Another Tobacco Buyout Proposed

Source from:  Franklin (KY) Favorite 06/11/2004

New federal tobacco buyout legislation was introduced by House Republicans Friday, possibly reviving the long-awaited and anticipated move by the nation's growers. The proposed buyout would eliminate federal price supports for tobacco and pay farmers $9.6 billion over five years. It would also end the tobacco quota program and would open the tobacco growing industry to the free market. One local producer said it would help farmers better compete with foreign growers. In exchange for ending the quota program, those owning quota tobacco would be paid $7 per pound based on what they were allowed to grown in 2002. Growers would get $3 per pound. Funding for the buyout would come from using 10 cents of the current 39 cents per pack federal excise tax on cigarettes. The buyout cost would be offset by other increases in revenues provided for in the bill. The latest proposal would not be linked to giving the Food and Drug Administration the power to regulate tobacco producers, which was a key difference between Senate and House bills introduced in May. The bill is part of a larger corporate tax bill known as the American Jobs Creation Act of 2004. The focus of the bill is repeal of an export tax break that was ruled a violation by the World Trade Organization that sparked trade sanctions by the European Union. The corporate tax bill is scheduled for a House Ways and Means Committee vote on Thursday. If approved. it would go for a floor vote by the House of Representatives maybe by next week. If endorsed by the House, the legislation then goes to a conference committee with the Senate, which passed its own bill in May that did not include a buyout. Any compromise would go back to both the House and Senate for final approval before being sent for the President's signature. Tobacco remains a major Simpson County cash crop, bringing in about $4 to $4.5 million a year. Burley is the major tobacco grown on the state's 45,000 tobacco farms. The latest buyout proposal has received praise from tobacco farmers but at least one Simpson County producer is cautious. "I think most people are cautious because it (buyout) has been talked about for the last three or four years," said Larry Gomer who is a member of the board of directors of the Burley Tobacco Growers Cooperative. "I'm just waiting to see what actually happens with it." Gomer, who raises burley tobacco in northeast Simpson County, said the buyout would allow growers to plant as much of the crop as they wish and would free them of expensive quota lease payments. Tobacco producers have suffered in recent years due to a drop in the number of smokers, more imports of cheaper tobacco and increased costs of raising tobacco, due mainly to the expense of leasing tobacco quotas. U.S. Senator Mitch McConnell (R-Ky) introduced a buyout bill last year that never passed. The latest buyout proposal has received praise from tobacco farmers but was strongly criticized by public health groups. Enditem