[Federal Register Volume 61, Number 140 (Friday, July 19, 1996)]
[Rules and Regulations]
[Pages 37672-37673]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-18293]


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DEPARTMENT OF AGRICULTURE
Farm Service Agency
7 CFR Part 723
Commodity Credit Corporation

7 CFR Part 1464
RIN 0560-AE48

1996 Marketing Quota and Price Support for Flue-Cured Tobacco

AGENCIES: Farm Service Agency and Commodity Credit Corporation, USDA.

ACTION: Final rule.

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SUMMARY: The purpose of this final rule is to codify determinations 
made by the Secretary of Agriculture (Secretary) with respect to the 
1996 crop of flue-cured tobacco. In accordance with the Agricultural 
Adjustment Act of 1938, as amended, (1938 Act), the Secretary 
determined the 1996 marketing quota for flue-cured tobacco to be 873.6 
million pounds. In accordance with the Agricultural Act of 1949, as 
amended, (1949 Act), the Secretary determined the 1996 price support 
level to be 160.1 cents per pound.

EFFECTIVE DATE: December 15, 1995.

FOR FURTHER INFORMATION CONTACT: Robert Tarczy, FSA, USDA, room 5726 
South Building, PO. Box 2415, STOP 0514, Washington, DC 20013-2415, 
telephone 202-720-5346.
SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This final rule has been determined to be significant for purposes 
of Executive Order 12866 and, therefore, has been reviewed by OMB under 
Executive Order 12866.

Federal Assistance Program

    The title and number of the Federal Assistance Program, as found in 
the Catalog of Federal Domestic Assistance, to which this rule applies, 
are Commodity Loans and Purchases--10.051.

Executive Order 12778

    This final rule has been reviewed in accordance with Executive 
Order 12778, Civil Justice Reform. The provisions of this rule do not 
preempt State laws, are not retroactive, and do not involve 
administrative appeals.

Regulatory Flexibility Act

    It has been determined that the Regulatory Flexibility Act is not 
applicable to this final rule since FSA is not required by 5 U.S.C. 553 
or any other provision of law to publish a notice of proposed 
rulemaking with respect to the subject matter of this rule.

Paperwork Reduction Act

    The amendments to 7 CFR parts 723 and 1464 set forth in this final 
rule do not contain any information collection requirements that 
require clearance through the Office of Management and Budget under the 
provisions of the Paperwork Reduction Act of 1995.

Statutory Background

    This rule is issued pursuant to the provisions of the 1938 Act and 
the 1949 Act. Section 1108(c) of P.L. 99-272 provides that the 
determinations made in this rule are not subject to the provisions for 
public participation in rule making contained in 5 U.S.C. 553 or in any 
directive of the Secretary.
    On December 15, 1995, the Secretary announced the national 
marketing quota and the price support level for the 1996 crop of flue-
cured tobacco. A number of related determinations were made at the same 
time, which this final rule also affirms.

Marketing Quota

    Section 317(a)(1)(b) of the 1938 Act provides, in part, that the 
national marketing quota for a marketing year for flue-cured tobacco is 
the quantity of such tobacco that is not more than 103 percent nor less 
than 97 percent of the total of: (1) The amount of flue-cured tobacco 
that domestic manufacturers of cigarettes estimate they intend to 
purchase on U.S. auction markets or from producers, (2) the average 
quantity exported annually from the U.S. during the 3 marketing years 
immediately preceding the marketing year for which the determination is 
being made, and (3) the quantity, if any, that the Secretary, in the 
Secretary's discretion, determines necessary to adjust loan stocks to 
the reserve stock level.
    Section 317(a)(1)(c) further provides that, with respect to the 
1995 and 1996 marketing years, any reduction in the national marketing 
quota being determined shall not exceed 10 percent of the previous 
year's national marketing quota. However, if actual loan stocks exceed 
the prescribed reserve stock level by 50 percent the reduction limit 
could be waived and the Secretary could then set the quota according to 
the 3-component formula (plus or minus 3 percent). The reserve stock 
level is defined in section 301(b)(14)(C) of the 1938 Act as the 
greater of 100 million pounds or 15 percent of the national marketing 
quota for flue-cured tobacco for the marketing year immediately 
preceding the marketing year for which the level is being determined.
    Section 320A of the 1938 Act provides that all domestic 
manufacturers of cigarettes with more than 1 percent of U.S. cigarette 
production and sales shall submit to the Secretary a statement of 
purchase intentions for the 1996 crop of flue-cured tobacco by December 
1, 1995. Five such manufacturers were required to submit such a 
statement for the 1996 crop and the total of their intended purchases 
for the 1996 crop is 475.5 million pounds. The 3-year average of 
exports is 344.8 million pounds.
    The national marketing quota for the 1995 crop year was 934.8 
million pounds (60 FR 22458). Thus, in accordance with section 
301(b)(14)(C), the reserve stock level for use in determining the 1996 
marketing quota for flue-cured tobacco is 140.2 million pounds.
    As of December 8, 1995, the Flue-Cured Tobacco Cooperative 
Stabilization Corporation had in its inventory 59.9 million pounds of 
flue-cured tobacco (excluding pre-1994 stocks committed to be purchased 
by manufacturers and covered by deferred sales). Accordingly, the 
adjustment to maintain loan stocks at the reserve supply level is an 
increase of 80.3 million pounds.
    The total of the three marketing quota components for the 1996-97 
marketing year is 900.6 million pounds. In addition, the discretionary 
authority to reduce the three-component total by 3 percent was used 
because it was determined that the 1996/97 supply would be more than 
ample. Accordingly, the national marketing quota for the marketing year 
beginning July 1, 1996, for flue-cured tobacco is 873.6 million pounds.
    Section 317(a)(2) of the 1938 Act provides that the national 
average yield goal be set at a level that the Secretary determines will 
improve or ensure the useability of the tobacco and increase the net 
return per pound to the producers. Yields in crop year 1995 were down 
substantially from the previous year, but this was a result of 
exceptionally poor growing conditions.

[[Page 37673]]

Accordingly, the national average yield goal for the 1996-97 marketing 
year will be 2,088 pounds per acre, the same as last year's level.
    In accordance with section 317(a)(3) of the 1938 Act, the national 
acreage allotment for the 1996 crop of flue-cured tobacco is determined 
to be 418,390.80 acres, derived from dividing the national marketing 
quota by the national average yield goal.
    In accordance with section 317(e) of the 1938 Act, the Secretary is 
authorized to establish a national reserve from the national acreage 
allotment in an amount equivalent to not more than 3 percent of the 
national acreage allotment for the purpose of making corrections in 
farm acreage allotments, adjusting for inequities, and for establishing 
allotments for new farms. The Secretary has determined that a national 
reserve for the 1996 crop of flue-cured tobacco of 2,025 acres is 
adequate for these purposes.
    In accordance with section 317(a)(4) of the 1938 Act, the national 
acreage factor for the 1996 crop of flue-cured tobacco for uniformly 
adjusting the acreage allotment of each farm is determined to be 0.935, 
which is the result of dividing the 1996 national allotment (418,390.80 
acres) minus the national reserve (2,025 acres) by the total of 
allotments established for flue-cured tobacco farms in 1995 (445,307.30 
acres).
    In accordance with section 317(a)(7) of the 1938 Act, the national 
yield factor for the 1996 crop of flue-cured tobacco is determined to 
be 0.9280, which is the result of dividing the national average yield 
goal (2,088 pounds) by a weighted national average yield (2,250 
pounds).

Price Support

    Price support is required to be made available for each crop of a 
kind of tobacco for which quotas are in effect, or for which marketing 
quotas have not been disapproved by producers, at a level determined in 
accordance with a formula prescribed in section 106 of the 1949 Act.
    With respect to the 1996 crop of flue-cured tobacco, the level of 
support is determined in accordance with sections 106 (d) and (f) of 
the 1949 Act. Section 106(f)(7)(A) of the 1949 Act provides that the 
level of support for the 1996 crop of flue-cured tobacco shall be:
    (1) The level, in cents per pound, at which the 1995 crop of flue-
cured tobacco was supported, plus or minus, respectively,
    (2) An adjustment of not less than 65 percent nor more than 100 
percent of the total, as determined by the Secretary after taking into 
consideration the supply of the kind of tobacco involved in relation to 
demand, of:
    (A) 66.7 percent of the amount by which:
    (I) The average price received by producers for flue-cured tobacco 
on the United States auction markets, as determined by the Secretary, 
during the 5 marketing years immediately preceding the marketing year 
for which the determination is being made, excluding the year in which 
the average price was the highest and the year in which the average 
price was the lowest in such period, is greater or less than:
    (II) The average price received by producers for flue-cured tobacco 
on the United States auction markets, as determined by the Secretary, 
during the 5 marketing years immediately preceding the marketing year 
prior to the marketing year for which the determination is being made, 
excluding the year in which the average price was the highest and the 
year in which the average price was the lowest in such period; and
    (B) 33.3 percent of the change, expressed as a cost per pound of 
tobacco, in the index of prices paid by the tobacco producers from 
January 1 to December 31 of the calendar year immediately preceding the 
year in which the determination is made.
    The difference between the two 5-year averages (i.e., the 
difference between (A) (I) and (II)) is 1.5 cents per pound. The 
difference in the cost index from January 1 to December 31, 1995, is 
-1.2 cents per pound. Applying these components to the price support 
formula (1.5 cents per pound, two-thirds weight; -1.2 cents per pound, 
one-third weight) results in a weighted total of 0.6 cent per pound. As 
indicated, section 106 provides that the Secretary may, on the basis of 
supply and demand conditions, limit the change in the price support 
level to no less than 65 percent of that amount. In order to remain 
competitive in foreign and domestic markets, the Secretary used his 
discretion to limit the increase to 65 percent of the maximum allowable 
increase. Accordingly, the 1996 crop of flue-cured tobacco will be 
supported at 160.1 cents per pound, 0.4 cents higher than in 1995.

List of Subjects

7 CFR Part 723

    Acreage allotments, Marketing quotas, Penalties, Reporting and 
recordkeeping requirements, tobacco.

7 CFR Part 1464

    Loan programs-agriculture, Price support programs, Reporting and 
recordkeeping requirements, Tobacco, Warehouses.

    Accordingly, 7 CFR parts 723 and 1464 are amended as follows:

PART 723--TOBACCO

    1. The authority citation for 7 CFR part 723 continues to read as 
follows:

    Authority: 7 U.S.C. 1301, 1311-1314, 1314-1, 1314b, 1314b-1, 
1314b-2, 1314c, 1314d, 1314e, 1314f, 1314i, 1315, 1316, 1362, 1363, 
1372-75, 1421, 1445-1, and 1445-2.

    2. Section 723.111 is amended by adding paragraph (d) to read as 
follows:


Sec. 723.111   Flue-Cured (types 11-14) tobacco.

* * * * *
    (d) The 1996 crop national marketing quota is 873.6 million pounds.

PART 1464--TOBACCO

    3. The authority citation for 7 CFR part 1464 continues to read as 
follows:

    Authority: 7 U.S.C. 1421, 1423, 1441, 1445, and 1445-1, 15 
U.S.C. 714b and 714c.

    4. Section 1464.12 is amended by adding paragraph (d) to read as 
follows:


Sec. 1464.12   Flue-Cured (types 11-14) tobacco.

* * * * *
    (d) The 1996 crop national price support level is 160.1 cents per 
pound.

    Signed at Washington, DC, on July 11, 1996.
Bruce R. Weber,
Administrator, Farm Service Agency and Executive Vice President, 
Commodity Credit Corporation.
[FR Doc. 96-18293 Filed 7-18-96; 8:45 am]
BILLING CODE 3410-05-P