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