LEASE AND TRANSFER OF FLUE-CURED TOBACCO MARKETING QUOTA AMONG FARMS For the 1966 and 1967 Crop Year: A Preliminary Report

Estimates of the average rental rate per pound of marketing quota were made by county office managers of the Agricultural Stabilization and Conservation Service in each flue-cured producing county. The average of these estimates was 17.0 cents per pound in 1966 and 15.9 cents in 1967. Average rent varied between belts and between counties within belts. In general the rental rate was higher where tobacco is an important crop and lower in the counties on the fringe of each belt. Rent appears to be related positively t o the price of tobacco and to yield. It appears to be related negatively to wages. There appears to have been no definite trend in rental rates in three North Carolina counties since the program began in 1962. It is possible that some counties have experienced substantial changes but there are no data generally available before 1966. If transfer of quota across county lines becomes possible, substantial changes in rent may be expected to occur. Rental rates will tend to rise in counties losing quota and f all in counties gaining quota. No estimate of the responsiveness of rental rates to changes in quota is available at this time. Transfer has increased very rapidly since it was first allowed in 1962. Slightly ov~r 80,000 acres were transferred from lessor farms in 1966. This is equivalent to 12.4 percent of total allotted acreage. Transfer activity measured as a proportion of total allotment has been greater in areas where tobacco is of less importance. The lowest rates of transfer occurred in North Carolina. The highest rates were in Florida. The geographic distribution of participants is probably strongly related to off-farm job opportunities and average allotment size. More than 24 percent of all allotment holders leased their allotment under transfer program provisions in 1966. A grand total of 47,047 owners transferred acreage in that year. The number of owners transferring allotment has increased on an average of 7,700 each year over the past four years. If transfer restrictions are removed to allow unlimited transfer for farms and for transfer across county lines, the total volume and importance of transfer can be expected to increase substantially