Future of Leaf Buyout Unclear

Source from:  By George A. Chidi, Rocky Mount Telegram 07/16/2004

Local farmers worry that Tuesday's U.S. House vote to block a tobacco quota buyout is a strong signal that Congress won't come through with relief for growers. "The news is so volatile, nobody can make any decisions," said Lawrence Davenport, a tobacco farmer and former chairman of the Golden LEAF Foundation, an economic development organization. "We don't know what to do because we don't know what's happening and don't know what's going to happen. There are some farmers that want to get out but need that buyout and some younger ones that want to stay in but don't know if there's still going to be a program." The House approved an amendment to the funding bill for the U.S. Agriculture Department prohibiting government money from being used for buyout payments to end tobacco marketing quotas. It passed on a voice vote, but the final spending bill has yet to wind its way through the Senate and final passage. It would effectively kill a buyout if it is retained in conference committee with the Senate and passes in a final vote. The amendment offered by U.S. Rep. Chris Van Hollen, D-Md., and U.S. Rep. Jeff Flake, R-Ariz., was backed by a coalition of Republicans objecting to the use of government money for a buyout and Democrats objecting to the absence of U.S. Food and Drug Administration regulation of tobacco included in the buyout. Anti-smoking organizations lauded the blocking amendment. "The tobacco buyout would have been a good deal for the tobacco industry and a bad deal for taxpayers," a spokesman for the American Lung Association stated in a press release. "The tobacco companies would get cheaper tobacco, and taxpayers would get the $10 billion bill. The Library of Congress' Congressional Research Service estimates that tobacco companies will save $270 million on tobacco this year alone because the tobacco purchased from growers will be cheaper." The $9.6 billion tobacco quota buyout also must survive a House-Senate conference committee to be enacted. Republican leaders attached buyout language to a tax repeal bill for foreign sales corporations in order to attract votes from tobacco-state legislators. "Well, we're having one more fight. The death (of the buyout) has been greatly exaggerated by some of the early press," said U.S. Rep. Bob Etheridge, D-2nd District. "This amendment attached to the agriculture bill is unlikely to affect negotiations on the (foreign sales corporations) bill." The U.S. Department of Agriculture currently fixes the amount of tobacco to be grown by each domestic tobacco farmer each year, while also fixing the price per pound sold. The price support system has broken down in the last decade, as domestic cigarette makers reduced purchases of domestic tobacco, according to Agriculture Department reports. Tobacco farmers are expecting a quota cut of as much as 30 percent this year, said Billy Ray Hall, president of the N.C. Rural Economic Development Center. Many are hanging on only because of the possibility of a buyout, he said. "I think farmers and the rest of us that are concerned with rural North Carolina know that tobacco is on its way down," Hall said. "Living in that environment is one of the risks of being a farmer in tobacco." Under the buyout proposal, tobacco quota owners who also farm their own land would get $10 for each pound in the quota they would be giving up. Farmers who rent other people's quota to grow tobacco would get $3 per pound, with the quota owners getting $7 per pound. The quota system would then end, leaving an open market for tobacco producers. "We continue to hold our breath," Hall said. M4Information from the The Associated Press is included in this report. Enditem