Tobacco Buyout Took Effort

Source from:  News Democrat & Leader By MITCH MCCONNELL 11/05/2004

After 25 years farming tobacco, Kent Miles' situation had grown desperate. His tobacco quota had dropped from 220,000 pounds in 1997 to just more than half that, 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," Mr. 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 as it is now." 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 even cover taxes on the farm. Communities centered on tobacco income saw businesses disappear. Younger generations left in search of better jobs. Tobacco towns were becoming ghost towns. The federal government's tobacco quota program, once one of the most successful agricultural programs in Kentucky history, had become a train careening towards a brick wall. Every farmer could see the end coming, and only a legislative miracle could avert the crash. I'm grateful that I was able to help make that miracle happen for the people of Kentucky. The historic tobacco buyout passed by Congress and signed by the president guarantees a whopping $2.5 billion flowing directly to Kentucky farm families over the next 10 years. I've believed for years that a buyout and an end to the tobacco quota program was the best solution to the tobacco train wreck. Ever since the 1930s, the federal government has controlled the amount of tobacco produced in the country. But the New Deal-era system did not anticipate foreign competition. About 10 years ago, foreign competitors ramped up their tobacco production, and began selling tobacco in America. Since foreign competitors weren't bound by production controls, the overall price of tobacco went down. The quota system dictated that if the price fell, tobacco growers must grow less. That opened the way for even more foreign tobacco to flood the country. 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 even 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 originally created the quota that gave tobacco farmers a right to grow and sell, I felt we had to help farmers once the system became broken beyond repair. The $10.14-billion buyout will pay $7 per pound to quota holders and $3 per pound to growers; the payments, based on the 2002 quota level, will be paid over a 10-year period. 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 assistance provided by the buyout and transition to other crops. For those who choose to keep growing tobacco, the buyout will allow them to grow more to compete in the global marketplace. In my two decades in the Senate, I have never before worked on a piece of legislation that benefits so many people, yet had so much stacked against it. If the buyout had been offered on its own, it would never have garnered anything close to a majority of votes in the Senate. Since most tobacco is only grown in a handful of states, there simply wasn't any constituency of support. Many objected to helping the producers of what they saw as 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 could not vote against it. I carefully shepherded the buyout proposal at every step along the way, in committees, in leadership meetings, and in conferences between the House and the Senate, working to keep the buyout alive to provide a way out for thousands of Kentuckians. Any change to the final package would have doomed it. I worked my hardest to get it done, and now the uncertainty surrounding the tobacco program is no more. It's my honor to have worked on what Will Snell, a leading economist from the University of Kentucky, has called "the most significant agricultural policy event for Kentucky since the quota program was first established in the 1930s." Tobacco has been a special crop for Kentucky throughout the Commonwealth's history. Now, thanks to the generous $10.14 billion buyout, tobacco can remain an important part of Kentucky's heritage and economy well into the 21st century, while at the same time Kentucky farmers like Kent Miles are finally free to pursue other opportunities without limit. Enditem