February 13, 2002 | By: Haven Miller
LEXINGTON, KY.

Although the tobacco industry is experiencing a period of stability now, big changes are looming on the horizon. At the top of the list is the much discussed quota buyout issue.

Across the burley belt growers, owners, and many tobacco companies support the concept of compensating quota owners for the value of their quota and transferring production rights to active growers. But the details of how to do that remain a question, and progress toward a solution is moving slowly.

"It's been a year and a half and will probably be another year and a half," said Rod Kuegel, Daviess County tobacco grower and past president of the Burley Tobacco Growers Cooperative. "It's like climbing Mt. Everest, but of course Everest can be climbed."

Kuegel said growers and other groups are working with tobacco companies to find out their concerns regarding a recent buyout proposal put forth by agriculture commissioners from several tobacco-producing states. He said the goal is to design a compromise that is palatable to all parties.

"The two big unknowns in this debate are what will happen to the tobacco program if a buyout evolves, and where will the industry find a viable and reliable source of funds for a buyout," said Will Snell, University of Kentucky agricultural economist.

Snell said looking to the federal government for buyout funding does not appear to be politically acceptable right now, and therefore the focus has shifted toward the possibility of acquiring funding from tobacco companies. In exchange for these funds, tobacco companies will likely ask for changes in tobacco policy and regulation.

"Consequently, tobacco farmers should be thinking about what they consider to be a fair compensation price, an acceptable time frame for payments, and what potential changes in the tobacco program they can support in exchange for a buyout," Snell said.

The question of compensation is a top concern for growers.

"Quite frankly, for a lot of Kentuckians their retirement ‘IRA' is their quota, so the first thing that has to happen is that those people have to be compensated to a level that's adequate," said Kuegel. "The second thing that has to happen is to find a way to transfer the right of production from those who hold the quota who are not producing to those who are producing, and remove that artificial cost that's built in."

Contact: 

Will Snell, 859-257-7288