Ending Tobacco's Downward Spiral

Source from:  By Mitch McConnell Special to The Courier-Journal  10/29/2004

After 25 years of farming tobacco, Kent Miles' situation had grown desperate. His tobacco quota — the limit set by government on how much he could grow — had dropped from 220,000 pounds in 1997 to 115,000 pounds by 2003. Half as much tobacco to sell meant half as much income. His Paris, Ky., farm was declining in value. Some of his fellow tobacco farmers faced bankruptcy. The only answer he saw was a buyout. "The reason my family and I want the buyout is for stability," Miles wrote me in a letter. "Right now we have no idea what to do. Our equipment is old and worn. We need to update our greenhouses. But we see no way to invest money in tobacco, which looks like it has no future." Across Kentucky, thousands of tobacco farmers were stuck in the same downward spiral as Kent Miles. Tobacco money, once enough to pay for the kids' college educations, now couldn't cover taxes on the farm. Communities centered on tobacco income saw businesses disappear. Tobacco towns were becoming ghost towns. The federal government's once-successful tobacco quota program had become a train careening towards a brick wall, and only a legislative miracle could avert the crash. I'm grateful I was able to help make that miracle happen for the people of Kentucky. The historic tobacco buyout passed by Congress and soon to be signed by the President guarantees $2.5 billion to Kentucky farm families over the next 10 years. I've believed for years that a buyout and an end to the quota program were the best solutions to the tobacco train wreck. Ever since the 1930s, the federal government has controlled the amount of tobacco produced in the country. But this system didn't anticipate foreign competition. About 10 years ago, foreign competitors increased their tobacco production and began selling in America. Since foreign competitors weren't bound by production controls, the price of tobacco went down. The quota system dictated that if the price fell, growers must grow less. That opened the way for more foreign tobacco. Kentucky has gone from 100,000 tobacco farms 20 years ago, when I first entered the Senate, to fewer than 30,000 today. Most of those losses are a direct result of the federal program mandating decreased production. Also, as more people learned about the health risks of tobacco, demand for it declined. When Lexington, the heart of tobacco country, banned smoking in bars and restaurants for legitimate heath concerns, it was clear demand would only continue to drop. Because government created the quota system, I felt we had to help farmers once it became broken. The $10.14 billion buyout will pay $7 per pound to quota holders and $3 per pound to growers; payments, based on the 2002 quota level, will be paid over ten years. Kentucky's $2.5 billion portion not only exceeds whatever tobacco farmers would have received under Phase II payments, it's more than double the cash receipts earned in 2002 from all Kentucky crops combined. Now tobacco farmers can take the buyout assistance and transition to other crops, or grow more tobacco to compete in the global marketplace. In my two decades in the Senate, I have never worked on a piece of legislation that benefits so many, yet had so much stacked against it. If the buyout had been offered on its own, it would never have garnered a majority of votes in the Senate. Since most tobacco is grown in a handful of states, there wasn't any constituency of support. Many objected to helping producers of what they deemed an immoral product. One New York congressman even compared tobacco producers to Colombian cocaine dealers. But by attaching the buyout to a larger tax bill, most lawmakers couldn't vote against it. I shepherded the buyout proposal through committees, leadership meetings, and conferences between the House and the Senate, working my hardest to keep it alive and provide a way out for thousands of Kentuckians. Any change to the final package would have doomed it, but now the uncertainty surrounding the tobacco program is no more. It's my honor to have worked on what UK economist Will Snell calls "the most significant agricultural policy event for Kentucky since the quota program was first established." Tobacco has been a special crop throughout Kentucky's history. Now, thanks to the generous buyout, tobacco can remain a part of our economy in the 21st Century, while at the same time Kentucky farmers like Kent Miles are free to pursue other opportunities without limit. The writer, a Louisville Republican, is Kentucky's senior U.S. senator. Enditem