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OCR Page 1 of 36TOBACCO-
FARMERS
FARM AND FOREIGN AGRICULTURAL SERVICES
ISSUE:
Proposed provisions to help tobacco farmers in the Ford Bill ("Leaf Act") section of the McCain
Bill in relation to the proposed National Tobacco Settlement.
DISCUSSION:
The tobacco settlement will have a wide reaching impact on all segments of the tobacco industry,
but a disproportionate effect on small and minority tobacco quota owners and producers. Of the
338,000 individual tobacco quotas nationwide, nearly 66 percent are considered small farm
operations. Five percent of all quotas are owned by minorities, the majority of which run small
and family-sized operations. If a settlement is reached, cigarette prices would increase sharply
because of manufacturer payments or increased taxes, and tobacco production would decline
with a concomitant reduction in income. Limited resource farms would be especially vulnerable
because of their already low level of income and significant dependence on tobacco as a source
of family income.
BACKGROUND:
Several bills have been introduced to compensate tobacco quota holders and producers for the
reduced income resulting from a tobacco settlement. The three bills that received the most
attention were the Ford Bill (as known as the Leaf Act), the Lugar Bill, and the Robb Bill. The
Leaf Act would continue the current program with payments for lost production, the Lugar Bill
would buy out quotas and eliminate the current program, and the Robb Bill would shift the
program from a Federal to privatized program. The tobacco farm leadership has adopted the
Ford Bill/Leaf Act as a model and incorporated some provisions of the Robb Bill, especially for
flue-cured tobacco.
The Ford Bill has been incorporated in the McCain Bill (S.1415) as the farmer portion of the
McCain Bill. On April 1, the Senate Commerce Committee approved the bill, 19 to 1, and
Senator McCain said he hoped the Bill would be before the full Senate before memorial Day. A
few modifications were made during the markup, but the thrust of the farmer portion of the Ford
Bill remained intact.
TALKING POINTS:
As we understand the current compromise, the following are the main points included in the
farmer portion of the McCain Bill:
Payments to Farmers for:
*
Burley, fire-cured, and dark air-cured tobaccos - (In Kentucky, more than 95
percent of the quotas are for burley tobacco).
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