[Federal Register Volume 63, Number 202 (Tuesday, October 20, 1998)]
[Rules and Regulations]
[Pages 55939-55940]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-28017]


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

DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR Part 723

Commodity Credit Corporation

7 CFR Part 1464

RIN 0560-AF18


1998 Marketing Quota and Price Support for Burley Tobacco

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

ACTION: Final rule.

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

SUMMARY: The purpose of this final rule is to codify determinations 
made by the Secretary of Agriculture (Secretary) with respect to the 
1998 crop of burley tobacco. In accordance with the Agricultural 
Adjustment Act of 1938, as amended, (1938 Act), the Secretary 
determined the 1998 marketing quota for burley tobacco to be 637.8 
million pounds. In accordance with the Agricultural Act of 1949, as 
amended, (1949 Act), the Secretary determined the 1998 price support 
level to be 177.8 cents per pound.

EFFECTIVE DATE: January 30, 1998.

FOR FURTHER INFORMATION CONTACT: Robert L. Tarczy, Tobacco and Peanuts 
Division, USDA, FSA, STOP 0514, 1400 Independence Avenue, SW., 
Washington, DC 20250-0514, telephone 202-720-5346. Copies of the cost-
benefit assessment prepared for this rule can be obtained from Mr. 
Tarczy.

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 12988

    This final rule has been reviewed in accordance with Executive 
Order 12988. 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 Farm Service Agency (FSA) nor the 
Commodity Credit Corporation (CCC) is 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

    These final amendments do not contain information collection that 
require clearance by 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.

Statutory Background

    This rule is issued pursuant to the provisions of the 1938 Act and 
the 1949 Act. Section 1108(c) of Pub. 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. Further, since this rule affirms existing 
determinations which are time-sensitive, the rule is made effective as 
of the date of the underlying determinations.

Proclamation

    On January 30, 1998, the Secretary announced the national marketing 
quota and the price support level for the 1998 crop of burley tobacco. 
A number of related determinations were made at the same time, which 
this final rule affirms. The Secretary also announced that a referendum 
would be conducted by mail ballot with respect to burley tobacco.
    During February 23-27, 1998, eligible burley tobacco producers 
voted in a referendum to determine whether such producers disapprove 
marketing quotas for the 1998, 1999, and 2000 marketing years (MYs) for 
this kind of tobacco. Of the producers voting, 97.5 percent favored 
marketing quotas for burley tobacco. Accordingly, quotas and price 
support are in effect for the 1998 MY.

Marketing Quota

    Section 319(c)(3) of the 1938 Act provides, in part, that the 
national marketing quota for a marketing year for burley 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 burley 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.
    The reserve stock level is defined in section 301(b)(14)(D) of the 
1938 Act as the greater of 50 million pounds or 15 percent of the 
national marketing quota for burley 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 1998 crop of burley tobacco by January 15, 
1998. Five such manufacturers were required to submit such a statement 
for the 1998 crop and the total of their intended purchases for the 
1998 crop is 421.1 million pounds. The 3-year average of exports is 
188.1 million pounds.
    The national marketing quota for the 1997 crop year was 704.5 
million pounds (62 FR 30229). Thus, in accordance with section 
301(b)(14)(D) of the 1938 Act, the reserve stock level for use in 
determining the 1998 marketing quota for burley tobacco is 105.7 
million pounds.
    As of January 24, 1998, the Burley Tobacco Growers Cooperative 
Association and Burley Stabilization Corporation had in their 
inventories 27.1 million pounds of burley tobacco (excluding pre-1994 
stocks committed to be purchased by manufacturers and covered by 
deferred sales). The 1997-crop receipts are expected to total about 50 
million pounds. Accordingly, the adjustment necessary to maintain loan 
stocks at the reserve supply level is an increase of 28.6 million 
pounds.
    The total of the three marketing quota components for the 1997-98 
marketing

[[Page 55940]]

year is 637.8 million pounds. USDA did not use its discretionary 
authority to increase or decrease the three-component total by up to 3 
percent because the Secretary determined that the 1998/99 supply would 
be ample and appropriate at the formula level. Accordingly, the 
national marketing quota for the marketing year beginning October 1, 
1998, for burley tobacco is 637.8 million pounds.
    In accordance with section 319(c) of the 1938 Act, the Secretary is 
authorized to establish a national reserve from the national quota in 
an amount equivalent to not more than 1 percent of the national quota 
for the purpose of making corrections in farm quotas to adjust for 
inequities and establish quotas for new farms. The Secretary has 
determined that a national reserve for the 1998 crop of burley tobacco 
of 738,000 pounds is adequate for these purposes.

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 1998 crop of burley 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 1998 crop of burley tobacco shall be:
    (1) The level, in cents per pound, at which the 1997 crop of burley 
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 burley 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 burley 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 2.9 cents per pound. The 
difference in the cost index from January 1, 1997 to December 31, 1997, 
is 2.5 cents per pound. Applying these components to the price support 
formula (2.9 cents per pound, two-thirds weight; 2.5 cents per pound, 
one-third weight) results in a weighted total of 2.8 cents per pound. 
As indicated, section 106 of the 1949 Act 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 1998 crop of burley 
tobacco will be supported at 177.8 cents per pound, 1.8 cents higher 
than in 1997.

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 723.112 is amended by adding paragraph (f) to read as 
follows:


Sec. 723.112  Burley (type 31) tobacco.

* * * * *
    (f) The 1998-crop national marketing quota is 637.8 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, 1445-1 and 1445-2; 
15 U.S.C. 714b and 714c.

    4. Section 1464.19 is amended by adding paragraph (f) to read as 
follows:


Sec. 1464.19  Burley (type 31) tobacco.

* * * * *
    (f) The 1998 crop national price support level is 177.8 cents per 
pound.

    Signed at Washington, DC, on October 9, 1998.
Keith Kelly,
Administrator, Farm Service Agency and Executive Vice President, 
Commodity Credit Corporation.
[FR Doc. 98-28017 Filed 10-19-98; 8:45 am]
BILLING CODE 3410-05-P