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

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