1998 Marketing Quotas and Price Support Levels for Fire-Cured (Type 21), Fire-Cured (Types 22-23), Maryland (Type 32), Dark Air-Cured (Types 35-36), Virginia Sun-Cured (Type 37), Cigar-Filler (Type 41), Cigar-Filler and Binder (Types 42-44 and 53-55), and Cigar Binder (Types 51-52) Tobaccos

DEPARTMENT OF AGRICULTURE

Farm Service Agency

7 CFR Part 723

Commodity Credit Corporation

7 CFR Part 1464

RIN 0560-AF 20

1998 Marketing Quotas and Price Support Levels for Fire-Cured

(Type 21), Fire-Cured (Types 22-23), Maryland (Type 32), Dark Air-Cured

(Types 35-36), Virginia Sun-Cured (Type 37), Cigar-Filler (Type 41),

Cigar-Filler and Binder (Types 42-44 and 53-55), and Cigar Binder

(Types 51-52) Tobaccos

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

ACTION: Affirmation of determination and final rule.

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SUMMARY: The purpose of this notice is to codify the national marketing

quotas and price support levels for the 1998 crops for several kinds of

tobacco announced by press release on February 27, 1998.

In accordance with the Agricultural Adjustment Act of 1938, as

amended (the 1938 Act), the Secretary determined the 1998 marketing

quotas to be as follows: fire-cured (type 21), 2.725 million pounds;

fire-cured (types 22-23), 44.6 million pounds; Maryland (type 32), 5.45

million pounds; dark air-cured (types 35-36), 11.15 million pounds;

Virginia sun-cured (type 37), 165,000 pounds; cigar-filler (type 41),

0.665 million pounds; cigar-filler and binder (types 42-44 and 53-55),

6.63 million pounds; and cigar binder (types 51-52), 1.31 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 accordance with the Agricultural Act of 1949 as amended (the

1949 Act), the Secretary determined the 1998 levels of price support to

be as follows (in cents per pound): fire-cured (type 21), 153.6; fire-

cured (types 22-23), 168.1; dark air-cured (types 35-36), 145.0;

Virginia sun-cured (type 37), 136.0; and cigar-filler and binder (types

42-44 and 53-55), 121.2. Price support for Maryland (type 32), cigar-

filler (type 41), and cigar binder (types 51-52) were not announced

because producers of each of these kinds of tobacco had disapproved

marketing quotas for many years and were not expected to approve quotas

in separate referenda held on March 23-26, 1998. This notice also fixes

a technical error in a section heading.

EFFECTIVE DATE: February 27, 1998.

FOR FURTHER INFORMATION CONTACT: Robert L. Tarczy, Tobacco and Peanuts

Division, FSA, USDA, 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 notice has been determined to be significant and was 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

The amendments to 7 CFR parts 723 and 1464 set forth in this final

rule 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 final rule is issued pursuant to the provisions of the 1938

Act and the 1949 Act.

On February 27, 1998, the Secretary determined and announced the

national marketing quotas and price support levels for the 1998 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. In addition, the Secretary

announced marketing quotas for Maryland (type 32), cigar-filler (type

41) and cigar-binder (types 51-52). 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 Maryland (type 32), Virginia sun-cured (type 37),

cigar-filler (type 41), and cigar-binder (types 51-52) tobaccos.

During March 23-26, 1998, eligible producers of Maryland (types

32), Virginia sun-cured (type 37), cigar-filler (type 41), and cigar

binder (types 51-52) tobacco voted in separate referenda to determine

whether such producers approved marketing quotas for the 1998, 1999,

and 2000 marketing years (MY) for these tobaccos. Of the producers

voting, 14.8 percent favored marketing quotas for Maryland (type 32)

tobacco; 96.7 percent favored marketing quotas for Virginia sun-cured

(type 37) tobacco; 9.1 percent favored marketing quotas for cigar-

filler (type 41) tobacco; and 2.5 percent favored marketing quotas for

cigar-filler (types 51-52) tobacco. Accordingly, among these tobaccos,

quotas and price supports for only Virginia sun-cured (type 37) tobacco

are in effect for the 1998 though 2000 MYs. For the other three kinds,

neither marketing quotas nor price supports will be in effect for the

next 3 MYs.

In accordance with section 312 of the 1938 Act, for tobaccos other

than flue-

[[Page 15291]]

cured tobacco and burley tobacco, the Secretary of Agriculture is

required to proclaim not later than March 1 of any MY a national

marketing quota for those tobaccos for which either: (1) are tobaccos

for which marketing quotas have been approved in the prior 3 years or

(2) are tobaccos for which it has been 3 years since the last quota

referendum. There is a vote on quotas for each kind in a 3-year cycle.

With respect to Virginia sun-cured (type 37) tobacco, the 1997 MY was

the last year of 3 consecutive years of quota. For Maryland (type 32),

cigar-filler (type 41), and cigar binder (types 51-52) tobacco, all of

which had been without quotas, 1998 represented the beginning of

another 3 year cycle. Accordingly, marketing quotas for Maryland (type

32), Virginia sun-cured (type 37), cigar-filler (type 41) and cigar

binder (types 51-52) tobaccos were proclaimed for each of the 3 MYs

beginning October 1, 1998; October 1, 1999, and October 1, 2000, but

subject to producer approval. As indicated, however, only Virginia sun-

cured (type 37) producers approved quotas in the four referenda. Quotas

for the other tobaccos covered by this notice were approved in

referenda which were still effective.

Because of producer approval of quotas, sections 312 and 313 of the

1938 Act required that the Secretary also 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 announced 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. Since producers of Maryland (type 32), cigar filler (type

41), and cigar binder (types 51-52) tobacco disapproved quotas, price

supports were not considered in this notice. With respect to the 1998

crops of the kinds of tobacco that are the subject of this notice which

have approved national marketing quotas, the respective maximum levels

of price support for these kinds of tobacco 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 1998 crops, the price support announcements were

made on February 27, 1998, 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.

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 such 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 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 1998 crop of each of these

kinds of tobacco is adequate for these purposes.

The Proposed Rule

On February 2, 1998, a proposed rule was published in the Federal

Register (63 FR 5285) in which interested persons were requested to

comment with respect to setting quotas for the tobacco kinds addressed

in this notice.

Discussion of Comments

Seventeen written responses were received during the comment period

which ended February 13, 1998. A summary of these comments by kind of

tobacco follows:

(1) Fire-cured (type 21) tobacco. Three comments were received. All

recommended a 15 percent increase in 1998 quotas.

(2) Fire-cured (types 22-23) tobacco. Five comments were received.

All recommended no change in 1998 quotas.

(3) Dark air-cured (types 35-36) tobacco. Six comments were

received. All recommended a 20 percent increase in the quota.

(4) Virginia sun-cured (type 37) tobacco. Three comments were

received. They recommended a quota increase of 15 percent.

(5) Cigar-filler and binder (types 42-44 and 53-55) tobacco. No

comments were received.

Quota and Related Determinations

The tobacco program is, through assessments, operated at no net

cost to taxpayers other than the costs common to all price support

operations. Accordingly producer comments are given considerable weight

in this review. Based on a review of the comments received and the

latest available statistics of the Federal Government, which appear to

be the

[[Page 15292]]

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 1997 MY was

approximately 0.8 million pounds. The average annual quantity produced

in the United States and exported from the United States during the 10

MYs preceding the 1997 MY was 2.1 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 0.6 million pounds, and a normal year's

exports have been determined to be 1.6 million pounds. Application of

the formula prescribed by section 301(b)(14)(B) of the 1938 Act results

in a reserve supply level of 4.4 million pounds.

Manufacturers and dealers reported stocks held on October 1, 1997,

of 2.4 million pounds. The 1997 crop is estimated to be 2.0 million

pounds. Therefore, total supply for the 1997 MY is 4.4 million pounds.

During the 1997 MY, it is estimated that disappearance will total

approximately 2.2 million pounds. Deducting this disappearance from

total supply results in a 1998 MY beginning stock estimate of 2.2

million pounds.

The difference between the reserve supply level and the estimated

carryover on October 1, 1998, is 2.2 million pounds. This represents

the quantity that may be marketed that will make available during the

1998 MY a supply equal to the reserve supply level. More than 95

percent of the announced national marketing quota is expected to be

produced. Accordingly, it has been determined that a 1998 national

marketing quota of 2.271 million pounds is necessary to make available

production of 2.2 million pounds. As permitted by section 312(b) of the

1938 Act, it was further determined that the 1998 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 1998

crop is 2.725 million pounds.

In accordance with section 313(g) of the 1938 Act, dividing the

1998 national marketing quota of 2.725 million pounds by the 1993-97,

5-year national average yield of 1,594 pounds per acre results in a

1998 national acreage allotment of 1,709.54 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 1998 MY, less a national reserve of 9.25

acres, by the total of the 1998 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 1997 MY was

approximately 19.1 million pounds. The average annual quantity produced

in the United States and exported during the 10 MYs preceding the 1997

MY was 15.8 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 18.4 million pounds. Application of the formula

prescribed by section 301(b)(14)(B) of the 1938 Act results in a

reserve supply level of 118.5 million pounds.

Manufacturers and dealers reported stocks held on October 1, 1997,

of 83.3 million pounds. The 1997 crop is estimated to be 40.0 million

pounds. Therefore, total supply for the 1997 MY is 123.3 million

pounds. During the 1997 MY, it is estimated that disappearance will

total approximately 40.0 million pounds. Deducting this disappearance

from total supply results in a 1998 MY beginning stock estimate of 83.3

million pounds.

The difference between the reserve supply level and the estimated

carryover on October 1, 1998, is 35.2 million pounds. This represents

the quantity that may be marketed that will make available during the

1998 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 1998 national marketing

quota of 37.2 million pounds is necessary to make available production

of 35.2 million pounds.

Utilizing section 312(b) of the 1938 Act, it was further determined

for the same reason as with fire-cured (type 21) tobacco, that the 1998

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 1998 crop is

44.6 million pounds.

In accordance with section 313(g) of the 1938 Act, dividing the

1998 national marketing quota of 44.6 million pounds by the 1993-97, 5-

year average yield of 2,652 pounds per acre results in a 1998 national

acreage allotment of 16,817.50 acres.

Pursuant to the provisions of section 313(g) of the 1938 Act, a

national acreage factor of 1.0 is determined by dividing the national

acreage allotment for the 1998 MY, less a national reserve of 58.00

acres, by the total of the 1998 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 1997 MY was

approximately 9.5 million pounds. The average annual quantity produced

in the United States and exported from the United States during the 10

MYs preceding the 1997 MY was 1.5 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 1.4 million pounds.

Application of the formula prescribed by section 301(b)(14)(B) of the

1938 Act results in a reserve supply level of 31.0 million pounds.

Manufacturers and dealers reported stocks held on October 1, 1997,

of 23.8 million pounds. The 1997 crop is estimated to be 8.7 million

pounds. Therefore, total supply for the 1997 MY is 32.5 million pounds.

During the 1997 MY, it is estimated that disappearance will total

approximately 10.0 million pounds. Deducting this disappearance from

total supply results in a 1998 MY beginning stock estimate of 22.5

million pounds.

The difference between the reserve supply level and the estimated

carryover on October 1, 1998, is 8.5

[[Page 15293]]

million pounds. This represents the quantity that may be marketed that

will make available during the 1998 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 9.29 million pounds is necessary to

make available production of 8.5 million pounds. In accordance with

section 312(b) of the 1938 Act, it has been further determined that the

1998 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 fire-cured (type 21) tobacco and industry preferences. This

results in a national marketing quota for the 1998 MY of 11.15 million

pounds. Otherwise, the quota would be well below the level for the 1997

crop.

In accordance with section 313(g) of the 1938 Act, dividing the

1998 national marketing quota of 11.15 million pounds by the 1993-97,

5-year average yield of 2,284 pounds per acre results in a 1998

national acreage allotment of 4,881.79 acres.

Pursuant to the provisions of section 313(g) of the 1938 Act, a

national acreage factor of 1.20 is determined by dividing the national

acreage allotment for the 1998 MY, less a national reserve of 34.70

acres, by the total of the 1998 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.

(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 1997 MY was

approximately 90,000 pounds. The average annual quantity produced in

the United States and exported from the United States during the 10 MYs

preceding the 1997 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 30,000 pounds, and a

normal year's exports have been determined to be 20,000 pounds.

Application of the formula prescribed by section 301(b)(14)(B) of the

1938 Act results in a reserve supply level of 121,000 pounds.

Manufacturers and dealers reported stocks held on October 1, 1997,

of 20,000 pounds. The 1997 crop is estimated to be 100,000 pounds.

Therefore, total supply for the 1997 MY is 120,000 pounds. During the

1997 MY, it is estimated that disappearance will total approximately

120,000 pounds. Deducting this disappearance from total supply results

in a 1998 MY beginning stock estimate of 0 pounds.

The difference between the reserve supply level and the estimated

carryover on October 1, 1997, is 121,000 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 three-quarters

of the announced national marketing quota is expected to be produced.

Accordingly, it has been determined that a 1998 national marketing

quota of 163,000 pounds is necessary to make available production of

121,000 pounds. Thus, the national marketing quota for the 1998 crop is

163,000 pounds which is greater than the preceding quota by about 15

percent and should not unduly restrict marketings.

In accordance with section 313(g) of the 1938 Act, dividing the

1998 national marketing quota of 163,000 pounds by the 1993-97, 5-year

average yield of 1,376 pounds per acre results in a 1998 national

acreage allotment of 118.46 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 1998 MY, less a national reserve of 0.57

acres, by the total of the 1998 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

1997 MY was approximately 12.1 million pounds. The average annual

quantity produced in the United States and exported from the United

States during the 10 MYs preceding the 1997 MY was less than 100,000

pounds (farm sales weight). Domestic use has trended downward and

exports are very small. Thus, a normal year's domestic consumption has

been determined to be 7.2 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 20.8 million pounds.

Manufacturers and dealers reported stocks held on October 1, 1997,

of 17.8 million pounds. The 1997 crop is estimated to be 5.5 million

pounds. Therefore, total supply for the 1997 MY is 23.3 million pounds.

During the 1997 MY, it is estimated that disappearance will total about

8.0 million pounds. Deducting this disappearance from total supply

results in a 1998 MY beginning stock estimate of 15.3 million pounds.

The difference between the reserve supply level and the estimated

carryover on October 1, 1998, is 5.5 million pounds. This represents

the quantity that may be marketed that will make available during the

1998 MY a supply equal to the reserve supply level. Slightly more than

80 percent of the announced national marketing quota is expected to be

produced. Accordingly, it has been determined that a 1998 national

marketing quota of 6.63 million pounds is necessary to make available

production of 5.5 million pounds. This results in a 1998 national

marketing quota of 6.63 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 1998 quota will be less than the 1997 crop quota.

In accordance with section 313(g) of the 1938 Act, dividing the

1998 national marketing quota of 6.63 million pounds by the 1993-97, 5-

year average yield of 1,921 pounds per acre results in a 1998 national

acreage allotment of 3,451.33 acres.

Pursuant to the provisions of section 313(g), of the 1938 Act, a

national factor of 0.8 is determined by dividing the national acreage

allotment for the 1998 MY, less a national reserve of 15.80 acres, by

the total of the 1998 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 Virginia Sun-Cured (type 37), Maryland (type

32), Cigar Filler (type 41), and Cigar Binder (types 51-52) Tobaccos

Because of the results of producer referenda, marketing quotas

shall be in effect for the 1998 MY for Virginia sun-

[[Page 15294]]

cured (type 37). However, they will not be in effect for Maryland (type

32), cigar filler (type 41), nor cigar binder (types 51-52) tobacco. In

referenda held March 23-26, 1998, 96.7 percent of Virginia sun-cured

producers voted in favor of quotas. However, only 14.8 percent of

Maryland (type 32), 9.1 percent of cigar filler (type 41), and 2.5

percent of cigar binder (types 51-52) producers voted for quotas.

Referenda Data

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

Total Yes No % yes

Kind of tobacco votes votes votes votes

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

Virginia sun-cured (type 37)........ 60 58 2 96.7

Maryland (type 32).................. 698 103 595 14.8

Cigar-filler (type 41).............. 230 21 209 9.1

Cigar-binder (types 51-52).......... 120 3 117 2.5

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

Price Support

Statutory Provisions

Section 106(f)(6)(A) of the 1949 Act provides that the level of

support for the 1998 crop of a kind of tobacco (other than flue-cured

and burley) shall be the level in cents per pound at which the 1997

crop of such kind of tobacco was supported, plus or minus, as

appropriate, the amount by which (i) the basic support level for the

1998 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

1997 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 is 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 1997 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)

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

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

Cigar-filler and binder (types 42-44 and 53-55)......... 116.9

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

For the 1998 crop year:

(1) Average parity indexes for calendar year periods 1994-1996 and

1995-1997 are as follows:

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

Year Index Year Index

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

1994....................................... 1,398 1995.............................. 1,437

1995....................................... 1,437 1996.............................. 1,504

1996....................................... 1,504 1997.............................. 1,527

Average.................................... 1,446 Average........................... 1,489

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

(2) Average parity index, calendar year 1959 = 298.

(3) 1997 ratio of 1,446 to 298 = 4.85; 1998 ratio of 1,488 to 298 =

5.00.

(4) Ratios times 1959 support levels and 1998 increase in basic

support levels are as follows:

[[Page 15295]]

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

1959 Basic support level \1\ Increase from 1996 to

support -------------------------- 1997

level -------------------------

Kind and type ------------- 1997 ( 1998 ( 100% ( 65% (

( cents/ cents/lb.) cents/lb.) cents/lb.) cents/lb.)

lb.)

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

Fire-cured (type 21)........................... 38.8 188.2 194.0 5.8 3.8

Fire-cured (types 22-23)....................... 38.8 188.2 194.0 5.8 3.8

Dark air-cured (types 35-36)................... 34.5 167.3 172.5 5.2 3.4

Virginia sun-cured (type 37)................... 34.5 167.3 172.5 5.2 3.4

Cigar-filler and binder (types 42-44, 54-55)... 28.6 138.7 143.0 4.3 2.8

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

\1\ 1997 ratio is 4.85, 1998 ration is 5.00.

The loan associations for Virginia fire-cured (type 21) and

Virginia sun-cured (type 37) tobacco 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 1998-crop support levels were set so as to only

add, over 1997-crop levels, 65 percent of the difference between the

1998 crop ``basic support level'' and the 1997-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 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 the MY 1997 level of support increased

by 100 percent of the difference between the MY 1998 ``basic support

level'' and the MY 1997 ``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, 1998, for the 1998 crops of the tobaccos

which are the subject of this notice:

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

Support level

Kind and type (cents per

pound)

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

Fire-cured (type 21).................................... 153.6

Fire-cured (types 22-23)................................ 168.1

Dark air-cured (types 35-36)............................ 145.0

Virginia sun-cured (type 37)............................ 136.0

Cigar-filler and binder (types 42-44 and 53-55)......... 121.2

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

Other Determinations

This rule also amends the heading in 7 CFR 1464.15 because of a

technical error. Further, as to that determination and the others

addressed in this notice which are driven by statutory deadlines and

affect the marketing of current crops, it was determined that to the

extent restrictions might otherwise apply, a delay in the effectiveness

of the rule for additional notice and procedure would be contrary to

the public interest, impracticable, and unnecessary. This conclusion is

the same as to prior crop years and for all purposes including for

purposes of the Small Business Regulatory Enforcement Act (Pub. L. 104-

121). With respect to the quota and price support determinations, this

conclusion as to further procedure is based on the statutory deadlines

and other timing factors involved. For the other change, the conclusion

is based on the technical nature of the change.

List of Subjects

7 CFR Part 723

Acreage allotments, Marketing quotas, Penalties, Reporting and

recordkeeping requirements, Tobacco.

7 CFR Part 1464

Price support, Programs, 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 (f) to read as

follows:

Sec. 723.113 Fire-cured (type 21) tobacco.

* * * * *

(f) The 1998-crop national marketing quota is 2.725 million pounds.

3. Section 723.114 is amended by adding paragraph (f) to read as

follows:

Sec. 723.114 Fire-cured (types 22-23) tobacco.

* * * * *

(f) The 1998-crop national marketing quota is 44.6 million pounds.

4. Section 723.115 is amended by adding paragraph (f) to read as

follows:

Sec. 723.115 Dark air-cured (types 35-36) tobacco.

* * * * *

(f) The 1998-crop national marketing quota is 11.15 million pounds.

5. Section 723.116 is amended by adding paragraph (f) to read as

follows:

Sec. 723.116 Sun-cured (type 37) tobacco.

* * * * *

(f) The 1998-crop national marketing quota is 163,000 pounds.

6. Section 723.117 is amended by adding paragraph (f) to read as

follows:

Sec. 723.117 Cigar-filler and binder (types 42-44 and 53-55) tobacco.

* * * * *

(f) The 1998-crop national marketing quota is 6.63 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 (f) to read as

follows:

Sec. 1464.13 Fire-cured (type 21) tobacco.

* * * * *

(f) The 1998-crop national price support level is 153.6 cents per

pound.

[[Page 15296]]

9. Section 1464.14 is amended by adding paragraph (f) to read as

follows:

Sec. 1464.14 Fire-cured (types 22-23) tobacco.

* * * * *

(f) The 1998-crop national price support level is 168.1 cents per

pound.

10. Section 1464.15 is amended by changing in the heading ``types

22-23'' to ``types 35-36'' and by adding paragraph (f) to read, in the

amended section, as follows:

Sec. 1464.15 Dark air-cured (types 35-36) tobacco.

* * * * *

(f) The 1998-crop national price support level is 145.0 cents per

pound.

11. Section 1464.16 is amended by adding paragraph (f) to read as

follows:

Sec. 1464.16 Virginia sun-cured (type 37) tobacco.

* * * * *

(f) The 1998-crop national price support level is 136.0 cents per

pound.

12. Section 1464.17 is amended by adding paragraph (f) to read as

follows:

Sec. 1464.17 Cigar-filler and binder (types 42-44 and 53-55) tobacco.

* * * * *

(f) The 1998-crop national price support level is 121.2 cents per

pound.

Signed at Washington, DC, on March 24, 1999.

Keith Kelly,

Administrator, Farm Service Agency and Executive Vice President,

Commodity Credit Corporation.

[FR Doc. 99-7799 Filed 3-30-99; 8:45 am]

BILLING CODE 3410-05-P