Press Release

September 24, 2003

TOBACCO ‘BUYOUT’ BILL INTRODUCED

WASHINGTON, D.C. U.S. Representative Sanford Bishop and a bipartisan group of House members Wednesday (9/24) introduced a far-reaching tobacco production reform bill supported by growers and many health advocates alike.

Georgia’s Second District Congressman said the measure proposes to replace the Depression-era federal tobacco quota system with a new free market oriented system that financially protects growers and tobacco-impacted communities by providing growers transitional compensation and making U.S. tobacco more competitive on the world market and addresses health concerns by promoting a shift from tobacco to crop diversity.

He is an original cosponsor of the bill, entitled the “Tobacco Reduction, Accountability and Community Enhancement (TRACE) Act.”

“The so-called ‘buyout’ is a fair and responsible deal for everyone,” Representative Bishop asserted. “It is certainly not a give-away. Our bill proposes a new tobacco policy for the 21st century that is right for growers, right for the economy, and right for the health and well being of America’s consumers.”

The Congressman said the federal tobacco program proved to be effective in providing price and income stability for many small family farms for many years. For the past couple of decades, however, the program has not reacted as effectively against the increasing competition from lower-priced foreign tobacco, he said. In addition, he noted, health concerns, taxes, and legal challenges have further depressed the domestic market.

He pointed out that the value of U.S. tobacco production declined 46 percent from 1997 to 2003, and will likely fall more in 2003 as the declining domestic consumption, slumping exports, and the increased use of imported tobacco continue to depress the country’s tobacco growing industry.

Representative Bishop said the proposed new tobacco quota buyout and transition program could substantially strengthen the economic outlook for farmers who decide to continue producing tobacco in the post-buyout era. The bill does not address the issue of whether the U.S. Food and Drug Administration should have regulatory control over the manufacture, sale, distribution, and labeling of tobacco products, he pointed out. However, he added, that issue is expected to be raised as the bill moves through Congress.

The legislation includes provisions that would:

Compensate owners by $8 a pound and growers by $4 a pound, based on an average of quota between 1997-2002, with payments made in equal installments over seven years.

Establish a trust fund from assessments on tobacco manufacturers to provide payments to quota holders and traditional growers and to provide grants to universities for research on ways to help farmers shift to crops other than tobacco and to find alternative uses for tobacco.

Create advisory boards for each kind of tobacco, with equal representation given to producers and manufacturers, to recommend annual limits on the pounds that could be produced, keep tobacco production in traditional growing areas, and to ensure quality.

Create a privately funded price insurance system, paid for by a transaction fee assessed to both producers and manufacturers at the point of sale, to provide grower payments to make up the difference if the domestic price of tobacco falls below a market-determined, insured price.

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