO COMMISSION
                                    Report to the Board of Directors
                                  For the Year Ended October 31, 2010


STATUS OF PRIOR YEAR RECOMMENDATIONS (continued)

2009-3 Financial Reporting
(Other Matters Related to Internal Control)

Observation

During the information gathering process, we noted subsequent to September 15, 2009, the Accounting
Manager prepares, reviews and posts journal entries to the general ledger with no review or approval.

Recommendation

Due to the small size of the accounting department, we recommend that someone independent of the journal
entry preparation and posting process review and approve all journal entries posted to the general ledger to
ensure errors are noted and corrected on a timely basis.

Status

Implemented. All journal entries were reviewed and approved by the Commission’s President in fiscal
year 2009-2010.

2009-4 Risk Assessment and Monitoring Over Financial Reporting
(Other Matters Related to Internal Control)

Observation

The Committee on Sponsoring Organizations of the Treadway Commission (COSO) has established a
nationally recognized framework for internal control in its Internal Control – Integrated Framework and its
related Guidance for Smaller Public Companies: Reporting on Internal Controls over Financial Reporting.
The COSO framework establishes five elements of internal control: (1) Control Environment; (2) Risk
Assessment; (3) Control Activities; (4) Information and Communication; and (5) Monitoring. Risk
Assessment and Monitoring are integral parts of internal control and management should periodically
evaluate the risks and monitor the changes facing the Commission. This process involves evaluating both
previously identified risks and potential new risks and providing assurance that (1) controls are designed
properly to address significant risks and (2) controls are operating effectively.

The Auditing Standards Board (ASB) of the American Institute of Certified Public Accountant’s (AICPA)
recently adopted a set of eight Statements of Auditing Standards (SAS No. 104 through 111), which among
other things, require auditors to assess an organization’s design of controls and determine whether the
controls have been placed in operation for all elements of internal control over financial reporting. If controls
do not exist, are poorly designed or not operating effectively, the auditor must evaluate the control deficiency
and report the deficiency to management, including whether the control deficiency is a significant deficiency
or material weaknesses.




                                                       7                                                      Item 3.A-40
                              CALIFORNIA AVOCADO COMMISSION
                                   Report to the Board of Directors
                                 For the Year Ended October 31, 2010


STATUS OF PRIOR YEAR RECOMMENDATIONS (continued)

The Commission’s management has updated policies and procedures documented over certain significant
accounting areas (e.g. cash disbursements and cash management and investments). In addition, management
meets monthly to discuss operational matters. Although management has initiated the risk assessment
process, formal policies and procedures have not been documented for all significant accounting areas (refer
to the Policies and Procedures comment above) and there is no formal monitoring plan to ensure procedures
are adequate and effective to continually mitigate potential risk to financial reporting. This comment was
included in the management letter dated December 31, 2008.

Recommendation

We recommend the Commission develop and implement a policy on internal control assessment and a
comprehensive risk assessment plan, which would include monitoring the adequacy and effectiveness of
internal control procedures. This risk should be evaluated at least annually to consider any changes to the
Commission’s operating environment.

Status

Implemented. For the fiscal year 2009-2010, the Commission's Finance Committee identified the
Commission's risks and developed a new internal control policy to address those risks.




                                                     8                                                   Item 3.A-41
                           CALIFORNIA AVOCADO COMMISSION
                                Report to the Board of Directors
                              For the Year Ended October 31, 2010


SCHEDULE OF UNCORRECTED MISSTATEMENTS

         Account Description                         Debit          Credit

Interest receivable                              $     2,503   $         -
Interest income                                        4,609             -
Beginning net assets                                     -             7,112
To record interest receivable with
rollover effect from prior year




                                             9                                 Item 3.A-42
    The Board of Directors of the
      California Avocado Commission


            Independent Auditor’s Report on Internal Control Over Financial Reporting and on
                Compliance and Other Matters Based on an Audit of Financial Statements
                     Performed in Accordance With Government Auditing Standards

    We have audited the basic financial statements of the California Avocado Commission (Commission) as
    of and for the year ended October 31, 2010, and have issued our report thereon dated January 6, 2011.
    We conducted our audit in accordance with auditing standards generally accepted in the United States of
    America and the standards applicable to financial audits contained in Government Auditing Standards
    issued by the Comptroller General of the United States.

    Internal Control Over Financial Reporting

    In planning and performing our audit, we considered the Commission’s internal control over financial
    reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the
    financial statements, but not for the purpose of expressing an opinion on the effectiveness of the
    Commission’s internal control over financial reporting. Accordingly, we do not express an opinion on the
    effectiveness of the Commission’s internal control over financial reporting.

    A deficiency in internal control exists when the design or operation of a control does not allow
    management or employees, in the normal course of performing their assigned functions, to prevent, or
    detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination
    of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement
    of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis.

    Our consideration of internal control over financial reporting was for the limited purpose described in the
    first paragraph of this section and was not designed to identify all deficiencies in internal control over
    financial reporting that might be deficiencies, significant deficiencies or material weaknesses. We did not
    identify any deficiencies in internal control over financial reporting that we consider to be material
    weaknesses, as defined above.

    Compliance and Other Matters

    As part of obtaining reasonable assurance about whether the Commission’s basic financial statements are
    free of material misstatement, we performed tests of its compliance with certain provisions of laws,
    regulations, contracts, including the United States Department of Agriculture, Agriculture Marketing
    Service contract with the Hass Avocado Board, and grant agreements, noncompliance with which could
    have a direct and material effect on the determination of financial statement amounts. However,
    providing an opinion on compliance with those provisions was not an objective of our audit and,
    accordingly, we do not express such an opinion. The results of our tests disclosed no instances of
    noncompliance or other matters that are required to be reported under Government Auditing Standards.




                                                          1                                                    Item 3.A-43
This report is intended solely for the information and use of the Board of Directors and management of
the California Avocado Commission, and is not intended to be and should not be used by anyone other
than these specified parties.



Certified Public Accountants
Newport Beach, California

January 6, 2011




                                                  1                                                Item 3.A-44
               BOARD OF DIRECTORS MEETING, January 20, 2011

                                                                              BOARD ACTION

ITEM 3.B:      CONSIDER APPROVAL FOR ESTABLISHING NEW BANK ACCOUNT

SUMMARY:

       In an attempt to lower CAC bank fees, management has been negotiating with its current bank
(Wells Fargo Bank) and soliciting proposals from seven other banks. Currently, CAC pays about
$1,200/month to Wells Fargo for various bank fees. Management’s goal is to significantly lower those fees
without sacrificing the security of its funds. Management has received several proposals and is expecting
a few more.

        In reviewing the banks’ proposals, management considers, among other things, the banks’
financial strength, pricing, versatility of products and services, customer service and knowledge in
government funds regulations. In addition, management also considers the banks’ interest and ability to
provide a line of credit since CAC’s current line of credit with Wells Fargo Bank will be discontinued once
CAC terminates its banking relationship with Wells Fargo.

       Per CAC’s Internal Control Policy, opening a bank new account or line of credit requires the
Board’s approval. Management will review all proposals and present its recommendation to the Board at
the meeting. Based on the proposals received so far, CAC should be able to significantly lower its bank
fees by switching from Wells Fargo to a different bank.


FISCAL ANALYSIS:

   •   Based on the proposals received so far, CAC should be able to expect at least $500 savings per
       month.

BOARD OPTIONS:

   •   Approve the establishment of new accounts with the bank recommended by management.
   •   Do not approve the establishment of new accounts with the bank recommended by management.
   •   Take no action.

STAFF RECOMMENDATION:

   Management will present its recommendation to the Board at the meeting.

EXHIBITS / ATTACHMENTS:

   None.

                                                                                                  Item 3.B-1
               BOARD OF DIRECTORS MEETING, January 20, 2011

                                                            BOARD INFORMATION

ITEM 3.D:     2010-11 FINANCIAL & CROP UPDATE

SUMMARY:

Financial Position and Operational Indicators

The following are highlights taken from the Commission’s Balance Sheet & Reserves (Statement of
Net Assets) as of 12/31/2010 and Statement of Revenues, Expenses & Changes in Net Assets
(Income Statement) for the period then ended:

  •    Cash in Bank–Checking Account = $70,631          •   Total Liabilities = $1,643,588
  •    Investments (LAIF) = $9,342,459                  •   Total Reserves = $9,313,598 (Beg.
  •    Cash in Bank & LAIF held for AIP = $1,052,191        $9,661,722 - Deficit $348,124)
  •    Total Cash & Investment = $10,465,481            •   Total Revenues = $687,680
  •    Assessment Receivable = $360,000                 •   Total Expenditures = $1,035,806
  •    Total Assets = $10,957,185                       •   Deficit = $348,126



Crop Statistics

Handlers reported 14 million pounds of California avocados handled in November 2010 with an
average price (per pound) reported at 79 cents. We estimated a total of 1.1 million pounds were
harvested in December 2010 with an average price (per pound) of 88 cents. That would bring the
total harvested through December to 15.1 million pounds at an average price (per pound) of 80
cents.

The attached 2009-10 and 2010-11 U.S. Aggregate Avocado Volume by Month Charts (as provided
by HAB) show the most current crop projection for all countries of origin.

FISCAL ANALYSIS:

   •   Not applicable.

BOARD OPTIONS:

   •   Discussion item only.

STAFF RECOMMENDATION:

   •   Not applicable.

                                                                                        Item 3.D-1
EXHIBITS / ATTACHMENTS:

  •   CAC Balance Sheet and Reserves as of December 31, 2010
  •   Statement of Revenues and Expenses for the year ending December 31, 2010
  •   2010-11 Pounds & Dollars by Variety Report (November 2010)
  •   2009-10 U.S. Aggregate Avocado Volume by Month Chart (All Varieties)
  •   2010-11 U.S. Aggregate Avocado Volume by Month Chart (All Varieties)




                                                                                 Item 3.D-2
                            California Avocado Commission
                             Balance Sheet and Reserves
                                As of December 31, 2010

                                                            Balance       %

ASSETS

Cash and Short Term Investments:
Petty Cash                                                       $200      0.00%
Cash in Bank                                                   70,631      0.64%
Cash in Bank-LAIF                                           9,342,459     85.26%
Cash in Bank & LAIF (held for AIP)                          1,052,191      9.60%
  Total Cash and Short Term Investments                 10,465,481       95.51%

Other Current Assets:
Assessment Receivable                                         360,000      3.29%
Other Receivable                                               13,337      0.12%
Prepaids                                                       70,046      0.64%
  Total Other Current Assets                                 443,383      4.05%
  Total Current Assets                                  10,908,864       99.56%

Fixed Assets:

Property Plant & Equipment (Depreciated):
Furniture                                                      31,636      0.29%
Office Equipment                                               16,685      0.15%
Leasehold Improvements                                                     0.00%
Software                                                                   0.00%
  Total Property Plant & Equipment                            48,321      0.44%
  Net Fixed Assets                                            48,321      0.44%

Total Assets                                           $10,957,185       100.00%

LIABILITIES AND NET RESERVES

Current Liabilities:
Accounts Payable & Accrued Expenses                          $427,904     26.03%
Due to AIP                                                  1,052,191     64.02%
Other Payable (Vacation/Payroll/Sec. 125)                     119,461      7.27%
Capital Lease Payable-ST                                       10,592      0.64%
Unearned Revenue                                                           0.00%
  Total Current Liabilities                                 1,610,148    97.97%

Long Term Liabilities:
Capital Lease Payable-LT                                                   0.00%
Deposit Due to CDFA/AIP                                        18,000      1.10%
Security Deposits                                              15,440      0.94%
  Total Long Term Liabilities                                 33,440      2.03%
  Total Liabilities                                         1,643,588    100.00%

Net Reserves
Net Reserves-Prior Periods                                  9,661,722    103.74%
Surplus (Deficit)-Current Period                             (348,124)    (3.74%)
Total Net Reserves                                          9,313,598    100.00%

Total Liabilities and Net Reserves                     $10,957,186       100.00%




01/13/11 10:28 AM                                                          Page 1   Item 3.D-3
                                       California Avocado Commission
                    Statement of Revenues, Expenses & Changes in Net Assets (Surplus/Deficit)
                        For the Two Months Ending December 31, 2010 (with Comparison to Prior Year)

                                                   2010/11                   2009/10            Current Year Vs Prior Year
                                                YTD        %              YTD        %         Var-Fav(Unfav)   % Change


SUMMARY PAGE

Revenues
Assessment Revenues
CAC Assessment Revenue                         $192,504     27.99%        $17,992     7.12%         ($174,512)     (969.94%)
HAB Assessment Revenue                          345,357     50.22%         27,800    11.00%          (317,557)   (1,142.29%)
   Sub-total Assessment Revenue                 537,861     78.21%         45,792    18.11%          (492,069)   (1,074.57%)
Other Revenues
Program Implementation Revenue (HAB)            118,408     17.22%        104,228    41.23%           (14,180)     (13.60%)
Admin & Accounting Fee Revenue (HAB)                         0.00%         74,044    29.29%            74,044      100.00%
Admin & Accounting Fee Revenue (AIP)             12,500      1.82%         12,381     4.90%              (119)      (0.96%)
Interest Income                                 (12,815)    (1.86%)                   0.00%            12,815        0.00%
Sublease Income                                  31,726      4.61%         15,972     6.32%           (15,754)     (98.64%)
Other Income                                                 0.00%            409     0.16%               409      100.00%
   Sub-total Other Revenues                     149,819     21.79%        207,034    81.89%            57,215       27.64%
   Total Revenue                                687,680    100.00%        252,826    100.00%         (434,854)     (172.00%)
Expenses
Marketing Expenses
Consumer Advertising                            178,941     17.28%        127,667    11.14%            51,274       40.16%
Merchandising                                    58,844      5.68%         29,307     2.56%            29,537      100.78%
Foodservice                                      38,560      3.72%         58,108     5.07%           (19,548)     (33.64%)
Public Relations                                 75,064      7.25%         79,392     6.93%            (4,328)      (5.45%)
Online Marketing                                 52,081      5.03%        137,634    12.01%           (85,553)     (62.16%)
Marketing Planning & Other                        1,223      0.12%            586     0.05%               637      108.70%
   Sub-total Marketing Expenses                 404,713     39.07%        432,694    37.76%           (27,981)       (6.47%)

Non-Marketing Expenses
Industry Affairs                                 42,695      4.12%         58,365     5.09%           (15,670)     (26.85%)
Production Research                             222,849     21.51%        195,982    17.10%            26,867       13.71%
Administration                                  365,549     35.29%        458,898    40.05%           (93,349)     (20.34%)
   Sub-total Non-Marketing Expenses             631,093     60.93%        713,245    62.24%           (82,152)      (11.52%)
Total Expenses                                1,035,806    100.00%       1,145,939   100.00%         (110,133)       (9.61%)

Surplus (Deficit)                              (348,126)     0.00%       (893,113)    0.00%          (544,987)      (61.02%)




                                                     01/13/11 10:28 AM                                                Page 1

                                                                                                                               Item 3.D-4
                                                         California Avocado Commission
                             Statement of Revenues, Expenses & Changes in Net Assets (Surplus/Deficit) - Actual vs. Budget
                                                          For the Two Months Ending December 31, 2010

                                                        YTD              YTD          YTD Actual Vs YTD Budget        Annual       YTD Actual Vs Annual Budget
                                               Actual           %       Budget       Var-Fav(Unfav) % of Budget       Budget       Var-Fav(Unfav) % of Budget


SUMMARY PAGE

Revenues
Assessment Revenues
CAC Assessment Revenue                         $192,504       27.99%     $98,000            $94,504       96.43%     $4,640,000       ($4,447,496)    (95.85%)
HAB Assessment Revenue                          345,357       50.22%     201,300            144,057       71.56%      5,546,300        (5,200,943)    (93.77%)
   Sub-total Assessment Revenue                 537,861       78.21%      299,300           238,561       79.71%     10,186,300        (9,648,439)    (94.72%)
Other Revenues
Program Implementation Revenue (HAB)            118,408       17.22%       37,500            80,908       215.75%      225,000          (106,592)     (47.37%)
Admin & Accounting Fee Revenue (AIP)             12,500        1.82%       12,500                           0.00%       74,285           (61,785)     (83.17%)
Grant Revenue - Dept. of Water Resources                       0.00%                                        0.00%       24,500           (24,500)    (100.00%)
Interest Income                                  (12,815)     (1.86%)       1,200           (14,015)   (1,167.92%)       5,260           (18,075)    (343.63%)
Sublease Income                                   31,726       4.61%       30,880               846         2.74%      138,955          (107,229)     (77.17%)
   Sub-total Other Revenues                     149,819       21.79%       82,080            67,739       82.53%        468,000          (318,181)    (67.99%)
   Total Revenue                                687,680       100.00%     381,380           306,300       80.31%     10,654,300        (9,966,620)    (93.55%)
Expenses
Marketing Expenses
Consumer Advertising                            178,941       17.28%     178,941                           0.00%      5,310,000        5,131,059       96.63%
Merchandising                                    58,844        5.68%      67,958              9,114       13.41%      1,445,000        1,386,156       95.93%
Foodservice                                      38,560        3.72%      88,418             49,858       56.39%        828,000          789,440       95.34%
Public Relations                                 75,064        7.25%      74,775               (289)      (0.39%)       845,000          769,936       91.12%
Online Marketing                                 52,081        5.03%      52,424                343        0.65%        526,650          474,569       90.11%
Marketing Planning & Other                        1,223        0.12%         250               (973)    (389.20%)        52,000           50,777       97.65%
   Sub-total Marketing Expenses                 404,713       39.07%      462,766            58,053       12.54%      9,006,650         8,601,937      95.51%

Non-Marketing Expenses
Industry Affairs                                 42,695        4.12%     108,775             66,080       60.75%        958,300          915,605       95.54%
Production Research                             222,849       21.51%     206,182            (16,667)      (8.08%)     1,337,100        1,114,251       83.33%
Grant - DWR                                                    0.00%       2,832              2,832      100.00%         24,500           24,500      100.00%
Administration                                  365,549       35.29%     441,499             75,950       17.20%      2,710,000        2,344,451       86.51%
   Sub-total Non-Marketing Expenses             631,093       60.93%      759,288           128,195       16.88%      5,029,900         4,398,807      87.45%
Total Expenses                                 1,035,806      100.00%   1,222,054           186,248       15.24%     14,036,550        13,000,744      92.62%

Surplus (Deficit)                               (348,126)      0.00%     (840,674)          492,548       58.59%     (3,382,250)        3,034,124      89.71%




                                                                        01/13/11 04:25 PM                                                               Page 1

                                                                                                                                              Item 3.D-5
                                                         California Avocado Commission
                             Statement of Revenues, Expenses & Changes in Net Assets (Surplus/Deficit) - Actual vs. Budget
                                                          For the Two Months Ending December 31, 2010

                                                        YTD             YTD          YTD Actual Vs YTD Budget        Annual      YTD Actual Vs Annual Budget
                                               Actual          %       Budget       Var-Fav(Unfav) % of Budget       Budget      Var-Fav(Unfav) % of Budget


Expenses:

Consumer Advertising
Media                                           $35,000        3.38%     $35,000                          0.00%     $4,224,000      $4,189,000       99.17%
Fall Promotion                                                 0.00%                                      0.00%        200,000         200,000      100.00%
Production                                       27,941        2.70%      27,941                          0.00%        190,000         162,059       85.29%
Program Administration                          116,000       11.21%     116,000                          0.00%        696,000         580,000       83.33%
   Sub-total Consumer Advertising               178,941       17.30%     178,941                           0.00%     5,310,000        5,131,059      96.63%

Merchandising
Trade Relations                                  33,466       3.23%       32,834             (632)       (1.92%)      553,750          520,284       93.96%
Retail Promotions                                 6,940       0.67%        9,550            2,610        27.33%       575,750          568,810       98.79%
Data, Research & Analysis                        10,147       0.98%       16,324            6,177        37.84%       210,500          200,353       95.18%
Administration & Other                            8,291       0.80%        9,250              959        10.37%       105,000           96,709       92.10%
   Sub-total Merchandising                       58,844        5.69%      67,958             9,114        13.41%     1,445,000        1,386,156      95.93%

Foodservice
Media                                                75       0.01%        1,500            1,425        95.00%       200,000          199,925       99.96%
Production                                        5,171       0.50%       12,500            7,329        58.63%        20,000           14,829       74.15%
Public Relations & Collateral Materials           5,450       0.53%       18,500           13,050        70.54%       105,000           99,550       94.81%
Foodservice Events                                7,672       0.74%       27,600           19,928        72.20%       179,000          171,328       95.71%
Chain Promotions                                 15,863       1.53%       19,968            4,105        20.56%       274,000          258,137       94.21%
Program Administration Fees                       4,329       0.42%        8,350            4,021        48.16%        50,000           45,671       91.34%
   Sub-total Foodservice                         38,560        3.73%      88,418            49,858        56.39%       828,000         789,440       95.34%

Public Relations
Public Relations                                 18,713       1.81%       18,725                12         0.06%      369,800          351,087       94.94%
News Bureau                                      22,052       2.13%       22,000               (52)       (0.24%)     263,850          241,798       91.64%
Nutrition Communications                         18,280       1.77%       18,500               220         1.19%      131,750          113,470       86.13%
Program Administration                           16,019       1.55%       15,550              (469)       (3.02%)      79,600           63,581       79.88%
   Sub-total Public Relations                    75,064        7.26%      74,775              (289)       (0.39%)      845,000         769,936       91.12%

Online Marketing
Website                                          22,543       2.18%       21,987              (556)       (2.53%)     352,800          330,257       93.61%
Social Media                                     10,560       1.02%       10,559                (1)       (0.01%)      90,250           79,690       88.30%
E-Mail                                           10,053       0.97%       10,953               900         8.22%       43,600           33,547       76.94%
Program Administration                            8,925       0.86%        8,925                           0.00%       40,000           31,075       77.69%
   Sub-total Online Marketing                    52,081        5.03%      52,424              343          0.65%       526,650         474,569       90.11%

Marketing Planning & Other
Marketing Planning                                1,223       0.12%          250              (973)     (389.20%)      15,000           13,777       91.85%
Buy California Marketing Campaign                             0.00%                                        0.00%       25,000           25,000      100.00%
Festivals                                                     0.00%                                        0.00%       12,000           12,000      100.00%
   Sub-total Marketing Planning & Other           1,223        0.12%         250              (973)     (389.20%)       52,000          50,777       97.65%

Industry Affairs
AMRIC Operation                                  11,640       1.13%       12,560              920         7.32%        77,600           65,960       85.00%
Crop Forecasting & Analysis                         480       0.05%        1,000              520        52.00%        89,600           89,120       99.46%
Grower Database                                   4,275       0.41%        4,275                          0.00%         5,700            1,425       25.00%
Grove ID GIS Project Dmnt                                     0.00%                                       0.00%        32,000           32,000      100.00%
Field Meetings, Seminars & Workshops                563       0.05%        2,500             1,937       77.48%        17,000           16,437       96.69%
Field Days                                                    0.00%        2,500             2,500      100.00%        15,000           15,000      100.00%
Educational Outreach Materials                        6       0.00%        6,420             6,414       99.91%       107,000          106,994       99.99%
Online Information (Grower Web Site)              2,868       0.28%       11,350             8,482       74.73%        82,000           79,132       96.50%
Publications                                        220       0.02%        1,220             1,000       81.97%        76,400           76,180       99.71%
Annual Meeting                                       19       0.00%                            (19)       0.00%        15,000           14,981       99.87%
Annual Report                                    15,009       1.45%                        (15,009)       0.00%        25,000            9,991       39.96%
Water Issues                                                  0.00%       12,500            12,500      100.00%        75,000           75,000      100.00%
Field/Technical Support                                       0.00%        8,320             8,320      100.00%        50,000           50,000      100.00%
Legislative & Regulatory Advocacy                             0.00%        6,660             6,660      100.00%        40,000           40,000      100.00%
Export Exploration                                            0.00%        2,500             2,500      100.00%        10,000           10,000      100.00%
Elections                                                     0.00%                                       0.00%        20,000           20,000      100.00%
Legal Support                                       858       0.08%       18,000           17,142        95.23%        60,000           59,142       98.57%
Governance Support                                            0.00%        4,000            4,000       100.00%        35,000           35,000      100.00%
Referendum                                                    0.00%                                       0.00%        22,000           22,000      100.00%
Redistricting                                                 0.00%                                       0.00%         7,000            7,000      100.00%
Coalition Dues, Sponsorship & Reports             3,230       0.31%        3,250               20         0.62%        22,000           18,770       85.32%
Grant Writing                                                 0.00%        3,000            3,000       100.00%        15,000           15,000      100.00%
Travel                                            1,514       0.15%        5,400            3,886        71.96%        40,000           38,486       96.22%
Office Expense                                    2,013       0.19%        3,320            1,307        39.37%        20,000           17,987       89.94%
   Sub-total Industry Affairs                    42,695        4.13%     108,775            66,080        60.75%       958,300         915,605       95.54%

Production Research
Scale Survey and Disperal on Imported             9,833       0.95%        9,833                          0.00%        59,000           49,167       83.33%



                                                                       01/13/11 04:25 PM                                                              Page 2

                                                                                                                                            Item 3.D-6
                                                       California Avocado Commission
                           Statement of Revenues, Expenses & Changes in Net Assets (Surplus/Deficit) - Actual vs. Budget
                                                         For the Two Months Ending December 31, 2010

                                                        YTD              YTD          YTD Actual Vs YTD Budget     Annual        YTD Actual Vs Annual Budget
                                               Actual           %       Budget       Var-Fav(Unfav) % of Budget    Budget        Var-Fav(Unfav) % of Budget

Surveying Avocados in Baja Peninsula             $4,350        0.42%       $4,350                        0.00%       $26,100           $21,750       83.33%
Dvlpmnt of Pheromone Detection & Monitoring       6,850        0.66%        6,850                        0.00%        41,100            34,250       83.33%
Mgmt & Resistance Monitoring Avo Thrips          12,083        1.17%       12,083                        0.00%        72,500            60,417       83.33%
Fungal and Bacterial Pathogens                   10,667        1.03%       10,667                        0.00%        64,000            53,333       83.33%
Survey for Armored Scale & Natural Enemies       10,333        1.00%       10,333                        0.00%        62,000            51,667       83.33%
Binomial Sampling for Persea Mite                 3,333        0.32%        3,333                        0.00%        20,000            16,667       83.34%
Optimization of Systemic Pesticides              14,250        1.38%       14,250                        0.00%        85,500            71,250       83.33%
Selection & Evaluation of Improved Var           31,667        3.06%       31,667                        0.00%       190,000           158,333       83.33%
Screening of Rootstocks Resistant to Phy         25,700        2.48%       25,700                        0.00%       154,200           128,500       83.33%
Implementing Marker-Assisted Selection           17,167        1.66%       17,167                        0.00%       103,000            85,833       83.33%
Use of NAA as Tree Management Tool                  900        0.09%          900                        0.00%         5,400             4,500       83.33%
Salinity-Chloride Interactions                   14,433        1.40%       14,433                        0.00%        86,600            72,167       83.33%
Field Strategies to Correct Alt. Bearing         11,483        1.11%       11,483                        0.00%        68,900            57,417       83.33%
PGR II-Strategies to Increase Fruit Size         12,533        1.21%       12,533                        0.00%        75,200            62,667       83.33%
Phase III for GA3 & Phase II for 2,4-D           11,417        1.10%       11,417                        0.00%        68,500            57,083       83.33%
International Alternate Bearing                  16,667        1.61%                        (16,667)     0.00%       100,000            83,333       83.33%
Determination of Eating Quality                   9,183        0.89%        9,183                        0.00%        55,100            45,917       83.33%
   Sub-total Production Research                222,849       21.54%      206,182           (16,667)     (8.08%)    1,337,100         1,114,251      83.33%

Grant - DWR
DWR Grant- Administration Management                           0.00%        2,832            2,832     100.00%        24,500            24,500      100.00%
   Sub-total Grant - DWR                                       0.00%        2,832             2,832     100.00%       24,500             24,500     100.00%

Administration
Rent-Office-CAM, Ins, Prop Tax-Mauchly            8,017        0.77%        8,200              183       2.23%        50,600             42,583      84.16%
Rent-Office-CAM, Ins, Prop Tax-Discovery         52,245        5.05%       57,900            5,655       9.77%       259,500            207,255      79.87%
Rent-Offsite Storage                              1,172        0.11%        1,200               28       2.33%         7,200              6,028      83.72%
Corporate Insurance                               3,916        0.38%       20,000           16,084      80.42%        61,600             57,684      93.64%
Office Expense, Supplies & Janitorial             1,776        0.17%        5,050            3,274      64.83%        26,200             24,424      93.22%
Utilities                                         3,556        0.34%        3,900              344       8.82%        19,500             15,944      81.76%
Bank Fees                                         2,535        0.25%        3,000              465      15.50%        18,000             15,465      85.92%
Equip Maintenance & Exp and Cap Lease Int         2,606        0.25%        4,639            2,033      43.82%        28,500             25,894      90.86%
Telephone                                         1,891        0.18%        3,750            1,859      49.57%        21,400             19,509      91.16%
CPA-Financial Audits                                           0.00%                                     0.00%        22,000             22,000     100.00%
CPA-Assessment Audits                                          0.00%                                     0.00%        23,000             23,000     100.00%
CDFA-Fiscal and Compliance Audit                               0.00%                                     0.00%        60,000             60,000     100.00%
California Dept. of Food & Agriculture                         0.00%      10,000            10,000     100.00%        60,000             60,000     100.00%
U.S. Dept. of Agriculture (AMS)                  10,010        0.97%      10,000               (10)     (0.10%)       60,000             49,990      83.32%
Legal & Other Professional                           25        0.00%       3,000             2,975      99.17%        19,000             18,975      99.87%
Salaries/Wages                                  199,719       19.30%     200,540               821       0.41%     1,213,000          1,013,281      83.54%
Pension, Payroll Tax & Benefits                  55,350        5.35%      72,970            17,620      24.15%       437,500            382,150      87.35%
Board Member District Meetings & Expenses                      0.00%                                     0.00%        20,000             20,000     100.00%
Board Member Entertainment                                     0.00%                                     0.00%         2,000              2,000     100.00%
Board Member Travel, Lodging, Mileage, Meal       4,116        0.40%        6,750            2,634      39.02%        40,500             36,384      89.84%
Board Meeting Expenses                            2,406        0.23%        2,000             (406)    (20.30%)       27,000             24,594      91.09%
Network Maintenance, Hardware, Software &         1,358        0.13%        3,000            1,642      54.73%        21,900             20,542      93.80%
IT Support & Consulting and Other Service         1,801        0.17%        4,800            2,999      62.48%        28,700             26,899      93.72%
Accounting & Assessment System                    2,942        0.28%        3,000               58       1.93%         4,600              1,658      36.04%
Administration Staff Travel                         777        0.08%        1,500              723      48.20%         8,000              7,223      90.29%
Depreciation Expense                              6,475        0.63%        7,200              725      10.07%        43,300             36,825      85.05%
Pension Admin & Legal                               523        0.05%        2,500            1,977      79.08%        15,000             14,477      96.51%
Dues & Reg, Education, Training, Recruitment        779        0.08%        4,600            3,821      83.07%        27,000             26,221      97.11%
Temporary Help                                    1,554        0.15%        2,000              446      22.30%        15,000             13,446      89.64%
38 Discovery Office Suite Restoration                          0.00%                                     0.00%        70,000             70,000     100.00%
   Sub-total Administration                     365,549       35.33%      441,499            75,950      17.20%     2,710,000         2,344,451      86.51%

Total Expenses                                 1,034,583      100.00%   1,221,804           187,221      15.32%    13,984,550        12,949,967      92.60%

Surplus (Deficit)                              (346,903) 100.00%         (840,424)          493,521      58.72%    (3,330,250)        2,983,347      89.58%




                                                                        01/13/11 04:25 PM                                                             Page 3

                                                                                                                                            Item 3.D-7
1/10/2011
3:21:15 PM

                                     CALIFORNIA AVOCADO COMMISSION
                                      POUNDS & DOLLARS BY VARIETY
                                      November 2010 Through November 2010

Month             Hass       Lamb       Others       Total        Hass      Lamb     Others        Total    Avg
                Pounds     Pounds      Pounds      Pounds        Dollars   Dollars   Dollars      Dollars   $/Lb

Nov 2010      13,644,407   264,058     107,600   14,016,065   10,830,601   185,544   56,545    11,072,690   0.790
1st QTR       13,644,407   264,058     107,600   14,016,065   10,830,601   185,544   56,545    11,072,690   0.790

1st Half      13,644,407   264,058     107,600   14,016,065   10,830,601   185,544   56,545    11,072,690   0.790

Total         13,644,407   264,058     107,600   14,016,065   10,830,601   185,544   56,545    11,072,690   0.790



Grand Total                                                                                    11,072,690   0.790




Y-T-D (%)        97.35%     1.88%        .77%      100.00%       97.81%     1.68%      .51%      100.00%
Y-T-D AVG
$/LB                                                               0.794     0.703    0.526         0.790




                                                                                                     Item 3.D-8
                                                                                2009-2010 FISCAL YEAR
                                                                   U. S. AGGREGATE AVOCADO VOLUME BY MONTH
                                                                                            All Varieties

               140.0


                                                                                             ALL VARIETIES
               120.0



               100.0



                80.0



                60.0



                40.0



                20.0



                 0.0
                          Nov‐09         Dec‐09         Jan‐10       Feb‐10     Mar‐10     Apr‐10     May‐10     Jun‐10      Jul‐10      Aug‐10       Sep‐10        Oct‐10


                                                                   Others*         Peru        Mexico          Chile        California

                             Actual        Actual        Actual      Actual     Actual    Actual    Actual     Actual     Actual      Actual      Actual       Actual        Est.
                               Nov-09        Dec-09        Jan-10      Feb-10    Mar-10    Apr-10     May-10    Jun-10      Jul-10     Aug-10      Sep-10       Oct-10       TOTAL
             California           0.0           2.0           8.4        10.7      37.6      52.2       66.0      79.9        87.3       78.6        73.2         38.6        534.5 **
             Chile               34.7          31.6          34.7        31.6      17.1       1.8        0.0       0.1         0.6        1.5         5.8         10.5        170.0
             Mexico              55.9          55.0          55.9        55.0      68.2      65.9       52.1      46.9        32.1       22.0        31.0         30.4        570.4
             Peru                 0.0           0.0           0.0         0.0       0.0       0.0        0.0       0.0         0.0        0.1         0.2          0.0          0.3
             Others*              5.5           4.7           7.2         6.4       3.8       0.8        0.8       2.8        12.0       14.8        10.0         11.0         79.8
                 TOTAL           96.1          93.3         106.2       103.7     126.7     120.7      118.9     129.7       132.0      117.0       120.2         90.5       1355.0

             * Others = Florida, Dominican Republic, New Zealand
             ** Total crop without carry-out
             Source: Hass Avocado Board




Item 3.D-9
                                                                                 2010-2011 FISCAL YEAR
                                                                    U. S. AGGREGATE AVOCADO VOLUME BY MONTH
                                                                                              All Varieties

                140.0


                                                                                               ALL VARIETIES
                120.0



                100.0



                 80.0



                 60.0



                 40.0



                 20.0



                  0.0
                           Nov‐10         Dec‐10         Jan‐11       Feb‐11     Mar‐11     Apr‐11     May‐11      Jun‐11    Jul‐11    Aug‐11     Sep‐11     Oct‐11


                                                                    Others*         Peru        Mexico           Chile      California

                                Est.          Est.          Est.        Est.      Est.      Est.        Est.      Est.      Est.      Est.      Est.       Est.       Est.
                                Nov-10        Dec-10        Jan-11      Feb-11     Mar-11    Apr-11     May-11     Jun-11    Jul-11   Aug-11    Sep-11     Oct-11     TOTAL
              California          14.0           1.1           4.8         7.4       15.2      31.9       41.3       46.2      47.9     42.4      24.5       13.3      290.0
              Chile               17.9          21.2          21.0        15.0        0.9       0.0        0.0        0.1       5.7     22.0      25.7       30.7      160.2
              Mexico              51.0          67.6          79.0        61.6       85.7      74.5       60.1       57.4      32.3     33.7      42.5       55.2      700.6
              Peru                 0.0           0.0           0.0         0.0        0.0       5.7        8.5       11.5       8.5      5.8       0.0        0.0       40.0
              Others*              6.3           5.9           5.2         1.2        0.0       0.0        0.0        4.8      11.0     12.5      12.4       11.9       71.2
                  TOTAL           89.2          95.8         110.0        85.2      101.8     112.1      109.9      120.0     105.4    116.4     105.1      111.1     1262.0

              * Others = Florida, Dominican Republic, New Zealand
              Source: Hass Avocado Board




Item 3.D-10
               BOARD OF DIRECTORS MEETING, January 20, 2011

                                                                        BOARD ACTION

ITEM 4.B:     CONSIDER APPROVAL OF INTERNATIONAL ALTERNATE BEARING
              PROJECT MEMORANDUM OF UNDERSTANDING

SUMMARY:

        The Board has been kept informed about the status of the International Alternate
Bearing (AB) Project since early 2010. In October 2010, the Board approved the 2010-11 CAC
budget, which included a line item earmarking funds for participation in this venture, with the
understanding that a final decision regarding CAC’s commitment to the project would take place
in January 2011. The additional time would allow for the development of a Memorandum of
Understanding between project participants (presently, Australia, New Zealand and Israel) and
the release of a Request for Proposals.

       On December 23, the nascent Avocado Research Consortium (ARC) released a
Request for Proposals (RFP), which was sent to the 25 avocado researchers from around the
world who attended the Alternate Bearing Summit, among others. The RFP called for
responses from “Innovation Partner(s)” by February 25, 2011. The ARC also refined a
Memorandum of Understanding (MOU) designed to serve as the framework for the International
AB Project collaboration between participating countries. The MOU addresses these main
areas:

   •   ARC Structure and Governance
   •   Purpose and Objectives
   •   Duties and Responsibilities of the ARC Parties
   •   Funding Provisions
   •   Intellectual Property
   •   Dispute Resolution

Copies of the MOU and RFP will be made available at the January 20 Board meeting.

        As the AB Project moves closer to becoming a reality, it is appropriate that a
determination is made regarding the Commission’s level of involvement, if any, with announced
partners from Israel, Australia, and New Zealand, to date. Management respectfully requests
that the Board make such a determination at its January 2011 meeting.

FISCAL ANALYSIS:

        The AB Project carries with it a commitment on the order of U.S. $100,000 annually for a
five-year period commencing with CAC’s current fiscal year.

BOARD OPTIONS:


                                                                                     Item 4.B-1
   •   Commit to becoming a collaborative partner in the AB Project
   •   Decline participation in the project
   •   Take no action

STAFF RECOMMENDATION:

        Management recommends Board deliberation, leading to a decision regarding the AB
Project in January 2011.

EXHIBITS / ATTACHMENTS:

   •   None.




                                                                                 Item 4.B-2
               BOARD OF DIRECTORS MEETING, January 20, 2011

                                                                             BOARD ACTION

ITEM 4.C:      CAC PARTICIPATION AT THE WORLD AVOCADO CONGRESS, SEPT 2011

SUMMARY:

        The World Avocado Congress, scheduled every four years, will be held in Cairns,
Australia in 2011. Avocados Australia has advised that Cairns has not been affected by the
recent flooding in Queensland. The program is scheduled to run September 5 – 9 and will
include three full days of sessions focused on marketing and industry issues, as well as one day
dedicated in the field. Below is a brief overview of the VII World Avocado Congress from the
event’s website:

       Held only every four years, the World Avocado Congress presents a rare opportunity for those in
       the avocado industry to come together to share and learn everything there is to know about our
       industry. Congress delegates will have the opportunity to listen to information, and hear about
       expert insights on the latest techniques for growing, learn about the newest trends in avocado
       marketing; and how such things as the economy and climate change will impact the industry’s
       future.

       The scientific program of the VII World Avocado Congress will include the latest information on
       avocado production and management issues, with special emphasis on the future of the industry.
       The Congress’s program also includes avocado marketing presentations and panel discussions
       about promotional and trade topics from all over the world.

       The Congress attracts over 1000 growers, wholesalers, food service suppliers, market traders,
       retail and government representatives. Delegates will have the chance to take advantage of the
       many networking opportunities available in the Congress program, to both strengthen and
       establish new relationships within the industry.

        Although the World Congress does not happen for another 8 months, an early decision
with respect to CAC’s participation will enable staff to secure the best travel rates possible,
assuming the Board wants representation at the event. In order to book airline reservations,
passenger names are required. Accordingly, management requests Board discussion regarding
CAC representation at the World Congress and specific individuals who may attend, if
representation is desired.

FISCAL ANALYSIS:

   •   The initial estimate for participation in the World Congress is approximately $6,000 per
       person. This includes registration, airfare, lodging, meals and incidentals. During the
       2010-11 planning process CAC had anticipated possible participation in this event, and
       $18,000 was allocated in the approved 2010-11 Budget for that purpose, should the
       Board choose to have CAC represented at the World Congress.

BOARD OPTIONS:
  •   Identify one or more individuals to represent CAC at the World Congress
  •   Decline participation in the event
  •   Postpone any decision regarding participation until a later time

STAFF RECOMMENDATION:

  •   Management defers to the Board’s judgment on participation.

EXHIBITS / ATTACHMENTS:
                 BOARD OF DIRECTORS MEETING, January 20, 2011

                                                                            BOARD ACTION

ITEM 4.D:        CONSIDER ASSESSMENT PENALTY WAIVER REQUESTS (RINCON FARMS AND
                 SOUTH COAST PACKING)

SUMMARY:

        CAC assessment policy states that the handlers shall fill out assessment reports monthly,
reporting the monthly volume received and price assigned of avocados received for handling. The
policy also states that the assessment reports and payments are due and payable on the last day of
the month following the month in which avocados were received for handling. Assessments which
are not paid by the last day of the month following the month in which avocados were received for
handling are considered delinquent and a 10% late payment charge will be added at that time. In
addition to the 10% late payment charge, interest at the rate of 1.5% per month will be charged on the
unpaid balance. Interest begins accruing on the first day after the assessment payment is delinquent.
The postmark (Post Office cancellation date) on the envelope containing the payment shall be
considered as date of payment, regardless of the date entered on the assessment form.

        South Coast Packing sent their August 2010 assessment payment on October 1, 2010. CAC
sent a letter to South Coast Packing advising them about their late penalty and interest due, which
were $606.71 and $91.01 respectively. South Coast Packing responded with a letter to the Board
explaining the circumstances that caused the late payment and requesting a one-time waiver on the
late penalty and interest due.

         Rincon Farms sent their September 2010 assessment on November 2, 2010. CAC sent a
letter to Rincon Farms advising them about their late penalty and interest due, which were $2,318.10
and $347.71 respectively. Rincon Farms responded with a letter to the Board explaining the
circumstances that caused the late payment and requesting a waiver on the late penalty.

          Letters from both South Coast Packing and Rincon Farms are attached here for the Board’s
review.


FISCAL ANALYSIS:

   •      South Coast Packing owes CAC $606.71 and $91.01 for penalty and interest. Total amount
          due for 2009-10 fiscal year is $697.72.
   •      Rincon Farms owes CAC $2,318.10 and $347.71 for penalty and interest. Total amount due
          for 2009-10 fiscal year is $2,665.81.

BOARD OPTIONS:



                                                                                           Item 4.D-1
  •   Accept South Coast Packing and Rincon Farms’ requests for late assessment penalties and
      interests waiver.
  •   Do not accept South Coast Packing and Rincon Farms’ requests for late assessment
      penalties and interests waiver.
  •   Take no action.

STAFF RECOMMENDATION:

  •   Staff defers to the Board’s judgment on this item.

EXHIBITS / ATTACHMENTS:

  1. South Coast Packing’s Request for Late Penalty and Interest Waiver.
  2. Rincon Farms’ Request for Late Penalty Waiver.




                                                                                     Item 4.D-2
Item 4.D-3
Kierulff, Stacia
From:                     dtbettles@aol.com
Sent:                     Wednesday, November 17, 2010 12:33 PM
To:                       Kierulff, Stacia
Subject:                  Rincon Farms

Follow Up Flag:           Follow up
Flag Status:              Flagged


Stacia,
Please forward this email to the appropriate board member? Thank you.

Regarding our late assessment payment for September, 2010. There are only two of us in the office
and I was out for several days with a sick child and could not get into the office until November
2nd. Is it possible to waive the penalty for us for September, and I'll pay the interest payment of
$347.71 as soon as I receive your reply?

We will appreciate you consideration. Thank you.

Sincerely,
Tracy Bettles
Tracy Bettles
Rincon Farms
805-684-3667 office
805-684-3672 office FAX




                                                     1


                                                                                            Item 4.D-4
               BOARD OF DIRECTORS MEETING, January 20, 2011

                                                              BOARD INFORMATION

ITEM 5.A:      2011 REFERENDUM AND REDISTRICTING UPDATE

Referendum Summary:

        By law, the California Department of Food and Agriculture (CDFA) is required to hold a
producer referendum every five years to determine whether to reapprove the provisions of the
Food and Agricultural Code governing CAC operations. The last CAC referendum was held in
January 2006, during the 2005-06 crop year. The law requires, therefore, that the next
referendum be conducted during the 2010-11 season. Section 67131 of Commission law allows
a referendum to be conducted at any time during the marketing year, in this case between
November 1, 2010 and October 31, 2011.

2011 Referendum Update:

        As proposed in September 2010, management has acted on its recommendation to
conduct the referendum early in the fiscal year and, with concurrence from CDFA, referendum
ballots will be mailed on January 31, 2011. To date, CAC has completed the following steps in
the referendum process:

       •    Update grower list – Using information provided by handlers, CAC has updated the
            grower database to include only producers who have sold fruit over the last two
            marketing seasons. This database update took the grower count from 6,100 to just
            under 5,000.

       •    Notify growers of referendum in local newspapers and trade press – CAC issued an
            official release on January 13, notifying the press of the upcoming referendum.
            Additionally, CAC has secured a 2x5-inch display ad, publicizing the upcoming
            referendum, to run on January 30 in local newspapers from San Luis Obispo to San
            Diego.

       •    Prepare/Mail ballots under CDFA oversight – CAC has secured a printer and CDFA-
            approved ballots have been printed and will be mailed out on January 31, 2011.

        Completed ballots must be returned to CDFA and postmarked no later than March 1,
2011 in order to be counted. CDFA will tally the results and prepare a notice to the industry
announcing the results. CAC expects to receive the notice from CDFA by March 11. Upon
receipt of CDFA notice, CAC will mail the results to all growers on record, as well as announcing
in the grower and trade press.




                                                                                      Item 5.A-1
Redistricting Process Summary:

        Every five years, the California Avocado Commission (CAC) must determine the need
for reapportionment of districts consistent with Food and Agricultural Code Sections 67041
through 67044. Reapportionment is the drawing of new boundary lines to distribute statewide
avocado production across five districts established by Commission law.

       The goal of reapportionment is to assure that each of the five districts contains
approximately 20% of the statewide avocado production. A variance of up to 10% above or
below this standard is acceptable.

        Reapportionment involves two major steps: 1) determining whether redistricting is
necessary, and 2) if it is, drawing new district lines. If reapportionment is necessary, the
process must be completed no later than March 30, 2011 or it will be subject to arbitration, i.e.
resolution by a neutral third party whose decision is binding. Approval of new district
boundaries requires a two-thirds vote of the Commission board.

2011 Redistricting Update:

         CAC has been following the redistricting timetable presented at the August 2010 Board
meeting and, to-date, has successfully completed step one of the process, i.e. determining
whether redistricting is necessary. Based on information submitted by the handlers, the
following is a summary of the 2008-09 and 2009-10 avocado production volume by current CAC
district boundaries (drawn in 2006):

 California Avocado Commission
 2008-09 and 2009-10 Avocado Production by 2006 CAC District Boundaries
               2008/09          2009/10          Combined       Pound Variance         Percent of
  District     Volume           Volume            Average        from Pro Rata          Pounds
    1         26,148,068         71,846,947         48,997,508        (21,718,500)       14%
    2         35,169,437         72,631,793         53,900,615        (16,815,393)       15%
    3         41,581,758         74,615,169         58,098,464        (12,617,544)       16%
    4         35,729,100         208,039,685        121,884,393        51,168,385        34%
    5         32,510,599         108,887,519        70,699,059          (16,949)         20%
  Total      171,138,962         536,021,113        353,580,038
                                  Pro Rata
                                  Poundage          70,716,008
                                   + 10%            77,787,608
                                    - 10%           63,644,407

       Per CAC law, if the poundage in any existing district varies by more than 10 percent
from the pro rata poundage, the Commission must reapportion the districts by drawing new
boundary lines so that no district shall vary by more than 10 percent from the pro rata
poundage. Based on the avocado production information presented, Districts 1, 2, 3 and 4 vary
by more than 10 percent and therefore must be reapportioned.




                                                                                        Item 5.A-2
CAC staff will work with the Redistricting Committee to address step 2: drawing new district
lines, based on the following timetable:

Feb-Mar 2011           Reapportionment Committee meets and reviews production data; reviews
                       and selects boundary line proposals.

March 17, 2011         Reapportionment Committee provides their recommendation for redrawn
                       district lines to the CAC Board for approval.

March 30, 2011         Deadline for redistricting. If new district lines have NOT been approved
                       by a two-thirds vote of the board by this date, the Commission must notify
                       the California Secretary of Agriculture.

April 2011             Within 10 days of receiving notification that CAC is unable to complete
                       the redistricting process, the Secretary shall appoint an arbitrator.

June 30, 2011          Deadline for arbitrator to reapportion existing districts in compliance with
                       CAC law.

Nov 1, 2011            New district boundaries become effective.

        Given the production volume data presented above, it appears likely that some
Commissioners will be displaced from their current districts by the reapportionment process
(their groves may be no longer located in the district represented by the seat). If this occurs, the
displaced member or alternate may be eligible for election of appointment in the new district in
which his or her grove is located if a vacancy on the board exists for that district. Management
will ensure that Commissioners are fully informed about their specific situation as the 2011
General Election approaches.

FISCAL ANALYSIS:

   •   Not applicable.

BOARD OPTIONS:

   •   Information item only.

STAFF RECOMMENDATION:

   •   None, information item only.

EXHIBITS / ATTACHMENTS:

   •   Current CAC District Map (effective November 1, 2006 – October 31, 2011)




                                                                                         Item 5.A-3
     District 1          District 2           District 3               District 4                District 5
San Diego County    San Diego County   Orange County            Los Angeles County       Monterey County
  Alpine             Bonsall                All Growing Areas       All Growing Areas      All Growing Areas
  Cardiff            Carlsbad          Riverside County         Ventura County           San Joaquin Valley
  Chula Vista        Escondido              All Growing Areas       Camarillo              All Growing Areas
                    (92026)
  Coronado           Fallbrook         San Bernadino County         Fillmore             San Luis Obispo Cnty
  Del Mar            Oceanside              All Growing Areas       Moorpark               All Growing Areas
  El Cajon           San Marcos        San Diego County             Oxnard               Santa Barbara County
  Encinitas          Vista                  Pala                    Santa Paula            All Growing Areas
  Escondido                                 Pauma Valley            Simi Valley          Ventura County
(92025)
  Escondido                                                         Somis                  Oak View
(92027)
  Escondido                                                         Thousand Oaks          Ojai
(92029)
  Jamul                                                             Ventura (93003-04)     Ventura (93001)
  La Jolla                                                          Westlake Village
  Lakeside
  National City                                                                          All growing areas north
  Poway                                                                                  of Monterey County
  Ramona
  Rancho Santa Fe
  San Diego
  Solana Beach
  Spring Valley
  Valley Center



                                                                                                  Item 5.A-4
               BOARD OF DIRECTORS MEETING, January 20, 2011

                                                               BOARD INFORMATION

ITEM 5.B:      EXPORT MARKET OPPORTUNITIES

SUMMARY:

       In October 2010 the CAC Board discussed the possibility of re-engaging in export
market development, with the objective of building additional outlets for California avocados at
premium prices. Management was directed to explore cost-sharing opportunities with the U.S.
Department of Agriculture’s Foreign Agricultural Service (USDA-FAS) and a small budget
($10,000) was set aside for this purpose.

        Export promotion was discussed at the November 2010 meeting of CAC’s Marketing
Advisory Committee. Several markets were identified as having potential, notably Russia,
Poland, and China. Subsequently, contact was made with Kevin Sage-EL, Branch Chief,
Horticultural Crops, Foreign Agricultural Service Office of Trade Programs, Shari Kosco,
Horticultural Analyst, FAS Office of Global Analysis, and Phil Jones, Vice President of
International Development, KSCW, Inc., Washington, D.C.

         Of central concern to FAS is the extent to which CAC’s export market development
activities would exclusively benefit California avocado producers, since all of California’s major
packers handle fruit from multiple sources, predominately Mexico and Chile. The issue would
have to be addressed—to FAS’ satisfaction—in any funding application submitted by CAC.

       The attached Issue Brief summarizes the results of the exploratory effort thus far.

FISCAL ANALYSIS:

   •   Not yet applicable.

BOARD OPTIONS:

   •   Information item only.

STAFF RECOMMENDATION:

        Management recommends further Board discussion on export promotion, specifically,
Board interest in FAS market development programs and possible export targets mentioned in
the attached brief.

EXHIBITS / ATTACHMENTS:
  • ISSUE BRIEF: EXPORT MARKET DEVELOPMENT



                                                                                         Item 5.B-1
ISSUE BRIEF:
EXPORT MARKET DEVELOPMENT
                                                                               January 20, 2011

Background

In October 2010 the CAC Board discussed the possibility of re-engaging in export market
development, with the objective of building additional outlets for California avocados at premium
prices. The Commission has had prior involvement with USDA foreign market development
programs. Between 1976 and 1996, CAC promoted California avocados, with government
assistance, in Japan, Europe, Hong Kong, and Canada. In addition, CAC helped to open the
Korean market in 1988, and market exploration was undertaken in Taiwan, but no program was
implemented. Annual expenditures on foreign market promotion ranged from $150,000 to
$700,000 during that period.

Generally, California avocado exports in any given year are single-digit percentages of the total
available crop. Export market opportunities seem to be a function of prevailing exchange rates,
crop size, competitive supply and the economic health of the destination markets. Under certain
conditions export demand may be strong, yielding returns that rival those obtained from the
domestic market. Other times, opportunities are more fleeting, with “windows” allowing for a
limited number of shipments within a relatively short period of time.

Per capita consumption of avocados in the U.S. has more than doubled over the past decade.
Thus far, demand has kept pace with the burgeoning supply of avocados resulting from
increased imports. Over time, however, and despite the significant marketing investment made
possible through the Hass Avocado Board, the health of the U.S. avocado market becomes
more uncertain. One possible strategy to optimize value for California avocados as a premium
product is market diversification.

USDA Market Development Programs

Government-sponsored foreign market development programs have been in place for decades,
many of which are administered by USDA-FAS. Congress generally appropriates funds for this
purpose in five-year cycles in connection with the Farm Bill. Although the FAS programs have
evolved over time and the acronyms have changed, the fundamental mission of this branch has
remained the same: improving foreign market access for U.S products, building new markets,
and increasing competitiveness for U.S. agriculture in the global marketplace. In support of this
mission is a global network of agricultural counselors, attaches, and market specialists in 100
offices covering 156 countries. These individuals help create, expand, and maintain long-term
export markets for U.S. agricultural products, and assist with preparing and submitting
recommendations and requests for funding under programs administered by FAS.

There are three major USDA market development programs: the Market Access Program
(MAP), the Foreign Market Development Program (FMD), and the Emerging Markets Program
(EMP). Additional, detailed information on each of these programs is available at:

                                                                                       Item 5.B-2
http://www.fas.usda.gov/mos/marketdev.asp. The Emerging Markets Program is given greater
treatment, below, because it appears to be the best fit given the Commission’s absence from
export market development programs over the past 15 years. Also, competition for these EMP
funding is generally not as great as with other FAS programs.

       The Market Access Program

MAP is the largest of the three programs, awarding a total of $200 million annually to about 67
commodity organizations. In FY 2010, allocations ranged from $28,000 to the American Seed
Trade Association to over $20 million to the Cotton Council International. MAP applications
undergo a competitive review process based on criteria specified in a Federal Register
announcement. Activities financed include consumer promotions, market research, technical
assistance, and trade servicing. For generic promotion activities, trade associations and others
must meet a minimum 10-percent match requirement.

       The Foreign Market Development Program

The FMD Program uses funds from the USDA’s Commodity Credit Corporation (CCC) to create,
expand, and maintain long-term export markets for U.S. agricultural products. First established
under the authority of Public Law 480, the FMD was re-authorized by Title VII of the Agricultural
Trade Act of 1978. Awards under the program in FY 2010 ranged from $14,000 to the Mohair
Council of America to $6.8 million to the American Soybean Association. In general, the FMD
program funds trade servicing and technical development projects. There were 23 cooperators
in the FY 2010 program, which collectively received allocations totaling about $32 million.

       The Emerging Markets Program

The EMP is a market access program that provides funding for technical assistance activities
intended to promote exports of U.S. agricultural commodities and products to emerging markets
in all geographic regions, consistent with U.S. foreign policy. The program is authorized by the
Food, Agriculture, Conservation, and Trade Act of 1990, as amended. Funding is set at $10
million each fiscal year from the Commodity Credit Corporation from now through the end of the
current Farm Bill.

EMP funding is provided through three channels: (1) the Central Fund, the principle means of
funding, made available through a public announcement; (2) the Technical Issues Resolution
Fund, to address technical barriers to exports; and (3) the Quick Response Marketing Fund, to
assist in resolving short-term time-sensitive market access issues.

Legislation defines an “emerging market” as any country that "is taking steps toward a market-
oriented economy through the food, agriculture, or rural business sectors of the economy of the
country," and "has the potential to provide a viable and significant market for United States
commodities or products of United States agricultural commodities." There is no fixed list of
"emerging market" countries. Because funds are limited and the range of emerging markets is
worldwide, FAS uses certain criteria to determine whether a country is considered an emerging
market, specifically:



                                                                                      Item 5.B-3
         1) Per capita income of less than $11,455, the current ceiling on upper middle income
         economies as determined by the World Bank.

         2) Population greater than 1 million (may encompass regional groupings, such as the
         islands of the Caribbean Basin).

The principal purpose of the program is to assist U.S. organizations to improve market access
by developing, maintaining, or enhancing U.S. exports to low- and middle-income countries with
market-oriented economies. The underlying premise is that emerging agricultural markets have
distinctive characteristics that benefit from U.S. governmental assistance before the private
sector moves to develop these markets through normal trade promotion activities.

Cost-sharing is one of the requirements needed in an application in order to qualify for funding
assistance under the Emerging Markets Program. Justification for federal funding is also
required.

Funding is on a project-by-project basis. Many types of technical assistance activities that
promote markets for U.S. agricultural products may be eligible for funding. Examples include
feasibility studies, market research, sectorial assessments, orientation visits, specialized
training, and business workshops. The program is not intended for projects targeted at end-
user consumers. Ineligible activities include in-store promotions; restaurant promotions;
equipment purchases; costs of new product development; administrative and operational
expenses for trade shows; advertising; preparation and printing of brochures, flyers, posters
(except in connection with specific technical assistance activities such as training seminars);
and design of development of Internet Web sites.

The program complements other FAS marketing programs. Once a market access issue has
been addressed by the Emerging Markets Program, further market development activities may
be considered under other FAS programs.

USDA market development cooperators may seek funding to address priority, market-specific
issues or to undertake activities not already serviced by or unsuitable for funding under other
FAS marketing programs, such as the Foreign Market Development Program and Market
Access Program.

Examples of projects funded under the EMP Program include:

Market               Activity Title                                                        Amount
                     Cotton USA Technical Assistance Initiative in Bangladesh for the
Bangladesh           Cotton Council International                                          $200,000
                     Market Feasibility Study of Brazil for the Alaska Seafood Marketing
Brazil               Institute                                                             $15,041
                     China Familiarization Tour of Organic Farms, Retail, and Processors
China                for the Organic Trade Association                                     $90,000
China                China Pecan Project for the Georgia Pecan Growers Association         $70,800
                     China Beer Distributors Education Program for the Brewers
China                Association                                                           $35,000
                     Reverse Trade Mission of Chinese Tanneries for the U.S. Hide, Skin
China                and Leather Association                                               $14,400



                                                                                              Item 5.B-4
                    Reverse Trade Mission for Retailers and Wholesalers from India for
India               the Produce Marketing Association                                      $75,438
                    India Retail Education Activities Reverse Mission Retail Training
India               Seminars for the Pear Bureau Northwest                                 $60,000
                    Product Introduction, Care and Handling, and Merchandising
                    Technique Seminars for Fresh Sweet Cherries for the Washington
Indonesia           State Fruit Commission                                                 $14,000
                    Technical Workshop on Coated Foods Applications for the USA Dry
Malaysia            Pea and Lentil Council                                                 $56,086
                    U.S. Soy Food Product Promotion in Pakistan for the American
Pakistan            Soybean Association                                                    $152,224
                    Second Phase of Market Development in Poland for California
Poland              Almonds for the Almond Board of California                             $100,000
Regional:           Southeast Asia Fruit and Vegetable Consumer Trends, Preferences
Southeast Asia      Research for the Washington Apple Commission                           $223,218
Regional:           Nutritional and Technical Information on Dry Beans for Southeast
Southeast Asia      Asian Buyers for the U.S. Dry Bean Council                             $46,820
Regional:           Second Phase of U.S. Dairy in Selected Asian Bakery Markets
Southeast Asia      Project for the California Milk Advisory Board                         $37,667
                    Review of U.S. Poultry Slaughter and Cold Storage Facilities for the
Russia              USA Poultry and Egg Export Council                                     $120,000
                    Russia Retail Education Activities Reverse Mission Retail Training
Russia              Seminars for the Pear Bureau Northwest                                 $87,200
                    Research To Identify Opportunities and Launch Trade Servicing,
Russia              Education, and Promotion in Russia for the California Prune Board      $70,000
                    Thailand Importer Developer Program for the Southern United
Thailand            States Trade Association                                               $185,535
                    Technical Support to U.S. Frozen Potato Tariff Reduction Efforts in
Thailand            Thailand for the National Potato Promotion Board                       $84,235
                    U.S. Dairy Genetics to Turkey, Overcoming Unjustifiable Regulatory
Turkey              Barriers for the National Association of Animal Breeders               $22,251


In FY 2010, a total of $8.3 million was awarded to about 40 cooperators under the EMP.
Awards ranged from $5,000 to $414,000.

Level of Industry Interest / Recent Activity

Export market activity was discussed at the November 2010 meeting of CAC’s Marketing
Advisory Committee. The Committee noted that certain established export markets for
avocados, such as Japan, were recently showing strong performance. Opportunities were also
identified in non-traditional markets such as Russia and Poland.

The Commission has been seeking access to the Chinese market since 2005. Presently, China
does not allow importation of avocados from the U.S. due to phytosanitary concerns. Although
California avocados have been on the “short-list” of priority commodities during bilateral talks
between U.S. and Chinese plant health officials, access remains blocked largely for political
reasons. Nonetheless, there continues to be interest in opening the Chinese market on the part
of the industry’s major handlers as well as Chinese importers and retailers.

Market Overviews

           Russia

                                                                                              Item 5.B-5
Russia imported $4.6 million of fresh avocados in 2009 primarily from Israel and South Africa.
There were no imports of avocados from the United States in 2009, and minimum imports of
U.S. avocados in 2007 ($514) and 2008 ($6,549).

Russia recently formed a Customs Union with Belarus and Kazakhstan (Customs Union). The
three countries are slated to harmonize their sanitary and phytosanitary (SPS) rules in January
2012. At that time, the Russian requirements described below could change.

It is possible that Russia could become a WTO Member next year or by 2012. Russia’s WTO
accession should mean greater transparency and consistency in Russia’s import procedures, as
Russia would then be subject to WTO disciplines and scrutiny.

Sanitary and Phytosanitary Requirements

The information below on Russia’s import requirements is from FAS officials in Moscow and St.
Petersburg, and APHIS officials covering Russia. APHIS warns that Russian officials can “be
very creative” if they want to prevent entry of a product. APHIS advises U.S. exporters to have
their importer in Russia apply for an import permit well in advance of any transactions.

       1. Export Side (U.S.)

California avocados are subject to quarantine and phytosanitary control (supervision) by the
Russian Federation and Customs Union. A phytosanitary export certificate issued by APHIS is
required prior to import stating that the shipment is free from the pests identified in the import
permit. Russia has no specific pests listed for avocado imports from the United States, but the
import permit might identify certain quarantine pests of concern.
Russian quarantine regulations do not require a pest risk assessment (PRA) for California
avocados. APHIS officials warn, however, that Russia’s Veterinary and Phytosanitary
Surveillance Service (VPSS) could still request one. If a PRA is required, it should be stated on
the import permit.

       2. Import Side (Russia)

Import Permit: An import permit obtained by the importer prior to export is required. The import
permit (which can be obtained without an APHIS export certificate) will state the SPS and other
Russian import requirements for California avocados.

Declaration of Conformity: The importer must also obtain a Declaration of Conformity before the
product is exported. The declaration will state that the product (California avocados) conforms
to Russian Federation quality standards.

Maximum Residue Levels (MRLs): Upon arrival at the port of entry, the imported avocados
would be subject to sanitary-epidemiologic inspection. As part of this process, a safety
certificate may be required from a laboratory approved by VPSS stating that the imported
product meets Russia’s approved MRL levels. VPSS may test imported fruits for MRL levels.
For this reason, Russian purchasers often require the foreign supplier to provide a list of
pesticides used in cultivation.
                                                                                        Item 5.B-6
Russian Phytosanitary Certificate: A Russian phytosanitary certificate is issued by VPSS on the
basis of the sanitary-epidemiologic inspection and APHIS phytosanitary export certificate.

Tariff: The tariff on U.S. avocados is 5% ad valorem.

       Poland

Because Poland is a Member of the European Union, its sanitary and phytosanitary (SPS)
requirements are governed by EU regulations. Poland imports avocados principally from Israel,
South Africa, Peru, Kenya, and Spain. Polish import data show only minimal imports from the
United States ($841 in 2008 and $571 in 2006). The U.S. has exported avocados to other EU
Members States in recent years, including the United Kingdom and Spain (over $1.5 million in
2006).

Sanitary and Phytosanitary Requirements

   1. Export Side (U.S.)
FAS and APHIS officials in Brussels and Poland confirm that there are no specific phytosanitary
requirements for exporting California avocado fruit to Poland. This means no APHIS
phytosanitary certificate is needed and no pest risk assessment is required prior to export.

   2. Import Side (Poland)

Inspection for Quarantine Pests: Imports are subject to inspection at the EU border (both
physical inspection of the fruit and documents). The EU has no pest list specific to avocado
fruit.

Inspection for Maximum Residue Levels (MRLs): Imports of California avocados are subject to
the EU’s MRLs (which are harmonized for all EU Member States). Imports may be tested at the
EU port of entry.

Standards: A “certificate of conformity” or “certificate of industrial use” certifying that the imports
meet EU marketing standards is required for all imported fresh fruits. The certificate is obtained
by the importer at the port of entry. Avocados are governed by the EU’s “General Marketing
Standards” (EU Regulation 1221/2008).

Tariff: The EU tariff on U.S. avocados is 4% for the 6-month period January 1 to May 31 and
December 1 to 31, and 5.1% for the 6-month period from June 1 to November 30.

Contact with FAS

Initial contact with FAS regarding the industry’s interest in export market development was with
Kevin Sage-EL, Branch Chief, Horticultural Crops, Foreign Agricultural Service Office of Trade
Programs, Shari Kosco, Horticultural Analyst, FAS Office of Global Analysis, and Steven
Beasley, Economist/International Marketing Specialist, FAS Office of Trade Programs. FAS
officials posed a central question for the Board to consider:


                                                                                            Item 5.B-7
       “One aspect that might come up in discussion while considering a future
       application from the avocado industry is the degree to which avocado handlers
       under your organization are involved with moving Mexican avocados and some
       from other origins as well as California’s. How do you see your industry
       membership’s promotions being able to exclusively benefit U.S. product?”

Based on prior experiences with CAC, FAS also expressed some concern about
whether participation in one or more of the export development programs would pose an
administrative burden for CAC. FAS officials suggested giving consideration to working
through the Sacramento-based California Agricultural Export Council (CAEC), which
administers export market development programs for California Medjool Dates, Olive Oil,
Pomegranates and Western Growers Association. Under this option, CAC would submit
a marketing plan through CAEC, and CAEC would handle the administrative aspects of
the program that would be the subject of periodic compliance audits by FAS. It is
important to recognize, however, that other organizations under CAEC may receive
priority attention.

Possible Action Steps

   •   Explore means of achieving handler commitment to market exclusivity
   •   Determine suitable export targets
   •   Submit Unified Export Strategy (UES) application to FAS by May 2011 (covers all
       programs)
   •   Contact CAEC to ascertain that organization’s level of interest in working with
       CAC

Timing Considerations

USDA is expected to announce the 2012 application process for FAS market development
programs soon. The deadline for submission of applications is expected to be May 2011. If
CAC’s application was approved, funding would be available when the new federal fiscal year
begins on October 1, 2011.




                                                                                    Item 5.B-8
              BOARD OF DIRECTORS MEETING, January 20, 2011

                                                             BOARD INFORMATION

ITEM 5.C:     STATUS REPORT ON GAP PROJECT

SUMMARY:

The California Avocado Commission’s (CAC) initiative to develop a California Avocado Industry
Good Agricultural Practices (GAP) Standard and Manual achieved significant progress
throughout December 2010 and January 2011; with the federal government’s recent passage of
the Food Safety Modernization Act underscoring the endeavor’s importance. Specifically, three
major events occurred with respect to CAC’s GAP Project, throughout the past two months,
including:

   1.) The December 8, 2010 GAP Committee Meeting, wherein several Commission
       members and industry guests convened to provide feedback regarding CAC’s second
       Draft GAP Manual. The general consensus reached was the second manual displayed
       marked improvement from – and greater avocado emphasis than – the first Draft GAP
       Manual. Nonetheless, the group scrupulously reviewed the manual, attendees provided
       detailed input and further edits were agreed upon. CAC then applied those edits,
       establishing the Commission’s third Draft GAP Manual, before transfer to consultant
       Dave Riggs, whom incorporated an approachable element to attain a fourth – and
       perhaps final – document.

   2.) The January 4, 2011 passage of the Food Safety Modernization Act, which granted
       the federal government broader authority to regulate the safety of domestic food,
       including recall capacity, increased inspections and development of safety standards for
       agricultural products. Therefore, its signature into law simultaneously emphasizes the
       need for a set of California Avocado Industry GAPs – serving to mitigate avocados’ low
       food-safety risks – as the bill requires that government develop science-based, safe-
       production practices for all raw fruits and vegetables; as well as publish updated GAPs
       regarding safe production. A California Avocado Industry GAP Program, already
       recognized by auditors, the federal government and produce industry, would supersede
       the government’s need to develop such for the California avocado industry.

   3.) CAC, in conjunction with the California Avocado Society, submitted a grant
       proposal to the California Department of Food & Agriculture’s Specialty Crop
       Block Grant Program, requesting funding assistance to enhance grower
       understanding – and ease implementation – of the California Avocado Industry’s
       GAP Program. More specifically, the three-year proposal (October 2011 – June 2014)
       introduces an Avocado Grower GAP Education Series and curriculum, designed to
       reach growers, farm managers and employees, shipper field representatives and grove
       managers. The GAP Education Series will offer a variety of outlets to deliver the GAP
       curriculum and compliance assistance, including the California Avocado Growers
       Seminar Series, mobile/field seminars and web-based training; all incentivized through

                                                                                     Item 5.C-1
       GAP Educational Credits. At the end of three years, the grant-funding assistance ideally
       will enable GAP compliance among two-thirds of California avocado acreage, according
       to the grant’s measureable outcome. An announcement regarding grant awards under
       the Special Crop Program is expected by March 2011.

While substantial GAP progress has ensued, several subsequent steps – in addition to
GAP Manual approval – need to occur, in order to finalize the California Avocado
Industry GAP Program, including:

   1.) Develop necessary documentation, in support of the GAP Manual, including checklists,
       pre-audit, audit, etc. (consultant Dave Riggs will assist in creating such).

   2.) Circulate GAP Manual through all appropriate third parties, including government
       (California Department of Food & Agriculture, U.S. Department of Agriculture, etc.),
       auditing bodies (NSF Davis Fresh, PrimusLabs, etc.) and buyers (retail, foodservice) to
       receive feedback and – ultimately – approval as a certifiable document.

   3.) Grower test pilots to ensure GAP Manual requirements are feasible for grower
       implementation and compliance (ideally, pilots will be comprised of small-, medium- and
       large-scale growers and a representative from the auditing industry).

   4.) All necessary edits and review rounds, in between.

   5.) Develop and rollout California Avocado Industry GAP Educational Program (Specialty
       Crop Block Grant is a component, if approved).

FISCAL ANALYSIS:

   •   CAC has applied for a specialty crop grant of $150,000 for outreach related to the GAP
       Project. Other GAP Project costs have already been included in the Commission’s
       2010-11 budget, approved by the Board in October 2010.

BOARD OPTIONS:

   •   Information item only.

STAFF RECOMMENDATION:

   •   Staff recommends full Board review of the Avocado GAP manual before commencement
       of the outreach effort.

EXHIBITS / ATTACHMENTS:

   •   Board members and alternates will be provided with a draft copy of the California
       Avocado GAP Manual on January 20, 2011.




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