06/21/04 — Tobacco buyout plan pleases farmers

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Tobacco buyout plan pleases farmers

By Sam Atkins
Published in News on June 21, 2004 1:56 PM

Wayne County farmers are pleased with the tobacco buyout the U.S. House approved last week, but are still not sure if a buyout will become a reality.

Jerry West farms in northern Wayne and southern Wilson County. The operation is in its fifth generation, and it currently has 130 acres of tobacco.

The question of whether the buyout should be linked to FDA regulation continues to be an issue. Senate members believe that for a buyout to pass, it must be. House members want a buyout without regulation.

West says he accepts reasonable FDA regulations of tobacco products, because it is the right thing to do morally. He said farmers overall are not against regulation, but there are some tobacco companies that oppose it, including one that has a lot of political power. That company opposes FDA regulation because it buys very little U.S. tobacco, he said.

"I think the political leadership should listen to the farmers and health needs of the American public," he said.

West said he was still pleased with the House package, which would allow some desperate farmers to get out of tobacco with grace and pay off their debts.

"We better be satisfied with what we can get," he added.

The tobacco quota has already been cut in half since 1997, and farmers could face another reduction in 2005.

The House approved its $155 billion tobacco package on Thursday. It includes nearly $10 billion for a buyout. An estimated 400,000 tobacco quota holders would receive a share of the buyout.

It says that owners who farm using their own allotments would get $10 per pound of quota, or $7 per pound if they rent it to someone else to farm. In that case, the renting farmer would get $3 per pound.

Keith Parrish, executive director of the National Tobacco Growers Association, said the package will now go to the full Senate.

He said he feels good about the House plan and believes there will be an attempt to add FDA regulation in the Senate. He said the FDA is capable of creating good things for growers, because it would help them market their tobacco worldwide.

RJR is one of the companies opposing FDA regulation; Philip Morris supports it.

Another issue affecting tobacco farmers is domestic purchase intentions, which continue to drop. The three-year export average has declined and the imported tobacco percentage in U.S. cigarette production is around 55 percent.

The U.S. has around 6 percent of the world market, and Brazil is the number one tobacco competitor. More Brazilian tobacco is being imported into the U.S. each year, and it is exporting more to the same countries that the U.S. exports to.

Parrish said that farmers and quota holders will be happy to see it pass regardless, and the most important thing is that it does.

Joe Sanderson, who has tobacco in the Grantham area, said the buyout is still a big fight and that he has not spoken to any farmer who is against a buyout. He said it has been particularly tough for those who have an allotment of only a few acres and are not getting much for their tobacco. He would prefer not having to deal with the FDA, but said the main thing is getting the buyout.

"We are just going to have to get what we can get," he added.