August 7, 2002 | By: Laura Skillman
PRINCETON, Ky.

With more than one proposed tobacco quota buyout option being proposed in Washington, D.C., and time dwindling in this session of Congress, the odds are against a plan being approved in 2002.

But, a University of Kentucky tobacco policy specialist believes one will ultimately occur.

“Personally, I cannot see the federal government simply taking this asset away without some compensation, especially now given the precedence of a quota buyout for peanuts as part of the 2002 farm bill,” said Will Snell, UK College of Agriculture economist.

Proposed buyouts of the tobacco quotas have been discussed heavily since the 1990s, but efforts to make it a reality have heightened in recent years. Rep. Ernie Fletcher of Lexington has introduced one of the bills now before Congress.

The bill has been referred to the House Subcommittee on Specialty Crops and Foreign Agriculture Programs. Following the August recess, efforts will be made to have congressional hearings on this bill, Snell said.  It is a long-shot for something to happen quickly on this bill (and other buyout bills) for 2002, but hopes remain to keep the issue alive for 2003, he said.

Farmers must realize that a tobacco buyout is a very challenging and complex political issue, Snell said.

For a buyout to make its way through Congress there has to be some degree of unity among farmers, tobacco companies and health groups on the structure of a buyout, the funding mechanism and federal Food and Drug Administration regulation.

“It appears some unity is building among farm and health groups on the structure and funding of a buyout plan,” he said.

But, the major obstacle to a plan appears to be agreement on FDA regulation, which many people believe is critical to obtaining support from the health community and anti-tobacco members of Congress, Snell said.

Another major issue, he noted, is whether a buyout can be accomplished while maintaining a tobacco program.

“Undoubtedly, we have some farmers in the state that could likely compete very effectively without a program, but they would certainly be in the minority,” Snell said. “Without a program, tobacco will likely remain important to Kentucky’s agriculture economy but tobacco dollars will be concentrated in a lot fewer hands and in a lot fewer communities.”

Snell said the critical questions that need to be considered when thinking about a buyout include:

If the program is eliminated, will the buyout provide enough financial capital for those who exit to at least sustain their economic well-being by investing profitably in other agriculture or non-agriculture enterprises?

Or can the federal tobacco program be maintained and modified with or without a buyout to transfer bases to more efficient growers, who can compete more effectively in a very competitive world market?

Snell said the answers to these questions are complex and may vary from farmer

to farmer, but farmers must stay in tune with the process.

“It is critical that farmers remain informed and actively involved in a process that must build consensus in order to make some changes in an industry that can no longer afford not to change,” he said.

Contact: 

Will Snell, (859) 257-7288