USDA ANNOUNCES PROVISIONS OF THE 2004 CROP BURLEY TOBACCO PROGRAM AND NO-NET-COST ASSESSMENTS Media Contact: Jillene Johnson (202) 720-9733

NEWS Farm Service Agency Public Affairs Staff 1400 Independence Ave SW Stop 0506, Room 3624-South Washington, D.C. 20250-0506 Release No. 1428.04 Jillene Johnson (202) 720-9733 jillene_johnson@wdc.usda.gov USDA ANNOUNCES PROVISIONS OF THE 2004 CROP BURLEY TOBACCO PROGRAM AND NO-NET-COST ASSESSMENTS WASHINGTON, Jan. 30, 2004 -- USDA's Farm Service Agency (FSA) today announced provisions of the 2004 burley tobacco program. These provisions include 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. Data on intended purchases, average annual burley exports for the preceding three years and the amount of tobacco needed to attain a reserve stock level are used to determine the annual burley tobacco marketing quota. Marketing quotas limit the amount of tobacco a producer can sell in a given marketing year. For each farm, the basic quota will increase approximately five percent from 2003. The 2004 quota is based on information in the table below. (million pounds) Purchase intentions by domestic cigarette manufacturers 194.6 Unmanufactured exports (three-year average) 144.5 Reserve stock adjustment -37.0 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 during crop year 2004. The price support level is determined by a statutory formula in the Agricultural Act of 1949 (the 1949 Act), 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. Under the 1949 Act, USDA also is required to carry out the tobacco price support program at no-net-cost to the taxpayer, except for administrative expenses common to the operation of all price support programs. Burley tobacco producers and purchasers pay an assessment to accomplish this no-net-cost provision. 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 2004-05 burley tobacco-marketing year begins Oct. 1, 2004, and ends Sept. 30, 2005. Burley tobacco is the main type of air-cured, cigarette tobacco that together with flue-cured tobacco accounts for more than 90 percent of total U.S. production. For more program information, please contact Daniel Stevens at (202) 720-5291; or by e-mail at: daniel_stevens@wdc.fsa.usda.gov. # NOTE: Farm Service Agency (FSA) news releases and media advisories are available on the World Wide Web at FSA's home page: http://www.fsa.usda.gov.