[Federal Register Volume 63, Number 202 (Tuesday, October 20, 1998)]
[Rules and Regulations]
[Pages 55937-55939]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-28018]



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 Rules and Regulations
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  Federal Register / Vol. 63, No. 202 / Tuesday, October 20, 1998 / 
Rules and Regulations  

[[Page 55937]]


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DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR Part 723

Commodity Credit Corporation

7 CFR Part 1464

RIN 0560-AF19


1998 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 
1998 crop of flue-cured tobacco. In accordance with the Agricultural 
Adjustment Act of 1938, as amended, (1938 Act), the Secretary 
determined the 1998 marketing quota for flue-cured tobacco to be 807.6 
million pounds. In accordance with the Agricultural Act of 1949, as 
amended, (1949 Act), the Secretary determined the 1998 price support 
level to be 162.8 cents per pound.

EFFECTIVE DATE: December 15, 1997.

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, 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.

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 the underlying determinations were made.

Proclamation

    On December 15, 1997, the Secretary announced the national 
marketing quota and the price support level for the 1998 crop of flue-
cured 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 flue-
cured tobacco.
    During January 12-15, 1998, eligible flue-cured tobacco producers 
voted in a referendum to determine whether such producers disapprove 
marketing quotas for the 1998, 1999, and 2000 marketing years (MY) for 
this kind of tobacco. Of the producers voting, 98.5 percent favored 
marketing quotas for flue-cured tobacco. Accordingly, quotas and price 
support are in effect for the 1998 MY.

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.
    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 1998 crop of flue-cured tobacco by December 
1, 1997. 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 454.6 million pounds. The 3-year average of 
exports is 371.9 million pounds.
    The national marketing quota for the 1997 crop year was 973.8 
million pounds (62 FR 24799). Thus, in

[[Page 55938]]

accordance with section 301(b)(14)(C) of the 1938 Act, the reserve 
stock level for use in determining the 1998 marketing quota for flue-
cured tobacco is 146.1 million pounds.
    Due to short crops in 1995 and 1996, all pre-1997 loan stocks held 
by the Flue-Cured Tobacco Cooperative Stabilization Corporation have 
been sold. Loans from the 1997 crop total 188.5 million pounds. 
Accordingly, the adjustment to maintain loan stocks at the reserve 
supply level is a decrease of 42.4 million pounds.
    The total of the three marketing quota components for the 1998-99 
MY is 784.1 million pounds. In addition, the discretionary authority to 
increase the three-component total by 3 percent was used due to the 
adverse impact on small farmers of the large reduction (still 16.5 
percent) in the 1998 marketing quota. Accordingly, the national 
marketing quota for the MY beginning July 1, 1998, for flue-cured 
tobacco is 807.6 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. Since average yields have not 
changed significantly in recent years, the national average yield goal 
for the 1998-99 MY 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 1998 crop of flue-cured tobacco is determined 
to be 386,781.61 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 1998 crop of flue-cured tobacco of 1,890 acres is 
adequate for these purposes.
    In accordance with section 317(a)(4) of the 1938 Act, the national 
acreage factor for the 1998 crop of flue-cured tobacco for uniformly 
adjusting the acreage allotment of each farm is determined to be 0.835, 
which is the result of dividing the 1998 national allotment (386,781.61 
acres) minus the national reserve (1,890 acres) by the total of 
allotments established for flue-cured tobacco farms in 1997 (460,942.49 
acres).
    In accordance with section 317(a)(7) of the 1938 Act, the national 
yield factor for the 1998 crop of flue-cured tobacco is determined to 
be 0.9268, which is the result of dividing the national average yield 
goal (2,088 pounds) by a weighted national average yield (2,253 
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 1998 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 1998 crop of flue-cured tobacco shall be:
    (1) The level, in cents per pound, at which the 1997 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 U.S. auction markets, as determined by the Secretary, during the 
5 MYs immediately preceding the MY 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 U.S. auction markets, as determined by the Secretary, during the 
5 MY immediately preceding the MY prior to the MY 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 for which the determination is made.
    The difference between the two 5-year averages (i.e., the 
difference between (A) (I) and (A) (II)) is 0.0 cent per pound. The 
difference in the cost index from January 1, 1997, to December 31, 
1997, is 2.2 cents per pound. Applying these components to the price 
support formula (0.0 cent per pound, two-thirds weight; 2.2 cents per 
pound, one-third weight) results in a weighted total of 0.7 cent 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. However, because the formula increase is significantly less 
than the increase in the cost of production, this discretion was not 
used for 1998. Accordingly, the 1998 crop of flue-cured tobacco will be 
supported at 162.8 cents per pound, 0.7 cent higher than the 1997 crop.

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 (f) to read as 
follows:


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

* * * * *
    (f) The 1998 crop national marketing quota is 807.6 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 (f) to read as 
follows:


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

* * * * *
    (f) The 1998 crop national price support level is 162.8 cents per 
pound.


[[Page 55939]]


    Signed at Washington, DC, on October 9, 1998.
Keith Kelly,
Administrator, Farm Service Agency and Executive Vice President, 
Commodity Credit Corporation.
[FR Doc. 98-28018 Filed 10-19-98; 8:45 am]
BILLING CODE 3410-05-P