Professor Researches Tobacco

Source from:  Robby ODaniel - Staff Writer September 06, 2006 09/07/2006

Economics is not only a department within the College of Business Administration - or just a major in the College of Arts and Sciences, for that matter. Several economists are employed by The University of Tennessee's College of Agriculture in the agricultural economics department and the Agriculture Policy Analysis Center. "The faculty here focuses on the economics of the applied problems in agricultural industry," Kelly Tiller, research assistant professor, said. "I have focused on the tobacco industry and how it affects our markets." The research that Tiller performed, along with colleagues from North Carolina State and the University of Kentucky, won an award from the American Agricultural Economics Association, which is a professional society for those interested in agricultural economics. A nonprofit organization, AAEA is committed to furthering knowledge about the economics of agriculture, rural communities and natural resources. In 2006, it won the group award for Distinguished Extension/Outreach Program for members' work on the federal tobacco buyout program. Tiller's presentation on the overall effect of the 2004 tobacco industry buyout has been presented at the APAC, which addressed many regional issues in regards to the overall model of growth of the agricultural industry and manufacturers. Tiller's presentation gained national recognition and included a summary of her research on how this buyout would affect revenue. In the summary of her presentation, she stated that there is no evidence that the tobacco buyout had any negative impact on the tobacco industry. According to the project's Web site, http://www.tobaccobuyoutinfo.com/, a tobacco quota buyout was included in the American Jobs Creation Act of 2004, which was signed and enacted on Oct. 22, 2004. The tobacco quota buyout terminates the federal tobacco price support and supply control programs (beginning with the 2005 crop), makes compensation payments to tobacco quota owners and active tobacco growers for the elimination of the tobacco quota asset, and provides for the orderly disposal of existing tobacco pool stocks. Payments to tobacco quota owners and growers are expected to total $9.6 billion, with annual payments spread evenly over 10 years. Additional funding for handling pool stocks and administration brings the cost of the total buyout package to $10.14 billion. The buyout is funded entirely by assessments on tobacco product manufacturers and importers. Tiller was consulted for work similar to that of a corporate economist in helping the tobacco industry with their decision-making under the changes that were brought about by the buy-out. "Farmers could participate in the buyout by handling their own production," Tiller said. In essence that buyout took away strict government regulation in production. The result in large was a greater GDP and more revenue for the federal government. Therefore it served the industry and the government better. "She has done an excellent job providing to the tobacco industry information during this time of policy change," Daryll E. Ray, the director of APAC, said. Enditem