Burley tobacco provisions announced

February 03, 2004

WASHINGTON - USDA's Farm Service Agency on Monday announced provisions of the 2004 burley tobacco program, including the 2004 crop quota, support price and no-net-cost assessment.

The national marketing quota for the 2004 burley crop is 302.1 million pounds, up from the 2003 quota of 287.8 million pounds.

Marketing quotas limit the amount of tobacco a producer can sell in a given marketing year. For each farm, the basic quota will increase about 5 percent from 2003.

The 2004 quota is based on information in the table below:

* Purchase intentions by domestic cigarette manufacturers, 194.6 million pounds

* Unmanufactured exports (three-year average), 144.5 million pounds

* Reserve stock adjustment, -37 million pounds

During the 2003 marketing year, producers marketed about 60 million pounds less than the national effective quota. The "undermarketings" adjustment, however, is limited by statute to 28.8 million pounds (10 percent of the 2003 basic quota).


When the 28.8 million pounds is added to the national basic quota, the result is an effective quota of about 331 million pounds, about the same as the 2003 quota.

Major domestic cigarette manufacturers are required by statute to annually report to USDA their intended purchases of burley tobacco from U.S. auction markets and producers.

In 2003, manufacturers' intended purchases totaled 184.9 million pounds. In 2004, manufacturers plan to purchase 194.6 million pounds (farm sales weight) of burley tobacco.

The price support level is determined by a statutory formula in the Agricultural Act of 1949, as amended. The 1949 Act provides the Secretary discretion to limit the change in the price support to no less than 65 percent of the formula change. The price support level for the 2004 burley crop is 65 percent of the formula change at $1.873 per pound, up 2.4 cents per pound from 2003.

The burley tobacco no-net-cost assessment is 2 cents on each pound of 2004-crop burley tobacco that is marketed. For crop year 2004, USDA set the no-net-cost assessments at 1 cent per pound for the producer and 1 cent per pound for the purchaser.

The marketing year begins Oct. 1, 2004, and ends Sept. 30, 2005.

Central Kentucky News Articles