[Federal Register Volume 62, Number 159 (Monday, August 18, 1997)]
[Rules and Regulations]
[Pages 43917-43922]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-21796]



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  Federal Register / Vol. 62, No. 159 / Monday, August 18, 1997 / Rules 
and Regulations  

[[Page 43917]]


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DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR Part 723

Commodity Credit Corporation

7 CFR Part 1464

RIN 0560-AF03


1997 Marketing Quotas and Price Support Levels for Fire-Cured 
(type 21), Fire-Cured (types 22-23), Dark Air-Cured (types 35-36), 
Virginia Sun-Cured (type 37), and Cigar-Filler and Binder (types 42-44 
and 53-55) Tobaccos

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

ACTION: Final rule.

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

SUMMARY: The purpose of this final rule is to codify the national 
marketing quotas and price support levels for the 1997 crops for 
several kinds of tobacco announced by press release on February 27, 
1997.
    In accordance with the Agricultural Adjustment Act of 1938, as 
amended (the 1938 Act), the Secretary determined the 1997 marketing 
quotas to be as follows: fire-cured (type 21), 2.395 million pounds; 
fire-cured (types 22-23), 43.4 million pounds; dark air-cured (types 
35-36), 9.88 million pounds; Virginia sun-cured (type 37), 156,400 
pounds; and cigar-filler and binder (types 42-44 and 53-55), 8.4 
million pounds.
    Quotas are necessary to adjust the production levels of certain 
tobaccos to more fully reflect supply and demand conditions, as 
provided by statute.
    In addition, in accordance with the Agricultural Act of 1949 as 
amended (the 1949 Act), the Secretary determined the 1997 levels of 
price support to be as follows (in cents per pound): fire-cured (type 
21), 149.8; fire-cured (types 22-23), 162.3; dark air-cured (types 35-
36), 139.8; Virginia sun-cured (type 37), 132.6; and cigar-filler and 
binder (types 42-44 and 53-55), 116.9. Price supports are generally 
necessary to maintain grower income.

EFFECTIVE DATE: February 27, 1997.

FOR FURTHER INFORMATION CONTACT: Robert L. Tarczy, STOP 0514, 1400 
Independence Avenue, SW, Washington, DC 20250-0514, Phone 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.

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 12988

    This final rule has been reviewed in accordance with Executive 
Order 12988, 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 because Farm Service Agency (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 of these 
determinations.

Paperwork Reduction Act

    The amendments to 7 CFR parts 723 and 1464 set forth in this final 
rule do not contain information collections that require clearance 
through the Office of Management and Budget under the provisions of 44 
U.S.C. Chapter 35.

Unfunded Federal Mandates

    This rule contains no Federal mandates under the regulatory 
provisions of Title II of the Unfunded Mandate Reform Act of 1995 
(UMRA), for State, local, and tribal governments or the private sector. 
Thus, this rule is not subject to the requirements of sections 202 and 
205 of the UMRA.

Background

    This final rule is issued pursuant to the provisions of the 1938 
Act and the 1949 Act.
    On February 27, 1997, the Secretary determined and announced the 
national marketing quotas and price support levels for the 1997 crops 
of fire-cured (type 21), fire-cured (types 22-23), dark air-cured 
(types 35-36), Virginia sun-cured (type 37), and cigar-filler and 
binder (types 42-44 and 53-55) tobaccos. A number of related 
determinations were made at the same time which this final rule 
affirms. On the same date, the Secretary also announced that referenda 
would be conducted by mail with respect to fire-cured (types 21-23) and 
dark air-cured (types 35-36) tobaccos.
    During March 24-27, 1997, eligible producers of fire-cured (types 
21-23) and dark air-cured (types 35-36) tobacco voted in separate 
referenda to determine whether such producers favor marketing quotas 
for the 1997, 1998 and 1999 marketing years (MYs) for these tobaccos. 
Of the producers voting, 90.6 percent favored marketing quotas for 
fire-cured (types 21-23) tobacco while 89.6 percent favored marketing 
quotas for dark air-cured (types 35-36) tobacco. Accordingly, quotas 
and price supports for fire-cured (types 21-23) and dark air-cured 
(types 35-36) tobacco are in effect for the 1997 MY.
    In accordance with section 312(a) of the 1938 Act, the Secretary of 
Agriculture was required to proclaim not later than March 1 of any MY 
with respect to any kind of tobacco, other than burley and flue-cured 
tobacco, a national marketing quota for any such kind of tobacco for 
each of the next 3 MYs if such MY was the last year of 3 consecutive 
years for which marketing quotas previously proclaimed will be in 
effect. With respect to fire-cured (types 21-23) and dark air-cured 
(types 35-36) tobaccos, the 1996 MY is the last year of 3 such 
consecutive years. Accordingly, subject to producer approval, marketing 
quotas for these tobaccos have been proclaimed for each of the 3 MYs 
beginning October 1, 1997; October 1, 1998; and October 1, 1999. Quotas 
for the other tobaccos covered by this notice were approved in 
referenda which are still effective.
    Because of producer approval of quotas, sections 312 and 313 of the 
1938 Act required that the Secretary

[[Page 43918]]

announce the reserve supply level and the total supply of fire-cured 
(type 21), fire-cured (types 22-23), dark air-cured (types 35-36), 
Virginia sun-cured (type 37), and cigar-filler and binder (types 42-44 
and 53-55) tobaccos for the MY beginning October 1, 1997.
    The Secretary also announces the amounts of the national marketing 
quotas, national acreage allotments, national acreage factors for 
apportioning the national acreage allotments (less reserves) to old 
farms, and the amounts of the national reserves and parts thereof 
available for (1) new farms and (2) making corrections and adjusting 
inequities in old farm allotments.
    Under the 1949 Act, price support is required to be made available 
for each crop of a kind of tobacco for which marketing quotas are in 
effect or for which marketing quotas have not been disapproved by 
producers. With respect to the 1997 crop of the five kinds of tobacco 
that are the subject of this notice, the respective maximum level of 
price support for these kinds is determined in accordance with section 
106 of the 1949 Act. Announcement of the price support levels for these 
five kinds of tobacco are normally made before the planting seasons. 
Under the provisions of Section 1108(c), of Pub. L. No. 99-272, the 
price support level announcements do not require prior rulemaking. For 
the 1997 crops, the price support announcements were made on February 
27, 1997, at the same time the quota announcements were made. Quota and 
price support determinations for burley and flue-cured tobacco are made 
separately and are the subject of separate notices.

Quotas and Related Determinations

Statutory Provisions

    Section 312(b) of the 1938 Act provides, in part, that the national 
marketing quota for a kind of tobacco is the total quantity of that 
kind of tobacco that may be marketed so that a supply of such tobacco 
equal to its reserve supply level is made available during the MY.
    Section 313(g) of the 1938 Act provides that the Secretary may 
convert the national marketing quota into a national acreage allotment 
for apportionment to individual farms.
    Since producers of these kinds of tobacco generally produce 
considerably less than their respective national acreage allotments 
allow, a larger effective quota is necessary to make available 
production equal to the reserve supply level. Further, under section 
312(b) of the 1938 Act the amount of the national marketing quota may, 
not later than the following March 1, be increased by not more than 20 
percent over the straight formula amount if the Secretary determines 
that such increase is necessary in order to meet market demands or to 
avoid undue restriction of marketings in adjusting the total supply to 
the reserve supply level.
    Section 301(b)(14)(B) of the 1938 Act defines ``reserve supply 
level'' as the normal supply, plus 5 percent thereof, to ensure a 
supply adequate to meet domestic consumption and export needs in years 
of drought, flood, or other adverse conditions, as well as in years of 
plenty. ``Normal supply'' is defined in section 301(b)(10)(B) of the 
1938 Act as a normal year's domestic consumption and exports, plus 175 
percent of a normal year's domestic use and 65 percent of a normal 
year's exports as an allowance for a normal year's carryover.
    Normal year's domestic consumption is defined in section 
301(b)(11)(B) of the 1938 Act as the average quantity produced and 
consumed in the United States during the 10 MYs immediately preceding 
the MY in which such consumption is determined, adjusted for current 
trends in such consumption. Normal year's exports is defined in section 
301(b)(12) of the 1938 Act as the average quantity produced in and 
exported from the United States during the 10 MYs immediately preceding 
the MY in which such exports are determined, adjusted for current 
trends in such exports.
    Also, under section 313(g) 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 1 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 the 
national reserve, noted herein, for the 1997 crop of each of these 
kinds of tobacco is adequate for these purposes.

The Proposed Rule

    On January 27, 1997, a proposed rule was published in the Federal 
Register (62 FR 3830) in which interested persons were requested to 
comment with respect to setting quotas for the tobacco kinds addressed 
in this notice.

Discussion of Comments

    Twenty-five written responses were received during the comment 
period which ended February 12, 1997. A summary of these comments by 
kind of tobacco follows:
    (1) Fire-cured (type 21) tobacco. Eleven comments were received. 
One recommended no change from the 1996 quota, while 10 others 
recommended a 15 percent increase in 1997 quotas.
    (2) Fire-cured (types 22-23) tobacco. Five comments were received. 
They ranged from recommending no change to recommending a 10 percent 
increase in 1997 quotas.
    (3) Dark air-cured (types 35-36) tobacco. Six comments were 
received. All recommended a 10 percent increase in the quota.
    (4) Virginia sun-cured (type 37) tobacco. Three comments were 
received. They recommended a quota increase of between 15 and 20 
percent.
    (5) Cigar-filler and binder (types 42-44 and 53-55) tobacco. No 
comments were received.

Quota and Related Determinations

    Based on a review of these comments and the latest available 
statistics of the Federal Government, which appear to be the most 
reliable data available, the following determinations were made for the 
five subject tobacco kinds:
(1) Fire-Cured (type 21) Tobacco
    The average annual quantity of fire-cured (type 21) tobacco 
produced in the United States that is estimated to have been consumed 
in the United States during the 10 MYs preceding the 1996 MY was 
approximately 0.7 million pounds. The average annual quantity produced 
in the United States and exported from the United States during the 10 
MYs preceding the 1996 MY was 2.2 million pounds (farm sales weight 
basis). Both domestic use and exports have trended sharply downward. 
Because of these considerations, a normal year's domestic consumption 
has been determined to be 0.7 million pounds, and a normal year's 
exports have been determined to be 1.5 million pounds. Application of 
the formula prescribed by section 301(b)(14)(B) of the 1938 Act results 
in a reserve supply level of 3.78 million pounds.
    Manufacturers and dealers reported stocks held on October 1, 1996, 
of 2.8 million pounds. The 1996 crop is estimated to be 1.7 million 
pounds. Therefore, total supply for the 1996 MY is 4.5 million pounds. 
During the 1996 MY, it is estimated that disappearance will total 
approximately 2.4 million pounds. Deducting this disappearance from 
total supply results in a 1997 MY beginning stock estimate of 2.1 
million pounds.
    The difference between the reserve supply level and the estimated 
carryover on October 1, 1997, is 1.68 million pounds. This represents 
the

[[Page 43919]]

quantity that may be marketed that will make available during the 1997 
MY a supply equal to the reserve supply level. More than 80 percent of 
the announced national marketing quota is expected to be produced. 
Accordingly, it has been determined that a 1997 national marketing 
quota of 1.996 million pounds is necessary to make available production 
of 1.68 million pounds. As permitted by section 312(b) of the 1938 Act, 
it was further determined that the 1997 national marketing quota should 
be increased by 20 percent over the normal formula amount in order to 
avoid undue restriction of marketings. This determination took into 
account the size of last year's quota the comments, the long storage 
time for this tobacco, and the possibility of changes in demand over 
expected demand.
    Thus, the national marketing quota for the 1997 crop is 2.395 
million pounds.
    In accordance with section 313(g) of the 1938 Act, dividing the 
1997 national marketing quota of 2.395 million pounds by the 1992-96, 
5-year national average yield of 1,590 pounds per acre results in a 
1997 national acreage allotment of 1,506.29 acres.
    Pursuant to the provisions of section 313(g) of the 1938 Act, a 
national acreage factor of 1.125 is determined by dividing the national 
acreage allotment for the 1997 MY, less a national reserve of 14.38 
acres, by the total of the 1997 preliminary farm acreage allotments 
(previous year's allotments). The preliminary farm acreage allotments 
reflect the factors specified in section 313(g) of the 1938 Act for 
apportioning the national acreage allotment, less the national reserve, 
to old farms.
(2) Fire-Cured (types 22-23) Tobacco
    The average annual quantity of fire-cured (types 22-23) tobacco 
produced in the United States that is estimated to have been consumed 
in the United States during the 10 years preceding the 1996 MY was 
approximately 18.7 million pounds. The average annual quantity produced 
in the United States and exported during the 10 MYs preceding the 1996 
MY was 16.2 million pounds (farm sales weight basis). Domestic use has 
trended upward while exports have varied. Because of these 
considerations, a normal year's domestic consumption has been 
determined to be 30.0 million pounds, and a normal year's exports have 
been determined to be 18.2 million pounds. Application of the formula 
prescribed by section 301(b)(14)(B) of the 1938 Act results in a 
reserve supply level of 118.1 million pounds.
    Manufacturers and dealers reported stocks held on October 1, 1996, 
of 80.2 million pounds. The 1996 crop is estimated to be 42.3 million 
pounds. Therefore, total supply for the 1996 MY is 122.5 million 
pounds. During the 1996 MY, it is estimated that disappearance will 
total approximately 39.0 million pounds. Deducting this disappearance 
from total supply results in a 1997 MY beginning stock estimate of 83.5 
million pounds.
    The difference between the reserve supply level and the estimated 
carryover on October 1, 1997, is 34.6 million pounds. This represents 
the quantity that may be marketed that will make available during the 
1997 MY a supply equal to the reserve supply level. About 95 percent of 
the announced national marketing quota is expected to be produced. 
Accordingly, it has been determined that a 1997 national marketing 
quota of 36.2 million pounds is necessary to make available production 
of 34.6 million pounds.
    Utilizing section 312(b) of the 1938 Act, it was further 
determined, for the same reasons as with type 21 tobacco, that the 1997 
national marketing quota should be increased by 20 percent over the 
normal formula amount in order to avoid undue restriction of 
marketings. Thus, the national marketing quota for the 1997 crop is 
43.4 million pounds.
    In accordance with section 313(g) of the 1938 Act, dividing the 
1997 national marketing quota of 43.4 million pounds by the 1992-96, 5-
year average yield of 2,551 pounds per acre results in a 1997 national 
acreage allotment of 17,012.94 acres.
    Pursuant to the provisions of section 313(g) of the 1938 Act, a 
national acreage factor of 1.025 is determined by dividing the national 
acreage allotment for the 1997 MY, less a national reserve of 136.93 
acres, by the total of the 1997 preliminary farm acreage allotments 
(previous year's allotments). The preliminary farm acreage allotments 
reflect the factors specified in section 313(g) of the 1938 Act for 
apportioning the national acreage allotment, less the national reserve, 
to old farms.
(3) Dark Air-Cured (types 35-36) Tobacco
    The average annual quantity of dark air-cured (types 35-36) tobacco 
produced in the United States that is estimated to have been consumed 
in the United States during the 10 MYs preceding the 1996 MY was 
approximately 9.6 million pounds. The average annual quantity produced 
in the United States and exported from the United States during the 10 
MYs preceding the 1996 MY was 1.7 million pounds (farm sales weight 
basis). Domestic use has been erratic while exports have trended 
downward. Because of these considerations, a normal year's domestic 
consumption has been determined to be 9.9 million pounds, and a normal 
year's exports have been determined to be 1.5 million pounds. 
Application of the formula prescribed by section 301(b)(14)(B) of the 
1938 Act results in a reserve supply level of 31.2 million pounds.
    Manufacturers and dealers reported stocks held on October 1, 1996, 
of 25.1 million pounds. The 1996 crop is estimated to be 9.1 million 
pounds. Therefore, total supply for the 1996 MY is 34.2 million pounds. 
During the 1996 MY, it is estimated that disappearance will total 
approximately 10.5 million pounds. Deducting this disappearance from 
total supply results in a 1997 MY beginning stock estimate of 23.7 
million pounds.
    The difference between the reserve supply level and the estimated 
carryover on October 1, 1997, is 7.5 million pounds. This represents 
the quantity that may be marketed that will make available during the 
1997 MY a supply equal to the reserve supply level. About 90 percent of 
the announced national marketing quota is expected to be produced. 
Accordingly, it has been determined that a national marketing quota of 
8.23 million pounds is necessary to make available production of 7.5 
million pounds. Utilizing section 312(b) of the 1938 Act, it was 
further determined that the 1997 national marketing quota should be 
increased by 20 percent over the normal formula amount in order to 
avoid undue restriction of marketings. This determination took into 
account the same factors as with type 21 and industry preferences. This 
results in a national marketing quota for the 1997 MY of 9.88 million 
pounds. Otherwise, the quota would be well below the level for the 1996 
crop.
    In accordance with section 313(g) of the 1938 Act, dividing the 
1997 national marketing quota of 9.88 million pounds by the 1992-96, 5-
year average yield of 2,312 pounds per acre results in a 1997 national 
acreage allotment of 4,273.36 acres.
    Pursuant to the provisions of section 313(g) of the 1938 Act, a 
national acreage factor of 1.05 is determined by dividing the national 
acreage allotment for the 1997 MY, less a national reserve of 39.83 
acres, by the total of the 1997 preliminary farm acreage allotments 
(previous year's allotments). The preliminary farm acreage allotments 
reflect the factors specified in section 313(g) of the 1938 Act for 
apportioning the national acreage allotment, less the national reserve, 
to old farms.

[[Page 43920]]

(4) Virginia Sun-Cured (Type 37) Tobacco
    The average annual quantity of Virginia sun-cured (type 37) tobacco 
produced in the United States that is estimated to have been consumed 
in the United States during the 10 MYs preceding the 1996 MY was 
approximately 110,000 pounds. The average annual quantity produced in 
the United States and exported from the United States during the 10 MYs 
preceding the 1996 MY was approximately 90,000 pounds (farm sales 
weight basis). Both domestic use and exports have shown a sharp 
downward trend. Because of these considerations, a normal year's 
domestic consumption has been determined to be 40,000 pounds, and a 
normal year's exports have been determined to be 24,000 pounds. 
Application of the formula prescribed by section 301(b)(14)(B) of the 
1938 Act results in a reserve supply level of 150,000 pounds.
    Manufacturers and dealers reported stocks held on October 1, 1996, 
of 50,000 pounds. The 1996 crop is estimated to be 120,000 pounds. 
Therefore, total supply for the 1996 MY is 170,000 pounds. During the 
1996 MY, it is estimated that disappearance will total approximately 
120,000 pounds. Deducting this disappearance from total supply results 
in a 1997 MY beginning stock estimate of 50,000 pounds.
    The difference between the reserve supply level and the estimated 
carryover on October 1, 1996, is 100,000 pounds. This represents the 
quantity that may be marketed that will make available during the 1997 
MY a supply equal to the reserve supply level. Less than two-thirds of 
the announced national marketing quota is expected to be produced. 
Accordingly, it has been determined that a 1997 national marketing 
quota of 156,400 pounds is necessary to make available production of 
100,000 pounds. Thus, the national marketing quota for the 1997 crop is 
156,400 pounds which is greater than the preceding quota by about 6 
percent and should not unduly restrict marketings.
    In accordance with section 313(g) of the 1938 Act, dividing the 
1997 national marketing quota of 156,400 pounds by the 1992-96, 5-year 
average yield of 1,375 pounds per acre results in a 1997 national 
acreage allotment of 113.75 acres.
    Pursuant to the provisions of section 313(g) of the 1938 Act, a 
national acreage factor of 1.15 is determined by dividing the national 
acreage allotment for the 1997 MY, less a national reserve of 1.09 
acres, by the total of the 1997 preliminary farm acreage allotments 
(previous year's allotments). The preliminary farm acreage allotments 
reflect the factors specified in section 313(g) of the 1938 Act for 
apportioning the national acreage allotment, less the national reserve, 
to old farms.
(5) Cigar-Filler and Binder (types 42-44 and 53-55) Tobacco
    The average annual quantity of cigar-filler and binder (types 42-44 
and 53-55) tobacco produced in the United States that is estimated to 
have been consumed in the United States during the 10 MYs preceding the 
1996 MY was approximately 13.8 million pounds. The average annual 
quantity produced in the United States and exported from the United 
States during the 10 MYs preceding the 1996 MY was less than 100,000 
pounds (farm sales weight). Domestic use has trended downward and 
exports are very small. Based on these considerations, a normal year's 
domestic consumption has been determined to be 7.8 million pounds, and 
a normal year's exports has been determined to be zero pounds. 
Application of the formula prescribed by section 301(b)(14)(B) of the 
1938 Act results in a reserve supply level of 22.6 million pounds.
    Manufacturers and dealers reported stocks held on October 1, 1996, 
of 21.8 million pounds. The 1996 crop is estimated to be 4.6 million 
pounds. Therefore, total supply for the 1996 MY is 26.4 million pounds. 
During the 1996 MY, it is estimated that disappearance will total about 
8.8 million pounds. Deducting this disappearance from total supply 
results in a 1997 MY beginning stock estimate of 17.6 million pounds.
    The difference between the reserve supply level and the estimated 
carryover on October 1, 1997, is 5.0 million pounds. This represents 
the quantity that may be marketed that will make available during the 
1997 MY a supply equal to the reserve supply level. Slightly more than 
70 percent of the announced national marketing quota is expected to be 
produced. Accordingly, it has been determined that a 1997 national 
marketing quota of 7.0 million pounds is necessary to make available 
production of 5.0 million pounds. As permitted by section 312(b) of the 
1938 Act, it was further determined that the 1997 national marketing 
quota should be increased by 20 percent over the normal formula amount 
in order to avoid undue restriction of marketings. This results in a 
1997-crop national marketing quota of 8.4 million pounds. This 
determination reflects that there are short reserve supplies and takes 
into account possible changes in expected demand and the fact that even 
with this adjustment the new quota will be less than the 1996 crop 
quota.
    In accordance with section 313(g) of the 1938 Act, dividing the 
1997 national marketing quota of 8.4 million pounds by the 1992-96, 5-
year average yield of 1,876 pounds per acre results in a 1997 national 
acreage allotment of 4,477.61 acres.
    Pursuant to the provisions of section 313(g), of the 1938 Act, a 
national factor of 1.0 is determined by dividing the national acreage 
allotment for the 1997 MY, less a national reserve of 9.21 acres, by 
the total of the 1997 preliminary farm acreage allotments (previous 
year's allotments). The preliminary farm acreage allotments reflect the 
factors specified in section 313(g) of the 1938 Act for apportioning 
the national acreage allotment, less the national reserve, to old 
farms.
(6) Referendum Results for Fire-Cured (Types 21-23) and Dark Air-Cured 
(Types 35-36) Tobaccos
    Because of the results of producer referenda, marketing quotas 
shall be in effect for the 1997 MY for fire-cured (types 21-23) and 
dark air-cured (types 35-36) tobacco. In referenda held March 24-27, 
1997, 90.6 percent of producers of fire-cured (types 21-23) and 89.6 
percent of producers of dark air-cured (types 35-36) tobaccos voted in 
favor of marketing quotas.

                                                 Referenda Data                                                 
----------------------------------------------------------------------------------------------------------------
                                                                                                     Percent yes
                       Kind of tobacco                        Total votes   Yes votes     No votes      votes   
----------------------------------------------------------------------------------------------------------------
Fire-cured (types 21-23)....................................        4,405        3,992          413         90.6
Dark air-cured (types 35-36)................................        4,350        3,898          452         89.6
----------------------------------------------------------------------------------------------------------------


[[Page 43921]]

Price Support

Statutory Provisions
    Section 106(f)(6)(A) of the 1949 Act provides that the level of 
support for the 1997 crop of a kind of tobacco (other than flue-cured 
and burley) shall be the level in cents per pound at which the 1996 
crop of such kind of tobacco was supported, plus or minus, as 
appropriate, the amount by which (i) the basic support level for the 
1997 crop, as it would otherwise be determined under section 106(b) of 
the 1949 Act, is greater or less than (ii) the support level for the 
1996 crop, as it would otherwise be determined under section 106(b). To 
the extent that the price support level would be increased as a result 
of that comparison, section 106(f) provides that the increase may be 
modified using the provisions of 106(d). Under 106(d), the Secretary 
may reduce the level of support for grades the Secretary determines 
will likely be in excess supply so long as the weighted level of 
support for all grades maintains at least 65 percent of the increase in 
the price support (from the previous year). The Secretary must consult 
with the appropriate tobacco associations and take into consideration 
the supply and anticipated demand for the tobacco, including the effect 
of the action on other kinds of quota tobacco. In determining whether 
the supply of any grade of any kind of tobacco of a crop will be 
excessive, the Secretary is required to consider the domestic supply, 
including domestic inventories, the amount of such tobacco pledged as 
security for price support loans, and anticipated domestic and export 
demand, based on the maturity, uniformity, and stalk position of such 
tobacco.
    Section 106(b) of the 1949 Act provides that the ``basic support 
level'' for any year will be determined by multiplying the support 
level for the 1959 crop of such kind of tobacco by the ratio of the 
average of the index of prices paid by farmers, including wage rates, 
interest and taxes (referred to as the ``parity index'') for the 3 
previous calendar years to the average index of such prices paid by 
farmers, including wage rates, interest and taxes for the 1959 calendar 
year.
    In addition, section 106(f)(6)(B) of the 1949 Act provides that to 
the extent requested by the board of directors of an association, 
through which price support is made available to producers (producer 
association), the Secretary may reduce the support level determined 
under section 106(f)(6)(A) of the 1949 Act for the respective kind of 
tobacco to more accurately reflect the market value and improve the 
marketability of such tobacco. Accordingly, the price support level for 
a kind of tobacco set forth in this rule could be reduced if such a 
request is made.

Price Support Determinations

    The following levels of price support for the 1996 crops of various 
kinds of tobacco, which were determined in accordance with section 
106(f)(6)(A) of the 1949 Act, are as follows:

------------------------------------------------------------------------
                                                               Support  
                                                                level   
                       Kind and type                          (cents per
                                                                pound)  
------------------------------------------------------------------------
Virginia fire-cured (type 21)..............................        145.5
KY-TN fire-cured (types 22-23).............................        155.7
Dark air-cured (types 35-36)...............................        133.9
Virginia sun-cured (type 37)...............................        128.8
Cigar-filler and binder (types 42-44 and 53-55)............        112.0
------------------------------------------------------------------------

    For the 1997 crop year:
    (1) Average parity indexes for calendar year periods 1993-1995 and 
1994-1996 are as follows:

----------------------------------------------------------------------------------------------------------------
                     Year                          Index                      Year                      Index   
----------------------------------------------------------------------------------------------------------------
1993..........................................        1,355  1994..................................        1,399
1994..........................................        1,399  1995..................................        1,443
1995..........................................        1,443  1996..................................        1,504
Average.......................................        1,399  Average...............................        1,449
----------------------------------------------------------------------------------------------------------------

    (2) Average parity index, calendar year 1959 = 298.
    (3) 1996 ratio of 1,399 to 298 = 4.69; 1997 ratio of 1,449 to 298 = 
4.86.
    (4) Ratios times 1959 support levels and 1997 increase in basic 
support levels are as follows:

----------------------------------------------------------------------------------------------------------------
                                                     1959      Basic support level \1\    Increase from 1995 to 
                                                   support   --------------------------           1996          
                                                    level                              -------------------------
                 Kind and type                  -------------    1996 (       1997 (       100% (               
                                                   ( cents/    cents/lb.)   cents/lb.)   cents/lb.)  65% ( cents/
                                                     lb.)                                                lb.)   
----------------------------------------------------------------------------------------------------------------
VA 21..........................................         38.8        182.0        188.6          6.6          4.3
KY-TN 22-23....................................         38.8        182.0        188.6          6.6          4.3
KY-TN 35-36....................................         34.5        161.8        167.7          5.9          3.8
VA 37..........................................         34.5        161.8        167.7          5.9          3.8
Cigar-filler and binder 42-44, 54-55...........         28.6        134.1        139.0          4.9          3.2
----------------------------------------------------------------------------------------------------------------
\1\ 1996 ratio is 4.69, 1997 ratio is 4.86.                                                                     

    With respect to 106(d) adjustments, for MY 1997, (that is for the 
1997-crop) the flue-cured and burley support levels were increased by 
65 percent of the formula increase to within about 13 percent of 1996's 
average market prices. For the kinds of tobacco subject of this notice, 
MY 1996 market prices were further above the support level, and overall 
loan receipts remained low.
    In addition, the supply-use ratios for these five kinds suggest 
adequate supplies. However, all five kinds are eligible for the full 
increase. In addition, the loan associations for Virginia fire-

[[Page 43922]]

 cured (type 21) and Virginia sun-cured (type 37) have accepted lower 
price support levels so their tobacco may remain competitive in world 
markets. Therefore, for fire-cured (type 21) tobacco and Virginia sun-
cured (type 37) tobacco, the 1997-crop support levels were set so as to 
only add, over 1996-crop levels, 65 percent of the difference between 
the 1997-crop ``basic support level'' and the 1996-crop ``basic support 
level.'' For the other tobaccos covered in this notice there was no 
such recommendation and the support levels were set accordingly. 
Accordingly, the price support levels for Kentucky-Tennessee fire-cured 
(types 22-23), dark air-cured (types 35-36) and cigar filler and binder 
(types 42-44; 53-55) tobaccos were set to use of the MY 1996 level of 
support increased by the difference between the MY 1997 ``basic support 
level'' and the MY 1996 ``basic support level.'' Chewing tobacco, 
smoking tobacco, and snuff manufacturing formulas limit the 
substitutability of one of these kinds of tobacco for another. 
Cigarettes, the principal outlet for flue-cured and burley tobaccos, do 
not require any of these five kinds of tobacco in their blends.
    Accordingly, the following price support determinations were 
announced on February 27, 1997 for the 1997 crops of the tobaccos which 
are the subject of this notice:

------------------------------------------------------------------------
                                                                Support 
                                                                 level  
                        Kind and type                            (cents 
                                                                  per   
                                                                 pound) 
------------------------------------------------------------------------
Virginia fire-cured (type 21)................................      149.8
Kentucky-Tennessee fire-cured   (types 22-23)................      162.3
Dark air-cured (types 35-36).................................      139.8
Virginia sun-cured (type 37).................................      132.6
Cigar-filler and binder (types 42-44 and 53-55)..............      116.9
------------------------------------------------------------------------

List of Subjects

7 CFR Part 723

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

7 CFR Part 1464

    Price supports, Tobacco.

    Accordingly, 7 CFR parts 723 and 1464 are amended to read 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, 1377-1379, 1421, 1445-1, and 1445-2.

    2. Section 723.113 is amended by adding paragraph (e) to read as 
follows:


Sec. 723.113  Fire-cured (type 21) tobacco.

* * * * *
    (e) The 1997-crop national marketing quota is 2.395 million pounds.
    3. Section 723.114 is amended by adding paragraph (e) to read as 
follows:


Sec. 723.114  Fire-cured (types 22-23) tobacco.

* * * * *
    (e) The 1997-crop national marketing quota is 43.4 million pounds.
    4. Section 723.115 is amended by adding paragraph (e) to read as 
follows:


Sec. 723.115  Dark air-cured (types 35-36) tobacco.

* * * * *
    (e) The 1997-crop national marketing quota is 9.88 million pounds.
    5. Section 723.116 is amended by adding paragraph (e) to read as 
follows:


Sec. 723.116  Sun-cured (type 37) tobacco.

* * * * *
    (e) The 1997-crop national marketing quota is 156,400 pounds.
    6. Section 723.117 is amended by adding paragraph (e) to read as 
follows:


Sec. 723.117  Cigar-filler and binder (types 42-44 and 53-55) tobacco.

* * * * *
    (e) The 1997-crop national marketing quota is 8.4 million pounds.

PART 1464--TOBACCO

    7. 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.

    8. Section 1464.13 is amended by adding paragraph (e) to read as 
follows:


Sec. 1464.13  Fire-cured (type 21) tobacco.

* * * * *
    (e) The 1997-crop national price support level is 149.8 cents per 
pound.
    9. Section 1464.14 is amended by adding paragraph (e) to read as 
follows:


Sec. 1464.14  Fire-cured (types 22-23) tobacco.

* * * * *
    (e) The 1997-crop national price support level is 162.3 cents per 
pound.
    10. Section 1464.15 is amended by adding paragraph (e) to read as 
follows:


Sec. 1464.15  Dark air-cured (types 22-23) tobacco.

* * * * *
    (e) The 1997-crop national price support level is 139.8 cents per 
pound.
    11. Section 1464.16 is amended by adding paragraph (e) to read as 
follows:


Sec. 1464.16  Virginia sun-cured (type 37) tobacco.

* * * * *
    (e) The 1997-crop national price support level is 132.6 cents per 
pound.
    12. Section 1464.17 is amended by adding paragraph (e) to read as 
follows:


Sec. 1464.17  Cigar-filler and binder (types 42-44 and 53-55) tobacco.

* * * * *
    (e) The 1997-crop national price support level is 116.9 cents per 
pound.

    Signed at Washington, DC, on August 10, 1997.
Bruce R. Weber,
Acting Administrator, Farm Service Agency and Executive Vice President, 
Commodity Credit Corporation.
[FR Doc. 97-21796 Filed 8-15-97; 8:45 am]
BILLING CODE 3410-05-P