CCC Announces Changes in Flue-Cured Tobacco
Curing-Barn Certification Program

Retrofit Reimbursement Update

USDA Announces
Provisions of the 2001 Crop Flue-Cured Tobacco Program
and No Net Cost Assessments

Upcoming Events and Dates

The U. S. Department of Agriculture's Commodity Credit Corporation (CCC) announced today it is seeking comments on its intent to adjust the loan price support differentials for flue-cured tobacco beginning with the 2001 crop. The proposed change, as set out in the notice filed for public inspection on December 7, 2000 and to be published in the Federal Register on December 12, 2000, involves tobacco which is cured in barns with a direct heat source.

In a joint enterprise between tobacco buyers and the producer-owned Flue-Cured Tobacco Cooperative Stabilization Corporation (Stabilization), many producers have converted barns to use indirect heat sources. This, some believe, improves the quality of the tobacco by reducing the nitrosamine content of the products produced by the tobacco. Stabilization, which is responsible for coordinating price support activities between producers and CCC, has indicated to CCC that buyers will no longer purchase tobacco which is not cured in the improved barns.

Through Stabilization, producers have requested that the price support value of tobacco produced in un-improved barns should be zero. Otherwise, it is feared, the tobacco will go into the price support inventory, will not be marketable, and will produce losses that will affect all producers in the form of higher "no net cost tobacco program assessments."

In proposing to set the differentials at zero for tobacco produced in un-improved barns, CCC is not making a determination about the benefits of, or need for, barn improvement. Rather, the differential determination is made on the expected actual market price for tobacco cured in the un-improved barns.

Producers are encouraged to comment on this proposal and should, in particular, address the question of whether tobacco in un-improved barns will, in fact, have a market value for the upcoming crop year.

Comments will be accepted through December 27, 2000 and should be addressed to Charles Hatcher, Director, Farm Service Agency (FSA) Tobacco and Peanuts Division, Stop 0514, 1400 Independence Avenue, SW, Washington, DC 20250-0514.

RETROFIT REIMBURSEMENT UPDATE

Tobacco companies have stated their intentions to purchase low nitrosamine tobacco beginning with the 2001 marketing season. Approximately $50,000,000 remains available in the Reimbursement Fund to assist growers with converting their barn furnaces from direct fired to indirect fired systems. Reimburesement funds are scheduled to end with the July 1, 2001 deadline.

Reimbursement is based on a limit of $0.13 per pound times the 2000 effective quota. This amount may be divided among as many barns as a grower wishes. However, no more than $2,600 may be reimbursed for any one barn conversion.

As of December 11, 2000 reimbursements have been made on 6,404 barns. The reported expense to the grower is averaging $4,317 with reimbursement payouts averaging $2,101 per barn. Ample data is available from samples taken during the 2000 marketing season to indicate that retrofit units tested are capable of successfully reducing nitrosamine content to acceptable levels.

To see some of the data collected look at the TSNA data found on the UGA Tobacco Web Page at the Tobacco Barn Retrofit Information link http://www.georgiatobacco.com Based on a survey of equipment manufacturers who are producing retrofits production of more than 40,000 units are expected to be produced and installed before the July 1, 2001 deadline for installation.

Growers planning to purchase heat exchangers need to place orders to allow for production scheduling. In most cases retrofits will only be produced in response to orders. With every week that passes the potential number to be produced and installed decreases. The plan is for growers to certify at their local FSA office that their curing barns intended for use during the 2001 season have been retrofitted before they are eligible for full price support on their 2001 marketings. Price support for tobacco produced in non-retrofitted barns is expected to be $0.00 per pound. In addition to providing encouragement for retrofitting barns before the deadline, the Price Support Deviation is meant to avoid the farmer owned coop from filling up with high nitrosamine tobacco which has been rejected by the purchasing companies and for which there would not be a profitable market.

USDA ANNOUNCES PROVISIONS OF THE 2001-CROP FLUE- CURED TOBACCO PROGRAM AND NO NET COST ASSESSMENTS

WASHINGTON, December 15, 2000

The U.S. Department of Agriculture’s Commodity Credit Corporation (CCC) today announced the provisions of the 2001 flue-cured tobacco program and that the flue-cured tobacco no-net-cost assessment will be 5 cents on each pound of 2001-crop flue-cured tobacco that is marketed. CCC set the no-net-cost assessments at 2.5 cents per pound for the producer and 2.5 cents per pound for the purchaser for crop year 2001. The national marketing quota for the 2001 crop is 548.9 million pounds, up from the 2000 quota of 543 million pounds and is based on the following:                                                       

Million pounds

297.0 -- Purchase intentions by domestic cigarette manufacturers:
297.7 -- Unmanufactured exports (3-yr. average):
-61.8 -- Reserve stock adjustment:
+16.0 -- Discretionary adjustment:                

The national average yield goal remains unchanged at 2,088 pounds per acre. The price support level for the 2001 crop is $1.660 per pound, up 2.0 cent per pound from 2000. The national acreage allotment for the 2001 crop is 262,253 acres, up 1 percent from the 2000 allotment of 260,057 acres. For each farm, the 2001 basic quota will increase approximately 1.0 percent from 2000. The effective quota is expected to be about 543 million pounds, or 3.0 percent below 2000. The Flue-Cured Tobacco Cooperative Stabilization Corporation, the producer-owned association through which price support is made available for flue-cured tobacco, was consulted before the no-net- cost assessments were set. USDA

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Approximately 41 million pounds of tobacco was sold by Stabilization recently to non-traditional purchasers reducing the Reserve Stock Adjustment.
National basic quota will be up 1% over that for 2000.
National effective quota will be down 3%.

Georgia 2001 basic quota will be up approximately 1% from 2000 (57,129,443 lbs) to approximately 57,700,737 lbs for 2001. The basic allotment trend is expected to be similar with a reduction in acreage from 26,136 acres to approximately 26,397 acres.

Georgia 2001 effective quota expected to be similar to the 2001basic quota due to better than expected yields and marketings from the 2000 crop. Effective quota is expected to be down approximately 16 percent from the 2000 effective quota of 68,506,056 lbs to approximately 57,414,677 lbs. Effective allotment trends are expected to be similar with a reduction from 31,338 acres to approximately 26,260 acres in 2001.

The price support level for the 2001 crop is $1.660 per pound, up 2.0 cent per pound from 2000. No-net-cost assessments will be 2.5 cents per pound for the producer and 2.5 cents per pound for the purchaser for a total of 5 cents per pound. JMM

Upcoming Events and Dates - (Refer to the Tobacco Calendar)

USDA Flue-Cured Tobacco Referendum Voting Period, January 8 - 12, 2001.
Ballots will be mailed to all growers and should be returned by the deadline. The referendum will determine whether acreage-poundage marketing quotas will continue for the the 2001, 2002, and 2003 marketing years. A vote of at least two-thirds in favor is necessary to continue acreage-poundage marketing quotas.

Georgia Farm Show, Alma Bright Leaf Warehouse, January 9,10,11, 2001. For information on the show call 919.380.0780.

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