N.C. Growers' Groups Praise Congressional Tobacco Buyout Move

Source from:  The Associated Press WINSTON-SALEM, N.C. 06/08/2004

The heads of several groups representing North Carolina tobacco farmers said congressional action last week has renewed hope of a buyout of federal tobacco quotas. To help win support for a massive corporate-tax overhaul, the chairman of the House Ways and Means Committee, Rep. Bill Thomas, R-Calif., added a $9.6 billion buyout of federal tobacco quotas to the package Friday. Under the proposal, farmers who grow tobacco under their own allotments would get $10 for each pound in the quota they would be giving up. Farmers who rent other people's quota and then grow the crop would get $3 per pound, with the allotment owners getting $7 per pound. Someone who owns an allotment and grows 10,000 pounds of tobacco on a five-acre farm could get $100,000. Money to buy back the allotments from about 400,000 owners would come from extending the scheduled expiration of a customs fee assessed at U.S. ports. "It's been rolled into a very big, comprehensive and complex piece of legislation. We're not there yet. But we're further down the road than we have been, and that's what's important," Larry Wooten, the president of the N.C. Farm Bureau, said in a conference call Saturday with other farm leaders. With the decline of smoking and increasing reliance of cigarette-makers on imported leaf, tobacco quotas have been cut in half since 1997. The U.S. Agriculture Department sets the quota annually based on planned purchases by cigarette makers for the following year. The government quotas are aimed at protecting growers from overproduction and low demand. American cigarette manufacturers are buying less U.S. tobacco because they can get cheaper leaf from Zimbabwe, Brazil and other countries. One economist has predicted that farmers could face another cut of 33 percent in 2005. If that happens, said Sam Crews of Oxford, the president of the Tobacco Growers' Association of North Carolina, the economic ripple effects will reach beyond farmers to equipment and fertilizer dealers, banks, volunteer fire departments and churches. "We won't have money to spend in our local economies," Crews said. As a result, said Keith Parrish, the chief executive of the National Tobacco Growers Association, "there's not security and no stability. Whatever's moving is whatever we're behind." The tobacco buyout added to the corporate-tax bill does not require cigarette makers to pay for the buyout and does not put the Food and Drug Administration in charge of regulating the industry - details that critics had sought. "It does nothing to protect public health and reduce the devastating toll from tobacco use on our country," William Corr, the executive director of the Campaign for Tobacco-Free Kids, said Friday. "It sticks taxpayers with the nearly $10 billion bill for the buyout instead of tobacco companies," he said. Corr called for a buyout that would give growers more money and be combined with regulation of tobacco products by the FDA - a combination that Sen. Elizabeth Dole, R-N.C., said will be needed to win Senate approval of a buyout. Farm-group leaders said they would support FDA regulation of the industry if that's what it takes to win approval of a buyout. North Carolina State Grange president Jimmy Gentry said though his group would prefer no FDA regulation of tobacco products, "we're certainly willing to concede that to get the buyout." The tax bill restructures corporate tax breaks in response to tariffs the European Union began imposing on U.S. exports in March after the World Trade Organization ruled that current corporate tax law illegally subsidizes the sales of American goods abroad. A corporate tax bill passed last month by the Senate has no tobacco provision. Thomas said his committee will act on the legislation this week and that it will likely be taken up in the full House the following week. Enditem