00-31957. 2000 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 2000 crop of burley tobacco. In accordance with the Agricultural Adjustment Act of 1938, as amended (1938 Act), the Secretary determined the 2000 marketing quota for burley tobacco to be 247.4 million pounds. In accordance with the Agricultural Act of 1949, as amended (1949 Act), the Secretary determined the 2000 price support level to be 180.5 cents per pound. A number of related determinations were made at the same time, which the rule affirms.

EFFECTIVE DATE:

February 1, 2000.

FOR FURTHER INFORMATION CONTACT:

Robert L. Tarczy, Tobacco and Peanuts Division, USDA, FSA, STOP 0514, 1400 Independence Avenue, SW., Washington, DC 20250-0514, telephone [phone]. 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 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 neither the 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 proposed amendments do not contain information collections 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.

Marketing Quota

Section 319(c)(3) of the 1938 Act provides, in part, that the national marketing quota for a marketing year (MY) for burley tobacco shall be 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 2000 crop of burley tobacco by January 15, 2000. Five such manufacturers were required to submit such a statement for the 2000 crop and the total of their intended purchases for the 2000 crop is 242.5 million pounds. The 3-year average of exports is 159.1 million pounds.

The national marketing quota for the 1999 crop year was 452.9 million pounds. Thus, in accordance with section 301(b)(14)(D) of the 1938 Act, the reserve stock level for use in determining the 2000 marketing quota for burley tobacco is 67.9 million pounds.

As of January 30, 2000, the Burley Tobacco Growers Cooperative Association and Burley Stabilization Corporation had in their inventories 185.8 million pounds of burley tobacco net of deferred sales. The 1999-crop receipts are expected to total about 205 million pounds. However, any reduction in adjusting loan inventory to the reserve stock level for burley tobacco is limited by statute, to the greater of 35 million pounds or 50 percent of the amount that the total pool inventory exceeds the reserve stock level. Accordingly, the adjustment allowed to move loan stocks toward the reserve supply level is a decrease of 161.4 million pounds (one-half of 322.9 million pounds).

The total of the three marketing quota components for the 2000 marketing year is 240.2 million pounds. In addition, USDA used its discretionary authority to increase the three-component total by 3 percent (7.2 million pounds) because the Secretary determined that the 48.6 percent decrease called for by the quota formula would be too much of a hardship for small producers to handle at one time. Accordingly, the national marketing quota for the marketing year beginning October 1, 2000, for burley tobacco is 247.4 million pounds.

In accordance with section 319(c)(2) 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 2000 crop of burley tobacco of 579,000 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 2000 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 2000 crop of burley tobacco shall be:

(1) The level, in cents per pound, at which the 1999 crop of burley tobacco was supported, plus or minus, respectively,

(a) 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:

(i) 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

(ii) 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 (i) (I) and (II)) is 1.5 cents per pound. The difference in the cost index from January 1, 1999 to December 31, 1999, is 1.8 cents per pound. Applying these components to the price support formula (1.5 cents per pound, two-thirds weight; 1.8 cents per pound, one-third weight) results in a weighted total of 1.6 cents per pound. As indicated, section 106(f)(7)(a) 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 increase in price support is less than the cost of production, the increase was not limited. Accordingly, the 2000 crop of burley tobacco will be supported at 180.5 cents per pound, 1.6 cents higher than in 1999.

List of Subjects

7 CFR Part 723

• Acreage allotments
• Cigarettes
• Marketing quotas
• Penalties
• Reporting and recordkeeping requirements

7 CFR Part 1464

• Loan programs—tobacco
• Price support programs—tobacco
• Reporting and recordkeeping requirements

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:

(a) Adding and reserving paragraph (g).

(b) Adding paragraph (h) to read as follows:

§ 723.112

Burley (type 31) tobacco.

* * * * *

(g) [Reserved]

(h) The 2000-crop national marketing quota is 247.4 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:

(a) Adding and reserving paragraph (g).

(b) Adding paragraph (h) to read as follows:

§ 1464.19

Burley (type 31) tobacco.

* * * * *

(g) [Reserved]

(h) The 2000 crop national price support level is 180.5 cents per pound.

Signed at Washington, D.C., on December 8, 2000.

Keith Kelly,

Administrator, Farm Service Agency and Executive Vice President, Commodity Credit Corporation.