Joint Effort Pushes Tobacco Bill Through

Source from:  STACEY S. MANNING The Kentucky Standard 10/19/2004

In days the president will likely sign the tobacco bill -- a plan that has been some six years in the making. After starts and stops, changes and rewrites, U.S. Congressman Ron Lewis, who represents the Second District of Kentucky, is thrilled to see a plan come through that will aid the state's tobacco farmers. Several months ago, Lewis said it didn't look as though the tobacco buyout plan would work. He thought if the bill didn't become law with this Congress, he would have to tell his constituents a tobacco deal wouldn't happen. "Thankfully, we didn't have to do that," he said. The tobacco buyout plan is part of the American Jobs Creation Act of 2004. The act was negotiated by the House and Senate in early October to repeal the foreign sales corporation/extraterritorial tax. The plan is designed to bring tax relief for creators of jobs in the United States. Lewis played a key role in getting the Fair and Equitable Tobacco Reform Act and American Jobs Creation Act combined. This ultimately led to the passage of the tobacco buyout deal that is awaiting signature by the president. "This is a monumental event in the history of the commonwealth," Lewis said. "This bill delivers long-awaited relief to hard-hit farmers in Kentucky and other states, replacing jobs and revitalizing thousands of communities who depend upon tobacco farming for economic stability." The provisions first drafted in a House plan called for a $9.6 billion buyout that would have come from the Federal Treasury. The U.S. Food and Drug Administration (FDA) would not have had any regulatory control over tobacco products. A plan drafted in the Senate was for a $13 million buyout that would have been paid for by tobacco companies. The FDA would have been involved in the Senate plan. The plan awaiting the president's signature is included as a conference report to H.R. 4520. Under the plan, $10.4 billion would be available with about $2.5 billion expected to benefit Kentucky farmers. The final bill does not have any FDA involvement and will be paid for by companies that import or make tobacco products sold in the U.S. "The FDA would not have passed the House," Lewis said. The plan also includes $500 million to do away with outstanding loan costs and pool stocks. Under the agreement, payments based on 2002 quota levels will be distributed over 10 years. The buyout would give payments of $7 per pound to quota holders and $3 per pound to growers. With the buyout, about half to two-thirds of Kentucky farmers will likely get out of the tobacco growing business, Lewis estimated. With the average tobacco farmer in his 60s, many payments will likely go toward retirement. For younger farmers who stay in, Lewis said, payments may be used to help eliminate overhead costs. The remaining farmers would then direct contract with tobacco companies meaning they would know exactly how much to grow and what they will get paid for it. "I don't think we will continue to see small tobacco farmers," Lewis said. With the new plan, the existing tobacco price support program is on its way out. The plan has been supporting farmers in market prices since 1938. It will be a transition for farmers to adjust to the change, but most farmers had been pressing for the buyout, Lewis said. "It's been a way of life," he said. "It's going to be different." Once the bill is signed into law, farmers can expect to receive the first payments sometime during the first quarter of 2005. Enditem