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FROM Gary&FlorenceBlack
PHONE NO. : 908 899 8494
Sep. 20 1997 08: 19AM P4
Bernstein Research
Page 2
INVESTMENT CONCLUSIONS
We reiterate outperform ratings on Philip Morris, RJR, and UST. With Dr. Kessler, Dr. Koop. and Congressman Waxman all
now on board the settlement, combined with our view that the lookback penalties are essentially a non-issue, with the industry
able to avoid the excess penalties simply by taking excess pricing, Clinton's speech today sharply increases odds that this deal
will get done next year. As we have said before, we cannot sec anti-tobacco members of Congress and the Administration
walking away from $400 billion that can be used for national health care, and industry concessions that include ceding
jurisdiction to the FDA; elimination of Marlboro Man and other brand equities; bans on billboards, vending machines,
sponsorships, in-store advertising, and self-service displays: and agreements to pay billions for smoking cessation, tobacco
education and awareness, and cancer research. We expect stocks to rally in the days following the speech, given the high
likelihood that the Republican leadership finds political cover to now endorse this deal, and given strong odds of favorable
resolution on the FDA jurisdiction question in the 4th Circuit and Texas Medicaid case in the 5th Circuit. The industry has also
asked the Minnesota district court to dismiss the state of Minnesota's direct action against the industry on precedent established
by the Minnesota Supreme Court in dismissing Blue Cross and Blue Shield's claims against the industry. If the judge denies this
motion, as we expect, the industry can take the issue to the Minnesota Supreme Court. Our one worry is that Administration
betrays the partnership with the industry that it staked out today, and instead embarks on a course to punish the industry, by
either doubling the payments, or rejects the deal's liability protections for the industry. This would cause the deal to effectively
die, with downsides at Philip Morris of $40, RJR Nabisco $29, and UST, which doesn't really move with odds of a deal, $30.
ADDITIONAL DETAILS
1. Deal moves forward, as everyone gets under the tent. President Clinton avoided specifics in his speech today and
offered a general embrace of the principles found in the tobacco settlement negotiated between the attorneys general and the
tobacco industry. Clinton made clear, however, that the June settlement needs fundamental changes in areas that we have
talked of at length -- FDA control over nicotine, stiffer penalties (including non-tax deductibility of penalties) if youth
smoking rates fail to drop, and the release of all documents. What was not in the Clinton speech was a definitive price tag,
or a requirement that payments as opposed to penalties be sharply increased from the terms found in the June 20
settlement ($368 billion payments per year, plus a potential $42 billion in lookback penalties if youth smoking objectives are
not achieved). By outlining general principles, but not specific provisions of a deal, Clinton followed a political strategy
that has worked well for him in the past. After legislation has been enacted, Clinton can claim he got what he wanted, and
take credit for any shape deal. Clinton also likely will avoid the criticism heaped on the industry and the attorneys general
when it "dumped" the deal on Congress' lap (Majority Whip Don Nickles) in telling Congress how to do its job. Clinton
seems too savvy a political operator to turn the industry into an adversary at this stage in the legislative process. Clinton
will likely keep the settlement on slow simmer through the end of the year, and then bring it up to a boil with detailed
recommendations - idcally hammered out between the industry, Administration, and key members of Congress by early
next year, with the goal of getting comprehensive legislation out by March or April in time for election campaigning.
2. Major difference between increased penalties and increased payments. Our sources indicate that settlement talks
between the industry and the Administration broke down last week after the Administration insisted that caps on the
lookback provision be lifted, that fines be non-tax deductible, and that the 75% abatement provision be tightened.
According to one source in the industry, this would have effectively raised the settlement price tag from $17 billion per year
($15 billion base payment, plus $2 billion per year in maximum lookback penalties, in real dollars) to $23 billion per year
($15 billion base payment, plus the equivalent of $8 billion in lookback penalties that only kick in if youth smoking targets
are not met). Put differently, the June 20 settlement translates to an effective price hike of $.70/pack in 1997 dollars $.62
in base payments, plus $.08/pack in lookback penalties which don't kick in for five or even ten years. Clinton's speech
asked for significantly higher penalties if youth smoking rates don't fall. This indicates to us that Clinton likely did not have
problems with the base payments, but wants to make sure the industry has strong incentives $.88/pack, or $21 billion per
year in new penalties that automatically kick in if youth smoking rates fail to decline after the industry implements
marketing and retail access initiatives. The deal turned down by the industry last week would have effectively raised the cost
of settlement from $17 billion per year shown above ($.62/pack plus $.08/pack lookback pricing), to $23 billion per year,
including $8 billion in lookback penalties ($.62/pack base payment, plus $.33/pack in lookback penalties).
Comparing Settlements
Attorney General
Implied Clinton
Settlement
Proposal
Year 10
Base payments
$15.0
$.62
$15.0
$.62
Lookback penalties
$2.0
.08
$21.0
.88
Total payments
$17.0
$.70
$36.0
$1.50
Memo: Packs sold (bill.)
24.0
24.0
FROM : Gary&F lorenceBlack
PHONE NO. : 908 899 8494
Sep. 20 1997 08: 20AM P5
Bernstein Research
Page 3
3. Industry can take excess pricing to depress youth smoking - and avoid the lookback fines, What is quite bizarre about
the $1.50/pack pricing debate that has depressed valuations over the past few days is that the industry can easily achieve the
youth lookback provisions and avoid the gargantuan penalties by simply raising prices on its own by an amount sufficient to
reduce teen smoking by 30% in year 5, by 50% in year 7, and 60% in year 10. Currently, 18% of 8th, 10th, and 12th graders
smoke; to avoid any penalty, youth smoking would have to fall to 7.2% within 10 years. This lookback incentive, endorsed
today by President Clinton, is tantamount to giving the industry license to raise prices by $.75/pack or more if it finds itself
in a position where it can't get youth smoking rates down to the targeted levels via marketing and access controls. To
avoid paying what would amount to a $21 billion, or $.88/pack fine, to the government, the industry could, as 3 last resort,
simply jack up prices by an amount needed to depress consumption by the required amount, and in so doing, avoid the fines.
This is not so onerous as one might expect, and from a P&L standpoint, could bc a godsend: Currently, the industry recruits
3,000 new smokers each day, which means that 1.1 million smokers enter the industry's customer base each year. The
industry's current customer base numbers 50 million. About 1.6 million leave the industry's customer base each year,
resulting in an intrinsic loss of 500,000 customers each year, for a net growth rate of -1%. If the industry succeeds in
reducing the number of new smokers by 60% i.e., can avoid gaining 700,000 new smokers each year the intrinsic
growth rate of the industry would deteriorate to a net outflow of 1.2 million smokers per year, doubling the industry's natural
rate of decline to -2.4% (this would increase over time as the existing customer base shrinks, and as existing smokers quit in
reaction to sharp increases in cigarette prices). A (1.5) point deterioration in domestic tobacco volume is worth about
$(.02)/share to MO earnings, building cumulatively, and about $(.05)/share to RJR earnings, building cumulatively.
A second way to look at this is as follows: With an elasticity of demand of 0.4, a $1.50/pack price hike $.88 taken to
we
depress youth consumption to avoid paying $21 billion in penaltics would force prices up by 90% ($3.40 VS. $1.85), and
need
could cause consumption to fall by 35% (we believe the actual consumption decline would be less, since smokers would trade
to
down, buy cigarettes on the expanding contraband market, and seek out retailers willing to sell cigarettes at cost to build
unite
store traffic). A 35% drop in consumption this over 10 years would be worth approximately $1.6 in profits, or
penalties
$.40/share to Philip Morris earnings, and roughly $500 million, or $.85/share to RJR earnings. But the profits from the
$.88/pack in excess pricing for those 65% of smokers who remain could overwhelm the consumption hit: PM USA profits
to preven
could jump some $6 billion (vs. $1.4 billion consumption hit); RJR profits could soar $3 billion (vs. $600 million
this
consumption hit). The result would be net earnings gains of $1/share at Philip Morris, and $4/share at RJR.
4. Contraband market remains major uncertainty. Ask Michigan what happens when excise taxes triple. When we ask
wholesalers what is the single biggest reason youth smoking rates may not go down, even if all of these measures are
implemented, they universally point to the explosion in contraband sales that they are already seeing, which most attribute to
sharp increases in state excise taxes over the past few years (+8% compounded since 1994). We expect Congress to evaluate
this issue carefully before embarking on any course of action, given what happened in Canada during the mid-1990s when
cigarette prices doubled as excise taxes quadrupled (35% of market went contraband), and closer to home, what has
happened in Michigan since 1994 as excise taxes have more than tripled (30% of market reported to be contraband sales).
North Carolina
Michigan
Volume
Excise tax
Price per
Volume
Excise tax
Price per
Combined
(MM pks)
per pack
pack
(MM pks)
per pack
pack
volumes
1993
1994
763.7
$.05
$1.35
1,059.2
$.25
$1.63
1,822.9
1995
873.3
$.05
$1.42
786.2
$.75
$2.24
1,659.5
1996
924.5
$.05
$1.45
788.8
$.95
$2.29
1,713.3
% Change
+21%
-26%
-6%
Combined volumes were down only -2.9% over TWO years, when adjusted for gains in Kentucky (+9% in two years)
In our many discussions with Administration officials over the past few months, no one has ever asked us what happens to
contraband sales if cigarette prices double? In Michigan, taxable removals have plummeted by 26% since 1994, as excise
taxes increased from $.25/pack to $.95/pack (+$.70/pack). This has caused average prices in Michigan to increase from
$1.63 to $2.29 (increase only $.66/pack), as retailers increasingly squeeze margins to attract price-scnsitive smokers looking
for the lowest possible price. In North Carolina, where excise taxes are just $.05/pack, and cigarettes cost $1.45/pack,
taxable removals have increased by +21% since 1994 coincident with the decline in Michigan, and strongly suggesting
that cigarettes are being purchased in North Carolina and then shipped to Michigan, where they are distributed via
newsstands, local stores, and alternative outlets such as bars and clubs. With the combination of up to $1.50/pack in excess
pricing, and new tougher retail access rules for youths, we would expect the national contraband market to jump from its
current estimated 5% nationwide to 20-25% within 5 years. This, of course, could negate all of the efforts to reduce youth
smoking brought about by the tobacco settlement, as teens increasingly buy their cigarettes outside traditional outlets.
OBACCO INDUSTRY
ttorney General Settlement Payments
0
1
2
3
4
5
6
7
8
9
10
11
-
25
Total
torney general funds:
FROM .Gary&FlorenceBlack
State funds
4,000
1,600
1,800
2,000
2,600
2,600
3,200
3,200
3,200
3,200
3,200
3,200
3,200
78,600
Federal recovery= 60%
6,000
2,400
2,700
3,000
3,900
3,900
4,800
4,800
4,800
4,800
4,800
4,800
4,800
117,900
Total AG funds
10,000
4,000
4,500
5,000
6,500
6,500
8,000
8,000
8,000
8,000
8,000
8,000
8,000
196,500
dividual awards and settlements:
Neminal amount (1/3 of base payments)
-
2,000
2,500
3,500
4,000
4,000
4,000
4,000
4,000
4,000
4,000
4,000
4,000
96,000
Anticipated unused (earmarked for public health trust)
.
(2,000)
(2,200)
(2,800)
(3,000)
(3,000)
(2,500)
(2,500)
(2,500)
-
-
-
.
(20,500)
Net individual awards
.
-
300
700
1,000
1,000
1,500
1,500
1,500
4,000
4,000
4,000
4,000
75,500
bacco cessation
-
1,000
1,000
1,000
1,000
1,000
1,300
1,500
1,500
1,500
1,500
1,500
1,500
35,000
blic health funds (HHS):
Public education campaign
-
500
500
500
500
500
500
500
500
500
500
500
500
12,500
HHS - Reduction in tobacco usage
-
125
125
125
225
225
225
225
225
225
225
225
225
5,325
FDA- Enforcement of Act
-
300
300
300
300
300
300
300
300
300
300
300
300
7,500
State and local control efforts (ASSIST)
-
75
75
100
125
125
125
125
125
125
125
125
125
3,000
Research for smoking cessation
-
.
100
100
100
100
100
100
100
100
100
100
100
2,400
Compensation for lost sponsorships
-
.
75
75
75
75
75
75
75
75
75
75
.
750
Undetined public health funds
-
.
25
100
175
175
175
175
175
175
175
175
250
5,025
Public health funds
.
1,000
1,200
1,300
1,500
1,500
1,500
1,500
1,500
1,300
1,500
1,500
1,500
36,500
resident's Public Health Trust ($25 billion)
-
2,500
2,500
3,500
4,000
5,000
2,500
2,500
2,500
-
-
.
-
25,000
PHONE NO. 908 899 8494
OTAL PAYMENTS
10,000
8,500
9,500
11,500
14,000
15,000
15,000
15,000
15,000
15,000
15,000
15,000
15,000
368,500
: Maximum lookback penalties
-
-
-
-
-
2,000
2,000
2,000
2,000
2,000
2,000
2,000
2,000
42,000
OTAL PAYMENTS AND PENALTIES
10,000
8,500
9,500
11,500
14,000
17,000
17,000
17,000
17,000
17,000
17,000
17,000
17,000
410,500
-- Per pack, in 1997 dollars
$ -
$ 0.35
$ 0.40
$ 0.48
$ 0.58
$ 0.72
$ 0.72
$ 0.72
$ 0.72
$ 0.72
$ 0.72
$ 0.72
$ 0.72
$
0.70
"
Industry cap (lookback fines fall outside cap)
10,000
9,000
10,125
12,375
15,000
16,000
16,000
16,000
16,000
16,000
16,000
16,000
16,000
392,500
liculation of cap:
-
Total payments
10,000
8,500
9,500
11,500
14,000
15,000
15,000
15,000
15,000
15,000
15,000
15,000
15,000
368,500
Less: 80% credit on individual awards
.
2,000
2,500
3,500
4,000
4,000
4,000
4,000
4,000
4,000
4,000
4,000
4,000
96,000
Maximum liability before awards
10,000
6,500
7,000
8,000
10,000
11,000
11,000
11,000
11,000
11,000
11,000
11,000
11,000
272,500
Maximumum awards
-
2,500
3,125
4,375
5,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
5,000
120,000
Total cap
10,000
9,000
10,125
12,375
15,000
16,000
16,000
16,000
16,000
16,000
16,000
16,000
16,000
392,500
Lookback penalty: Youth smoking prevalence, as measured by University of Michigan annual survey of 8th, 10th and 12th graders) 30% reduction by Year S, 50% by Year 7. 60% by year 10, Penalty. $80MM per pp. subject to $20 billion cap)
Sep. 20 1997 08:21AM P6
Pentagon seeks a share
tohnce
of the tobacco-deal take
Smoking-ills tab is $584 million a year
lower that rate to 20 percent by
By Samuel Goldreich
AI
TOBACCO
2000 with a ban on smoking in de-
THE WASHINGTON TIMES
fense workplaces, an end to dis-
The Pentagon wants a $14.6 bil-
From page A1
count coupons for tobacco prod-
ucts and less marketing of
lion cut of any nationwide tobacco
settlement to pay for treating sol-
nation's five biggest tobacco manu-
cigarettes in military base retail
diers and military retirees suffer-
facturers and 40 state attorneys
outlets.
general who have sued to recover
The Pentagon also wants to ex-
ing from smoking-related ill-
Medicaid costs associated with
pand smoking-cessation programs
nesses.
smoking-related diseases.
and would want a piece of a to-
In a letter sent to the White
House last month, Defense De-
The industry agreed to pay at
bacco settlement to help pay the
partment General Counsel Judith
least $368.5 billion over 25 years
costs, a Defense Department
and $15 billion annually there-
spokesman said.
Miller said the Pentagon wants to
recover the $584 million it spends
after, in return for an end to the
Under the proposed agreement,
state lawsuits, a ban on punitive
industry representatives say such
each year as a result of tobacco-
induced death, illness and disease.
damages for private citizens and
public health goals should be met
immunity from class-action
by a $600 million annual fund that
"This is not only a substantial
expenditure, it attests to a signifi-
claims. If the Pentagon prevails in
would be administered by the fed-
cant impact upon precious health
winning a cut in that deal, it would
eral government.
care resources," she wrote.
receive $14.6 billion over the next
Several senators already have
25 years.
said that no national tobacco deal
But the amount is even higher,
But compensating federal agen-
will pass without compensating
according to the Defense Depart-
cies clearly is not a White House
federal agencies for their costs of
ment's inspector general, who re-
priority in working with Congress
treating smoking-related diseases.
ported in December that military
on tobacco legislation.
Sen. Edward M. Kennedy, Mas-
health care and lost productivity
"The [Pentagon] letter and the
sachusetts Democrat, said last
costs due to smoking were $930
issues it raises will go into the mix
month that the annual amount the
million for fiscal 1995.
of policy issues, but it is not an
industry pays after the first 25
The Pentagon request, reported
issue the president has established
years should be doubled to $30 bil-
yesterday by the trade publication
as a fundamental issue he is trying
lion. An aide said yesterday that
Defense Week, marks the first time
to achieve," said Barry Toiv, a
Mr. Kennedy is working on a bill to
that a federal agency has sought a
White House spokesman.
pay back the Medicare program
piece of the action as Congress and
Mr. Clinton said last month that
and the Department of Veterans
President Clinton consider how to
his main goal is to take steps to
Affairs for the estimated $22 bil-
write a national tobacco control
bill.
curb underage smoking, including
lion they spend together each year
raising cigarette prices by $1.50
on patients suffering from smok-
The letter was prompted by the
proposed settlement of health li-
per pack. He also wants to pre-
ing-related diseases.
ability claims signed in June by the
serve Food and Drug Administra-
tion power to regulate nicotine as
see TOBACCO, page A12
a drug; ban tobacco marketing ef-
forts that critics say target chil-
dren; raise money for research of
smoking and health; and compen-
sate tobacco farmers whose crops
would be in less demand as smok-
ing decreases.
The Pentagon request is largely
a formality to register the Defense
Department's goals in any national
settlement. But it follows several
steps military officials have taken
to curb smoking among the ranks,
including a ban on smoking in all
Defense Department workplaces.
"Our past military culture con-
doned and even encouraged this
harmful behavior through subsi-
dized tobacco sales, free cigarette
packs in field rations, and the
smoke 'em if you got 'em' philos-
ophy," Dr. Stephen Joseph, assis-
tant secretary of defense for health
The Washington Times
affairs, wrote in a recent federal
WEDNESDAY OCTOBER 15, 1997
health journal.
The department's inspector
general reported that there is a
contradiction between efforts to
reduce smoking and the availabil-
ity of cut-rate cigarettes in military
stores.
Smoking rates in the military
have declined steadily, from 51
percent in 1980 to 33 percent in
1995. Pentagon officials hope to
ENACT
tobacco
Effective National Action to Control Tobacco
-- A Public Health Coalition --
American Academy of Family Physicians
American Medical Association
American Academy of Pediatrics
Association of State & Territorial
American Cancer Society
Health Officials
American College of Chest Physicians
Campaign for Tobacco-Free Kids
American College of Preventive Medicine
National Association of County
American Heart Association
and City Health Officials
Partnership for Prevention
FOR IMMEDIATE RELEASE
Contacts:
Emily Smith, ACS 202-546-4011
October 1, 1997
Trish Moreis, AHA 202-785-7900
Marjorie Tharp, AAP 202-347-8600
Brenda Craine, AMA 202-789-7447
Jennifer Thorp, CFTFK 202-296-5469
Sarah Thomas, ASFP 800-274-2237
-- Public Health Groups Form Powerful Coalition to
Enact Comprehensive Tobacco Control Legislation and
Release Poll Showing Broad Public Support for National Efforts to Curb Smoking --
Washington, D.C. (October 1, 1997) -- Eleven of the nation's most prestigious public health
organizations have formed the coalition ENACT (Effective National Action to Control Tobacco)
and have pledged to work with the Congress and the Administration to help pass comprehensive,
sustainable, effective, well-funded, national tobacco control legislation.
"The commitment made by all eleven organizations to come together to help pass legislation as
significant as this is unprecedented," said John R. Seffrin, Ph.D., chief executive officer of the
American Cancer Society. "By sharing resources we can educate the public about the need for
national tobacco control policy. By joining forces we can activate millions of public health
advocates across the country. By uniting we can overcome any obstacle we face to take
advantage of this historic opportunity."
ENACT also released a letter it sent to members of Congress pledging to work together to help
pass strong bipartisan legislation.
The group also released new national polling data that show strong public support for a
comprehensive plan to control tobacco use. Seventy-one percent of those polled during the week
following President Clinton's tobacco policy announcement think it is important that the
Congress address a national tobacco control policy in the next six months. The survey also
- more
P.O. Box 65168
Washington, DC 20035
Phone: (202) 293-1405
ENACT / 2
found that 87 percent of the public is concerned about tobacco use by kids as a public health
issue.
An advertisement announcing the formation of ENACT and its pledge to help pass
comprehensive legislation appears in The Washington Post and The Washington Times today.
"The American Academy of Family Physicians, American Academy of Pediatrics, American
Cancer Society, American College of Chest Physicians, American College of Preventive
Medicine, American Heart Association, American Medical Association, Association of State and
Territorial Health Officials, Campaign for Tobacco-Free Kids, National Association of County
and City Health Officials, and Partnership for Prevention are standing together here today to say
to the American people that we will work with Congress, the Clinton Administration and anyone
else who will join us in the fight to enact national tobacco control legislation," said Dr. Randolph
Smoak, Jr., vice chair of the American Medical Association's Board of Trustees.
Building on decades of work by the public health community, the 1996 assertion of jurisdiction
over tobacco by the U.S. Food and Drug Administration, the principles in the recent Koop-
Kessler Report, the June 20th agreement negotiated between the state Attorneys General and the
tobacco industry, and President Clinton's call for bipartisan legislation, ENACT members
released a consensus statement that outlines the important elements for effective legislation.
These elements include:
Full FDA authority over all tobacco products and nicotine delivery systems.
Tough penalties against the industry if tobacco use among children does not drop
substantially.
Significant price increases on the cost of tobacco products.
No marketing to children.
Broad disclosure of industry documents.
Provisions to ensure that federal law does not preempt more restrictive state and local
laws.
Support for important public health initiatives.
Funding for implementation of international tobacco control initiatives.
Protections from secondhand smoke.
Help for tobacco farmers and their communities.
In addition to documenting concern over youth tobacco use and the need for Congress to address
national tobacco control policy in the next six months, the poll also revealed that:
By a margin of two to one, the public favors President Clinton's approach to building on the
proposed tobacco settlement agreement to enact a national tobacco policy. Fifty-nine percent
of those polled favored the approach, with 29 percent opposed and 12 percent undecided.
A majority also supports many of the more specific provisions of the president's plan for a
national tobacco policy, including: full authority for FDA with no special restrictions (60% V.
28% opposed); a national minimum tobacco purchasing age with required photo
- more -
ENACT / 3
identification checks to reduce youth access to tobacco (85% V. 10% opposed); stiff industry
penalties if youth smoking does not decline (57% V. 34% opposed); a cigarette price increase
of as much as $1.50/pack if youth smoking does not decline (59% V. 33% opposed);
restricting smoking in public places (78% V. 16% opposed); and funding a national tobacco
use prevention/education program (70% V. 20% opposed).
Seventy-three percent of respondents agreed that a national tobacco policy is important to
help parents discourage kids from smoking. Two-thirds (67%) believe that a national
tobacco policy is likely to reduce youth tobacco use, and almost one-half (49%) believe a
national tobacco policy is likely to reduce tobacco use by adults.
Findings from the poll, commissioned by the CAMPAIGN FOR TOBACCO-FREE KIDS, were
released at today's ENACT news conference.
"It's clear that there is overwhelming support for a comprehensive plan to protect both kids and
adults from tobacco," said Dr. Ronald M. Davis, director of the Center for Health Promotion and
Disease Prevention at the Henry Ford Health System in Detroit, which is a member of
Partnership for Prevention. He also is a fellow of the American College of Preventive Medicine.
ENACT members said they thought Congress could pass legislation as early as the spring of
1998. Hearings on the issue are already taking place on Capitol Hill.
"We stand ready to work with the Congress and the American people to accomplish this
important goal," said Dr. Michael C. Caldwell, Dutchess County (NY) health commissioner and
a board member and tobacco committee chair of the National Association of County and City
Health Officials.
###
Note to editors: A full summary of poll findings is available.
MEMORANDUM
To:
Sarah Bianchi
Tom Freedman
Jeanne Lambrew
Mary Smith
From:
Kevin Brown
Date:
September 30, 1997
Subject:
Tobacco settlement part III-Senate hearing
Senate Labor and Human Resources Committee, DSOB 430, 10:00 a.m.
Senators in attendance: Jeffords (chair), DeWine, Harkin, Murray, Reed, Warner, Kennedy
Witnesses:
1st Panel:
Dr. Lewis Sullivan, former HHS Secretary (Bush Administration)
Dr. Rosenthal, American Cancer Society
2nd Panel:
Christine Gregiore, Washington State AG (helped in negotiations)
Stanley Chesney, lead attorney for Costano group
Main themes: $1.50 price hike-gradual or immediate?
Concern over possible black market in tobacco products.
Where to send/what groups (gov./private) should get money from settlement.
1st Panel:
Dr. Sullivan indicated that funding would have to be increased for government agencies,
especially the NIH as a result of the settlement. He also stated that attention should also be paid
to private organizations and institutions that particularly serve minorities. He said that
minorities are disproportionately affected by tobacco products. As a result, he suggested ten
grants of $10 million each to be awarded to four African American schools, two Native
American schools and four Hispanic schools. He stressed that more research needs to be done
on how to reverse the effects of tobacco use. He also recommended that HHS funding for
smoking cessation be increased by four times.
Dr. Rosenthal focused on ten primary objectives that need to be met in the tobacco settlement
and through legislation:
1. National education programs that are school based.
2. State and local enforcement efforts.
3. Reduced exposure to environmental tobacco smoke.
4. Cessation programs.
5. Counter advertising programs.
6. Biomedical research-national research programs.
7. State/local research programs.
8. Improved warning labels on tobacco products.
9. International tobacco control.
10. Increased tobacco product prices-dramatic increase and then connect to inflation index.
Rosenthal went on to say that the American Cancer Society supports a comprehensive plan to
help rural communities adjust and to increase development as a result in any decline in tobacco
production in those areas.
JEFFORDS: Sen. Jeffords questioned whether giving a large amount of money to these
organizations was going to help. Dr. Sullivan indicated that there are many opportunities for use
of this money by these organizations, especially private sector groups who desperately need the
funding to continue their studies. Jeffords went on to ask how the two panelists saw the FDA's
role. Sullivan indicated that it would be very difficult for the FDA to carry out its duties
effectively without a tremendous expansion of agency financial resources. Rosenthal added that
restraints must be lifted on FDA to allow for the elimination of any harmful products. Jeffords
ended the panel by asking if they both supported the settlement. They indicated they supported
the public health portions of the settlement.
MURRAY: Asked if an increase in prices on tobacco products would help. Dr. Sullivan
indicated that any price increase should happen abruptly, as opposed to an gradual increase and.
emphasized that teenagers are very price sensitive. Rosenthal agreed that a sudden increase was
needed. Murray asked if a black market would be possible. Both Sullivan and Rosenthal agreed
that it would be possible, but it should not be a reason to refrain from a price increase. Murray
also inquired about possible smoking cessation programs for adults. Both indicated that we must
pursue this.
DEWINE: Commented on the harmful effects of second-hand smoke on children's health.
Rosenthal said that the message must be gotten out to children-educate children and that will
have an effect on the parents.
HARKIN: Mentioned biomedical research and the power that tobacco has, especially what we
have not learned about yet. Sullivan indicated that behavioral research must be emphasized
because behavioral problems primarily affect us today. Rosenthal emphasized the need for
broad based research and more money in psycho-social research, which is currently not being
funded.
WARNER: Was concerned with a previous comment that we were trying to change people's
behavior and questioned if that is what we should do. Sullivan responded by indicating that it
was the government's responsibility to educate the people. Warner also asked who was running
the analysis as to whether we were headed towards prohibition.
KENNEDY: Asked what would be considered a dramatic increase in price and over what time
period. Rosenthal indicated that $2 a pack increase starting tomorrow would be adequate.
Sullivan added, that the important thing was not to let something like the price increase hold up
the debate and the action on the settlement. Kennedy noted that if the $1.50 increase goes into
effect, the U.S. price will still be below most industrialized nations.
Panel 2:
AG Gregiore began by saying that legislation was important to insure that the provisions were
reinforced by statute. Chesney indicated that this is the only opportunity that we have to develop
national tobacco policy and to guarantee other goals that are in the settlement.
JEFFORDS: Asked if there was some point at which the parties could walk away from the
settlement. He also added that the U.S. Senate did not usually operate that way and was not
usually influenced by those who would be offended by legislation. Chesney responded that he
didn't think that would happen and that there was nothing in the POTUS's 5 core principles that
would influence that either. Jeffords also asked if $2 pack increase over two years would blow
the agreement. Chesney said that this would blow the deal and indicated that the economics of
such a plan just do not make sense. Indicated that we have to factor in time for a change in
culture to make this work. Gregiore responded by indicating her support for an immediate per
pack increase. She is concerned over the possible black market and the penalty provision for
companies.
Note: I had to leave the hearing at this time. Hearing was not over.
Bruce N. Reed
07/10/97 01:50:01 PM
Record Type:
Record
To:
Thomas L. Freedman/OPD/EOP, Mary L. Smith/OPD/EOP
CC:
Elena Kagan/OPD/EOP, Jerold R. Mande/OSTP/EOP, Elizabeth Drye/OPD/EOP, Christopher C.
Jennings/OPD/EOP
Subject: Tobacco Bills
Thanks for the great memo on tobacco legislation. I was especially interested in the bills on farmers and
on tax deductibility of advertising. Could you also take a more detailed look at Durbin's bill on
performance stds and penalties (S828), autenberg's bill on warning labels (S527), Hansen's bill on youth
ads (HR762), the tobacco state member bills from Ford, Baesler, and Charlie Rose Oberstar's Medicaid
bill, and Meehan's nicotine bill (1995). Thanks. 5.878
4R 1853
3HR 3779 104th
SEN DURON 324 2152
10am will Farl
SEN LAUTENGERY 5.527 224 4744
we
chip Gardned -out Today back Molday Homas. loc.gov
Hard bill text * REP OBERGAR HR 3779 104th 2256211
REP MEFHAN HR 1853 1047k 225 3411
506
voice Rill McCannon CA
Mail
may
ftp://ftp.loc.gov/pub/thomas/c104/h3779.ih.txt
ftp://ftp.loc.gov/pub/thomas/c104/h3779.ih.txt
FILE h3779.ih
HR 3779 IH
104th CONGRESS
2d Session
To amend title XIX of the Social Security Act to reward States for
collecting Medicaid funds expended on tobacco-related illnesses,
and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
July 10, 1996
Mr. OBERSTAR (for himself, Mr. DURBIN, Mr. FRAZER, Mr. MEEHAN, Mr.
MINGE, Mr. HANSEN, Mrs. MORELLA, Mr. REED, Mr. SERRANO, Mr.
DELLUMS, and Ms. EDDIE BERNICE JOHNSON of Texas) introduced the
following bill; which was referred to the Committee on
Commerce, and in addition to the Committee on the Budget, for a
period to be subsequently determined by the Speaker, in each
case for consideration of such provisions as fall within the
jurisdiction of the committee concerned
A BILL
To amend title XIX of the Social Security Act to reward States for
collecting Medicaid funds expended on tobacco-related illnesses,
and for other purposes.
[Italic->] Be it enacted by the Senate and House of
Representatives of the United States of America in Congress
assembled, [<-Italic]
SECTION 1. SHORT TITLE.
This Act may be cited as the `Tobacco Medicaid Recovery Act of
1996'.
SEC. 2. FINDINGS AND PURPOSE.
(a) FINDINGS- The Congress finds the following:
(1) Federal taxpayers pay for approximately $20,000,000,000
each year in Federal health expenditures to treat
tobacco-related illnesses, including expenditures incurred
under the Medicare and Medicaid programs operated under titles
XVIII and XIX of the Social Security Act, health care programs
carried out by the Secretary of Veterans Affairs under chapter
17 of title 38, United States Code, and other Federal health
care programs. These expenditures often contribute to an
increase in the Federal budget deficit.
(2) According to the Centers for Disease Control and
Prevention, tobacco-related illnesses cost the Medicaid program
under title XIX of the Social Security Act $5,100,000,000 each
year.
(3) The efforts of several States that are attempting under
Federal law, including in some cases, under the Federal
anti-racketeering statutes, or under State law, to recover the
health care costs incurred under the Medicaid program for the
treatment of individuals with diseases attributable to the use
of tobacco products from the manufacturers of such products,
are to be commended.
(b) PURPOSE- The purpose of this Act is to reward States that
successfully recover the Federal and State health care costs
incurred under the Medicaid program for the treatment of
individuals with diseases attributable to the use of tobacco
products by providing increased funding for their Medicaid programs
and to provide increased resources to the National Institutes of
Health.
SEC. 3. INCENTIVE PAYMENTS FOR COLLECTION OF MEDICAID FUNDS
EXPENDED ON TOBACCO-RELATED ILLNESSES.
(a) FINANCIAL REWARD FOR SUCCESSFUL RECOVERIES- Section 1903 (d)
of the Social Security Act (42 U.S.C. 1396b (d) is amended by
adding at the end the following new paragraph:
(7) (A) Notwithstanding any other provision of law, if a State
recovers, by judgment in, or settlement of, any suit arising under
1 of 2
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Federal or State law, amounts expended as medical assistance under
the State plan for the treatment of individuals with diseases
attributable to the use of tobacco products, from a manufacturer of
tobacco products, the State shall notify the Secretary of the
amount of such recovery. Upon receipt of such a notice, the
Secretary shall determine the amount of Federal expenditures under
this title that are attributable to the amounts recovered, based on
the Federal medical assistance percentage, as defined in section
1905 (b), for such State. The Secretary shall treat the amount so
determined as an overpayment under this section, in accordance with
paragraph (2) (A), and with respect to such amount shall do the
following:
(i) Provide that the State shall retain 1/3 of such
amount, for the purpose of using such funds to meet the
non-Federal share of expenditures under the State plan with
respect to which payments may be made under this title.
(ii) Pay 1/3 of such amount to the Director of the
National Institutes of Health, for the purpose of conducting
disease research.
(B) Any amount of new budget authority or outlays resulting from
the provisions of this paragraph shall not be counted for any
purpose under section 251 or 252 of the Balanced Budget and
Emergency Deficit Control Act of 1985.
(C) For purposes of this paragraph--
(i) the term `manufacturer of tobacco products' has the
meaning given such term by section 5702 (d) of the Internal
Revenue Code of 1986; and
(ii) the term tobacco products' has the meaning given such
term by section 5702 (c) of such Code.
(b) CONFORMING AMENDMENT- Section 1902 (a) of such Act (42 U.S.C.
1396a (a) ) is amended--
(1) by striking `and' at the end of paragraph (61) ;
(2) by striking the period at the end of paragraph (62) and
inserting ; and'; and
(3) by inserting after paragraph (62) the following new
paragraph:
(63) provide that the State shall provide prompt notice to
the Secretary of the amount of any recovery from a manufacturer
of tobacco products, as defined in section 1903 (d) (7) (C) (i), of
expenditures for medical assistance provided under such plan
for the treatment of individuals with diseases attributable to
the use of tobacco products, as defined in section
1903 (d) (7) (C) (ii)
(c) EFFECTIVE DATE- The amendments made by subsections (a) and
(b) shall apply to amounts recovered on and after the date of the
enactment of this Act.
2 of 2
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MEMORANDUM
TO:
BRUCE REED, ELENA KAGAN
FROM:
TOM FREEDMAN, MARY L. SMITH
RE:
TOBACCO BILLS
DATE:
JULY 8, 1997
SUMMARY
Below is a list of bills, in reverse chronological order, that were introduced in both the
104th and 105th Congress that relate to tobacco. This list was compiled by performing a Nexis
X
search using the words "tobacco" and "cigarettes" as search terms.
'^ for by any legislation
Many of the bills relate to topics that are already covered in the proposed settlement
agreement such as bills regarding restrictions on advertising and bills aimed at reducing youth
smoking.
we havit lookers at the details of every Sill, but
There are a few bills, however that are not covered by the proposed settlement that look
X
particularly promising: interesting.
1.
Bills to create conversion funds for farmers. S.804 by Sen. Bradley on 5-15-95;
S.598 by Sen. Bradley (D-NJ) on 3-22-95.
2.
Bills to disallow deductions for advertising expenses for tobacco products.
H.R. 1323 by Rep. McHale (D-PA) on 41-15-97; H.R. 2962 by Rep. McHale (D-PA) on 2-06-96;
S. 596 by Sen. Harkin (D-IA) on 3-22-95.
stenet
Bid
there if ourlap
- when
for
VKO cooh
1 glyne
Waxman
stacter
DATE
BILL NO.
SPONSOR
STATUS
DESCRIPTION OF BILL
INTRO
6-27-97
S. Res. 104
Sen. Harkin (D-
referred to committee
Resolution to state the sense of the Senate regarding
IA)
the tax status of payments made as a result of the
recent tobacco liability settlement. Under the
settlement, any payment by the tobacco manufacturers
is counted as a "normal and necessary" business
expense and is therefore tax deductible, thereby
potentially requiring taxpayers to subsidize up to $147
billion of the settlement payment. This resolution
seeks to prohibit parties to the agreement from
claiming tax deductions for these payments.
6-25-97
H.R. 2034
Rep. Bishop (D-
referred to committee
A bill to amend section 1926 of the Public Health
GA); 13
Service Act to encourage states to strengthen their
cosponsors
efforts to prevent the sale and distribution of tobacco
products to individuals under the age of 18.
6-24-97
H.R. 2017
Rep. Bishop (D-
referred to committee
A bill to amend section 1926 of the Public Health
GA); no
Service Act to encourage states to strengthen their
cosponsors
efforts to prevent the sale and distribution of tobacco
products to individuals under the age of 18.
6-12-97
H.R. 1881
Rep. Waxman (D-
referred to committee
Tobacco Accountability Act: A bill to establish the
3.
CA)
Tobacco Accountability Board. The Board will
investigate all matters relating to the tobacco industry
including (1) any efforts to conceal research relating to
the adverse health effects caused by tobacco; (2) any
efforts by tobacco manufacturers to mislead the public;
(3) any efforts to sell tobacco to children; and (4) any
attempt to circumvent regulations of tobacco.
2
6-06-97
H.R. 1826
Rep. Elizabeth
referred to House
A bill to increase deficit-reduction assessments for
Furse (D-OR)
Agriculture Committee
participants in the Federal price support program for
tobacco and to extend the period during which such
assessments will be collected.
6-03-97
S.828
Sen. Durbin (D-
referred to Committee
No Tobacco for Kids Act: Directs HHS to conduct
IL); Cosponsors:
on Commerce
annual surveys to determine the number of children
Sen. Lautenberg
who used each manufacturer's tobacco products.
(D-NJ), Sen.
Requires each manufacturer to make specified annual
Harkin (D-IA)
reductions in child tobacco use, and provides penalties
based on total consumer use for failure to meet such
requirements. Sets forth performance standards for
new manufacturers. Directs that specified amounts of
fiscal year penalties shall go to a Tobacco
Enforcement and Education Fund in the Treasury,
with any excess to go to the Treasury.
6-03-97
S.826
Sen. Lautenberg
referred to Senate
Smoke Free Environment Act of 1997: A bill to
(D-NJ);
Environment and Public
amend the Public Health Service Act to protect the
Cosponsors: Sen.
Works Committee
public from health hazards caused by exposure to
Durbin (D-IL),
environmental tobacco smoke.
Sen. Kerry (D-
MA)
6-03-97
H.R. 1772
Rep. Waxman (D-
referred to committee
No Tobacco for Kids Act: A bill to provide for the
We
CA); no
reduction in the number of children who use tobacco
Kan
cosponsors
products.
6-03-97
H.R. 1771
Rep. Waxman (D-
referred to committee
Smoke-Free Environment Act of 1997: A bill to
CA); 2
amend the Public Health Service Act to protect the
cosponsors
public from health hazards caused by exposure to
environmental tobacco smoke
3
4-24-97
S.643
Sen. Durbin (D-
referred to Committee
Tobacco Subsidy Reduction Act of 1997: Amends
IL); 3 Cosponsors
on Agriculture
the Federal Crop Insurance Act to prohibit the CCC
from providing federal crop insurance or reinsurance
for tobacco. Amends the Agricultural Market
Transition Act to prohibit the Secretary of Agriculture
from providing noninsured crop disaster assistance for
tobacco.
4-24-97
H.R. 1438
Rep. Degette (D-
referred to committee
Tobacco Subsidy Reduction Act of 1997: A bill to
CO); 43
prohibit the Federal Government from providing
cosponsors
insurance, reinsurance, or noninsured corp disaster
assistance for tobacco.
4-17-97
H.R. 1364
Rep. Johnson (R-
referred to committee
Child Health Insurance and Lower Deficit Act of
CT); 12
1997: A bill to provide grants to States to provide
cosponsors
uninsured children with access to health care insurance
coverage and to amend the IRS Code of 1986 to
increase the excise taxes on tobacco products for the
purpose of funding such grants and reducing the
deficit.
4-15-97
H.R. 1323
Rep. McHale (D-
referred to committee
Tobacco Advertising Tax Reform Act: A bill to
PA); 34
amend the IRS Code of 1986 to disallow deductions
cosponsors
for advertising expenses for tobacco products.
4
4-09-97
H.R. 1263
Rep. Pallone (D-
referred to committee
Child Health Insurance and Lower Deficit Act: A
NJ); 40
bill to amend the Public Health Service Act to provide
cosponsors
access to health care insurance coverage for children
and to amend the IRS Code of 1986 to increase the
excise taxes on tobacco products for the purpose of
offsetting the Federal budgetary costs associated with
such insurance coverage.
4-08-97
S.527
Sen. Lautenberg
referred to Committee
Tobacco Disclosure and Warning Act of 1997: A
(D-NJ); 5
bill to prescribe labels for packages and advertising for
cosponsors
tobacco products, to provide for the disclosure of
certain information relating to tobacco products.
4-08-97
S.526
Sen. Hatch (R-
In Committee.
A bill to amend the IRS Code of 1986 to increase the
UT); 23
excise taxes on tobacco products for the purpose of
cosponsors
offsetting the federal budgetary costs associated with
the Child Health Insurance and Lower Deficit Act.
4-08-97
H.R. 1244
Rep. Meehan (D-
referred to committee
Tobacco Disclosure and Warning Act of 1997: A
MA); 5
bill to prescribe labels for packages and advertising for
cosponsors
tobacco products and to provide for the disclosure of
certain information relating to tobacco products.
2-13-97
H.R. 768
Rep. LaHood (R-
referred to committee
A bill to restrict the FDA from penalizing retailers for
IL); 34
face-to-face tobacco sales that are in accordance with
cosponsors
State law.
2-13-97
H.R. 762
Rep. Hansen (R-
referred to committee
Youth Protection from Tobacco Addiction Act of
UT); 5
1997: A bill to restrict the advertising and promotion
cosponsors
of tobacco products.
5
2-04-97
H.R. 516
Rep. Baesler (D-
referred to committee
Youth Smoking Prevention Act of 1997: A bill to
KY); no
establish the Federal Authority to regulate tobacco and
cosponsors
other tobacco products containing nicotine as a
condition to the receipt by a State of the Federal
preventive health and health services block grant.
1-23-97
S.201
Sen. Ford (D-
Referred to committee
Tobacco Products Control Act of 1997. A bill to
KY); no
provide for the establishment of certain limitations on
cosponsors
advertisements relating to, and the sale of, tobacco
products, and to provide for increased enforcement of
laws relating to underage tobacco use.
1-09-97
H.R. 410
Rep. Gordon (D-
referred to committee
A bill to prohibit the use of any tobacco or tobacco
TN); 29
product as a sponsor of an event of the National
cosponsors
Association of Stock Car Automobile Racing, its
agents or affiliates, or any other professional motor
sports associations by HHS or any other
instrumentality of the Federal Government.
10-01-96
S. 2184
Sen. Lautenberg
referred to Senate
Tobacco-Free Children's Internet Act of 1996: a
(D-NJ); no
Commerce, Science and
bill to require the Commissioner of the Food and Drug
cosponsors
Transportation
Administration to issue regulations limiting the
Committee
advertising of cigarettes and smokeless tobacco over
the Internet.
9-26-96
H. Con.
Rep. Greene (R-
referred to House
Expresses the sense of the Congress that addiction to
Res. 223
UT); no
Economic and
nicotine should not be considered a disability for
cosponsors
Educational
purposes of specified provisions of the Americans with
Opportunities
Disabilities Act of 1990 and the Rehabilitation Act of
Committee
1973
6
9-27-96
H.R. 4245
Rep. Fox (R-PA);
referred to House
Tobacco Youth Access Act: a bill to restrict the
no cosponsors
Commerce Committee
access of youth to tobacco products.
8-02-96
H.R. 3954
Rep. Fox (R-PA);
referred to committee
Control of Youth Access to Tobacco Act: A bill to
no cosponsors
restrict the access of youth to tobacco products.
7-16-96
H.R. 3821
Rep. Hansen (R-
referred to committee
Youth Protection from Tobacco Addiction Act of
UT); 8
1996: A bill to restrict the advertising and promotion
cosponsors
of tobacco products.
7-10-96
H.R. 3779
Rep. Oberstar (D-
referred to committee
Tobacco Medicaid Recovery Act of 1996: a bill to
MN); 16
amend title XIX of the Social Security Act to reward
cosponsors
states for collecting Medicaid funds expended on
tobacco-related illnesses.
6-19-96
S. 1892
Sen. Lautenberg
referred to Senate
Tobacco Medicaid Recovery Act of 1996: a bill to
(D-NJ); 6
Finance Committee
reward states for collecting Medicaid funds expended
cosponsors
on tobacco-related illnesses
2-06-96
H.R. 2962
Rep. McHale (D-
referred to House Ways
A bill to amend the Internal Revenue Code of 1986 to
PA); 22
and Means Committee
disallow deductions for advertising expenses for
cosponsors
tobacco products.
11-16-95
H.R. 2653
Rep. Charlie Rose
referred to House
Tobacco Amendments Act of 1995: A bill to amend
(D-NC); no
Agriculture Committee
the Agricultural Adjustment Act of 1938 and the
cosponsors
Agricultural Act of 1949 to improve the operation of
the Government flue-cured and burley tobacco
programs.
7
11-06-95
H.R. 2585
Rep. Schroeder
referred to committee
Smokeless Tobacco Consumption Reduction and
(D-CO); 26
Education Act of 1995: A bill to amend the IRS
cosponsors
Code of 1986 to increase the excise taxes on
smokeless tobacco to an amount equivalent to the tax
on cigarettes and to use the resulting revenues to fund
a trust fund for programs to reduce the use of
smokeless tobacco.
9-28-95
H.R. 2414
Rep. Baesler (D-
referred to House
Youth Smoking Prevention Act of 1995: a bill to
KY); 3
Commerce Committee
establish the Federal authority to regulate tobacco and
cosponsors
other tobacco products containing nicotine.
9-26-95
S. 1295
Sen. Helms (R-
referred to Senate
A bill to prohibit the regulation of any tobacco
NC); 3
Commerce, Science and
products, or tobacco sponsored advertising, used or
cosponsors
Transportation
purchased by the National Association of Stock Car
Committee
Automobile Racing, its agents or affiliates, or any
other professional motor sports association by HHS or
any other instrumentality of the Federal government.
9-20-95
S. 1262
Sen. Ford (D-KY)
referred to Senate
Tobacco Products Control Act of 1995: a bill to
Commerce, Science and
provide for the establishment of certain limitations on
Transportation
advertisements relating to, and the sale of, tobacco
Committee
products, and to provide for the increased
enforcement of laws relating to underage tobacco use.
9-07-95
H.R. 2283
Rep. Payne (D-
referred to House
A bill to prohibit the regulation of the sale or use of
VA); 23
Commerce Committee
tobacco or tobacco products by HHS.
cosponsors
8
9-06-95
H.R. 2265
Rep. Funderburk
referred to House
A bill to prohibit the regulation of any tobacco
(R-NC); 53
Commerce Committee
products, or tobacco sponsored advertising, used or
cosponsors
purchased by the National Association of Stock Car
Automobile Racing, its agents or affiliates, or any
other professional motor sports association by HHS or
other instrumentality of the Federal Government.
8-07-95
S. Res. 159
Sen. Bradley (D-
referred to Senate
A resolution to express the sense of the Senate
NJ); 11
Finance Committee
regarding the role of tobacco in leading to addiction,
cosponsors
disease, and premature death among children and
teenagers, and the role of increased excise taxes in
reducing tobacco use by children and teenagers.
8-04-95
S. 1123
Sen. Bingaman
referred to Senate
A bill to limit access by minors to cigarettes through
(D-NM); no
Environment and Public
prohibiting the sale of tobacco products in vending
cosponsors
Works Committee
machines and the distribution of free samples of
tobacco products in federal buildings and property
accessible by minors.
6-15-95
H.R. 1853
Rep. Meehan (D-
referred to House
Freedom from Nicotine Addiction Act of 1995: A
MA); 9
Science Committee
bill to amend the Federal Food, Drug, and Cosmetic
cosponsors
Act to require the reduction and eventual elimination
of nicotine in tobacco products.
5-15-95
S. 804
Sen. Bradley (D-
referred to Senate
Tobacco Consumption Reduction and Health
NJ); no
Finance Committee
Improvement Act of 1995: A bill to amend the
cosponsors
Internal Revenue Code of 1986 to increase the excise
taxes on tobacco products, and to use a portion of the
resulting revenues to fund a trust fund for tobacco
diversification.
9
4-06-95
H.R. 1455
Rep: Stark (D-
referred to the House
Tobacco Health Tax and Agricultural Conversion
CA); 13
Ways and Means
Act of 1995: A bill to amend the IRS Code of 1986 to
cosponsors
Committee
increase the tax on tobacco products.
3-22-95
S. 598
Sen. Bradley (D-
referred to Senate
Tobacco Consumption Reduction and Health
NJ); cosponsor:
Finance Committee
Improvement Act of 1995: A bill to amend the
Lautenberg (D-
Internal Revenue Code of 1986 to increase the excise
NJ)
taxes on tobacco products and to use a portion of the
resulting revenue to fund a trust fund for tobacco
diversification.
3-22-95
S. 597
Sen. Lautenberg
referred to Senate
Medicare/Medicaid Solvency Act: A bill to insure
(D-NJ); 2
Finance Committee
the long-term viability of the Medicare, Medicaid, and
cosponsors
other federal health programs by establishing a
dedicated trust fund to reimburse the government for
the health care costs of individuals with diseases
attributable to the use of tobacco products.
3-22-95
S. 596
Sen. Harkin (D-
referred to Senate
A bill to amend the Internal Revenue Code of 1986 to
IA)
Finance Committee
disallow deductions for advertising and promotional
expenses for tobacco products.
1-23-95
H.R. 636
Rep. Kildee (D-
referred to House
The Tobacco Workers Equity Act: A bill to amend
MI)
Economic and
section 207(m) of the Fair labor Standards Act of
Educational
1938 to eliminate the partial overtime exemption for
Opportunities
employees that perform services necessary and
Committee
incidental to the sale and processing of green and cigar
leaf tobacco.
10
Allen Courts Tobacco Vote
Congress Urged to Consider Farmers, Workers
Beyer and other Democrats have
accused Allen and Gilmore-who
By Spencer S. Hsu
Famers
and Ellen Nakashima
resigned last month to focus on his
Washington Post Staff Writers
campaign-of being too cozy with
cigarette makers at the expense of
RICHMOND, July 2-Casting
farmers and public health.
himself and other Virginia Republi-
"Imagery here is extremely im-
cans as defenders of threatened
portant," said Robert D. Holsworth, a
tobacco farmers and cigarette in-
political scientist at Virginia Com-
dustry workers, Gov. George Allen
monwealth University. Noting that
today urged Congress to try to
Allen appeared with the Wells family
THURSDAY, JULY 3, 1997
soften the impact of the landmark
and the state's top officials for com-
tobacco settlement on Virginia and
merce, transportation and agricul-
other states that grow the crop.
ture-but not health or Medicaid
At a news conference with 9-
officials-Holsworth said the gover-
year-old Jessica Wells and her par-
nor was not defending cigarette man-
ents, tobacco farmers from Meck-
ufacturers but also was not talking
lenburg, Va., Allen announced that
about addicted smokers.
he had created a panel to advise
"It's not that the Republicans want
to come to the defense of the corpo-
Virginia's members of Congress
rations that have been misleading
on possible compensation for farm-
ers and workers who could be
people," Holsworth said. "They want
to come to the defense of the hard-
affected by last month's $368 bil-
working farm families who have
lion settlement, negotiated by ciga-
been making an honest living."
rette makers, public health advo-
That was the case on Tuesday,
cates and states suing to recover
when Gilmore, standing thigh-deep
the costs of tobacco-related illness.
in a summer field of tobacco plants in
"My concern is that families
rural Southside, accused Beyer, Vir-
such as the Wellses and literally
ginia's lieutenant governor, of trying
tens of thousands like them across
to exploit antismoking sentiment
Virginia are
being ignored,"
and divide urban and suburban vot-
But he quoted tobacco industry
Allen said from his ornate Capitol
ers from rural farmers.
studies estimating that 48,000 jobs in
office. "I'm just trying to find some
"The trouble is that politics today
Virginia are directly tied to tobacco-
way for them to understand that,
seems to be about trying to set one
production and manufacturing and
look, these are real human beings
group against another group, one
that tobacco farm receipts totaled
being affected by what you
region against another region," Gil-
$186 million a year. According to
might be doing."
more, who lives in suburban Rich-
industry studies, an additional 72,000
Allen's remarks-a day after
mond, told a group of farmers.
jobs are partly dependent on the
GOP gubernatorial nominee
Beyer has not taken this region and
crop.
James S. Gilmore III told South-
this community into consideration."
Overall, tobacco accounts for 8
side Virginia tobacco farmers that
Today, Beyer praised Allen's
percent of the state's agricultural
Democratic nominee Donald S.
moves in support of farmers. But he
production and about 3 percent of
Beyer Jr. is trying to divide the
accused the governor and Gilmore of
Virginia's gross state product. Allen
state's rural and urban areas by
failing to protect children's health
said one of the task force's charges is
supporting federal tobacco regula-
and said the state should have
to determine what impact shrinking
tions-reflect an effort by Republi-
moved sooner to take part in the
cigarette consumption would have
See VIRGINIA, D5, Col. 1
tobacco settlement talks.
on Virginia farmers.
"We need real protections for chil-
Allen praised the settlement's plan
VIRGINIA, From D1
dren and real protections for grow-
to compensate states for Medicaid
cans to focus Virginia's often-
ers," said Beyer, who lives in Alexan-
costs incurred in treating tobacco-
wrenching debate over tobacco on
dria. "We should have made this
related diseases, and said he sup-
the leaf's economic importance rath-
kind of effort in April, when Jim
ports efforts to stop teen smoking.
er than its health risks.
Gilmore had the opportunity to rep-
Michael Wells, a 45-year-old farm-
Analysts said Republicans also are
resent Virginia's interests in the
er with 68 acres, said he was glad to
trying to recover from the criticism
talks and refused to."
see Allen come to his defense. "I'm
they taken on the issue in recent
Beyer also rejected Gilmore's
pleased, and I'm sure the tobacco
months. As Virginia's attorney gen-
claim that the Democrat was trying
industry is pleased," Wells said.
eral, Gilmore stayed away from the
to divide voters.
Although farmers represent a
tobacco settlement talks and sided
"Sticking up for children in the
dwindling percentage of Virginia's
with tobacco companies in their fight
debate about tobacco has nothing to
voters, Republicans are hoping that
against new federal regulations aimed
do with pitting one region of the state
those types of feelings will draw
primarily at curbing teen smoking.
against another," said Beyer, who
farmers to the polls in November to
said that it was Gilmore who was
vote for Gilmore.
trying to exploit regional animosities
At Holland's Tobacco Warehouse
by playing to farmers' anxieties in-
in Danville on Tuesday, Gilmore
stead of talking about issues such as
greeted farmers and bluntly pledged
education. "I'm as concerned about
his allegiance to their cause.
the kid who lives in Danville as I am
"I'm here to underscore the impor-
about the kid who lives in Richmond
tance of the agricultural and farming
or in Staunton."
community in the Commonwealth of
Allen said little today about the
Virginia, particularly Southside," Gil-
health impact of smoking, and he
more said. "I stood by tobacco farm-
could not say what the state's share
ers in the past, and I will continue to
of proposed Medicaid-compensation
stand behind and beside the tobacco
would be from the settlement.
farmers in the future."
MEMORANDUM
TO:
BRUCE REED, ELENA KAGAN
FROM:
TOM FREEDMAN, MARY L. SMITH
RE:
POSSIBLE TOBACCO BILLS
DATE:
JUNE 27, 1997
I.
SUMMARY
The following provides a summary of government programs that provide assistance to
tobacco farmers and that provide tax deductions for the tobacco industry. A list of bills from the
104th Congress and 105th Congress that could be used to supplement or amend the tobacco
proposal is also included. These bills either affect the tobacco industry in economic terms or
apply to tobacco farmers.
II.
BACKGROUND ON TOBACCO FARMERS
Today the subsidies for tobacco farmers are relatively small. Direct subsidies ended in the
1980s. Currently, the subsidies amount to a quota system in which the government
licenses the right to grow tobacco and has a federal program to insure farmers against
crop losses. The Department of Agriculture has budgeted $145 million for the insurance
in the coming fiscal year. In years with no significant losses, the Department of
Agriculture contributes little or nothing to the insurance pool.
North Carolina produces 52% of all domestically grown tobacco. There are 17,625
tobacco farmers in North Carolina. However, tobacco accounts for only 6.5% of North
Carolina's economy, or about $12 billion annually.
Federal, state, and local excise taxes collected on cigarettes totaled $13.1 billion.
III. SOME GOVERNMENT PROGRAMS INVOLVING TOBACCO
1.
Tobacco Price-Support Program. This is a program that controls both how much
tobacco farmers can sell and what price they get for it. In 1995, then Rep. Dick Durbin, in
proposing a failed amendment to the Agriculture Department funding bill to eliminate this
program, calculated that farmers who own tobacco quotas are allowed to gross $4,000 to
$5,000 per acre, compared with corn farmers who gross one-tenth of that amount. In
1995, under the program, the Agriculture Department paid $41.5 million a year for
administrative costs for such things as setting the quota, for losses associated with federal
crop insurance for tobacco, and for extension services. Opponents argued that if the
1
tobacco-price support program were eliminated, the government could end up losing $1
billion on the existing surplus.
2.
Tobacco insurance. The Federal government provides insurance, reinsurance, and
noninsured crop disaster assistance for tobacco.
3.
Favorable tax deductions for tobacco advertising. The Internal Revenue Code of 1986
allows the tobacco industry to take deductions for its advertising costs.
IV.
BILLS
104th Congress
1.
S. 598; Sponsored by Senator Bill Bradley: Establishes in the Treasury a Tobacco
Conversion Trust Fund. Funds from increased taxes on tobacco will be made available to:
(1)
assist farmers in converting from tobacco to other crops and improve their access
to markets for other crops; and
(2)
provide grants and loans, including assistance to convert from tobacco production,
to communities and persons involved in tobacco growing and tobacco product
manufacture who are adversely affected by the tax increase.
Last status: referred to Senate Finance Committee.
Copy attached.
2.
H.R. 2962; Sponsored by Rep. Paul McHale (D-PA). Bill to amend the IRS Code to
disallow deductions for advertising expenses for tobacco products.
Last status: referred to House Ways and Means Committee.
105th Congress
1.
H.R. 1323; Sponsored by Rep. McHale; 34 co-sponsors. A bill that amends the IRS
Code to disallow deductions for advertising expenses for tobacco products.
Last status: referred to committee.
2.
H.R. 1438, S. 643 (Senator Durbin). A bill to prohibit the Federal Government from
providing insurance, reinsurance, or noninsured crop disaster assistance for tobacco.
Last status: referred to committee.
2
3.
H.R. 1826. A bill to increase deficit-reduction assessments for participants in the Federal
price support program for tobacco and to extend the period during which such
assessments will be collected.
Last status: referred to committee.
4.
S.826; Sponsored by Senators Lautenberg, Durbin, and Kerry. A bill to amend the
Public Health Service Act to protect the public from health hazards caused by exposure to
environmental tobacco smoke. This bill basically create standards for smoke-free public
places (which is also covered in the proposed resolution reached by the state attorney
generals): Copy attached.
Last status: referred to committee.
3
PAGE 13
1ST DOCUMENT of Level 1 printed in FULL format.
Copyright (c) 1996 LEXIS-NEXIS,
a division of Reed Elsevier Inc. All rights reserved.
Bill Tracking Report
104th Congress
1st Session
U. S. Senate
S 598
1995 Bill Tracking S. 598; 104 Bill Tracking S. 598
TOBACCO CONSUMPTION REDUCTION AND HEALTH IMPROVEMENT ACT OF 1995
<=1> Retrieve full text version
DATE-INTRO: March 22, 1995
LAST-ACTION-DATE: March 22, 1995
STATUS: Referred to committee
SPONSOR: Senator Bill Bradley D-NJ
TOTAL-COSPONSORS: 1 Cosponsors: 1 Democrats / O Republicans
SYNOPSIS: A bill to amend the Internal Revenue Code of 1986 to increase the
excise taxes on tobacco products, and to use a portion of the resulting revenues
to fund a trust fund for tobacco diversification, and for other purposes.
ACTIONS: Committee Referrals:
03/22/95 Senate Finance Committee
Legislative Chronology:
1st Session Activity:
03/22/95 141 Cong Rec S 4365 Referred to the Senate Finance Committee
03/22/95 141 Cong Rec S 4381 Remarks by Sen. Bradley NJ
BILL-DIGEST: (from the CONGRESSIONAL RESEARCH SERVICE)
Short title as introduced :
Tobacco Consumption Reduction and Health Improvement Act of
1995
Digest :
Tobacco Consumption Reduction and Health Improvement Act of
1995 - Amends the Internal Revenue Code to increase the excise tax
PAGE 14
Bill Tracking Report S 598
on: (1) cigars: (2) cigarettes; (3) cigarette papers and tubes;
(4) snuff: and (5) chewing and pipe tobacco. Imposes a tax on the
floor stocks of such tobacco products which are removed before January
1, 1996. Makes an exception to the imposition of such tax for floor
stocks of such products held on such date at the place intended
to be sold at retail. Imposes such tax on such products entered
into the United States from foreign trade zones before such date.
Imposes a tax on roll-your-own tobacco manufactured in or imported
into the United States.
Establishes in the Treasury the Tobacco Conversion Trust Fund,
to which the Secretary of the Treasury shall transfer an amount
equivalent to three percent of the net increase in revenues attributable
to the tax increases imposed by this Act. Makes Fund amounts available
for expenditures for providing: (1) assistance to farmers for conversion
from tobacco growing (including Government purchase of tobacco
allotments)
and improving their access to markets for other crops; and (2) grants
and loans to communities and persons involved in tobacco growing
and tobacco product manufacture to support economic diversification
plans.
CRS Index Terms:
Taxation
Agricultural economics
Agricultural
subsidies
Agriculture
Budgets
Business
Cigarettes
Diversification in industry
Drug abuse
Exports
Farm produce
Federal aid to community development
Foreign trade
Free ports and zones
Government lending
Government trust funds
Grants-in-aid
Health policy
Imports
Marketing of farm produce
Medical care
Smokeless tobacco
Tax credits
Tax rates
Tobacco industry
Tobacco tax
Trade
PAGE 15
Bill Tracking Report S 598
CO-SPONSORS: Original Cosponsors:
Lautenberg D-NJ
PAGE
7
1ST DOCUMENT of Level 1 printed in FULL format.
FULL TEXT OF BILLS
104TH CONGRESS; 1ST SESSION
IN THE SENATE OF THE UNITED STATES
AS INTRODUCED IN THE SENATE
S. 598
1995 S. 598; 104 S. 598
SYNOPSIS:
A BILL To amend the Internal Revenue Code of 1986 to increase the excise taxes
on tobacco products, and to use a portion of the resulting revenues to fund a
trust fund for tobacco diversification, and for other purposes.
DATE OF INTRODUCTION: MARCH 22, 1995
DATE OF VERSION: MARCH 24, 1995 -- VERSION: 1
SPONSOR (s)
Mr. BRADLEY (for himself and Mr. LAUTENBERG) introduced the following
bill; which was read twice and referred to the Committee on Finance
TEXT:
* Be it enacted by the Senate and House of Representatives of the United*
*States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the "Tobacco Consumption Reduction and Health
Improvement Act of 1995".
SEC. 2. INCREASE IN TAXES ON TOBACCO PRODUCTS.
(a) IN GENERAL.-
(1) CIGARS. -Subsection (a) of section 5701 of the Internal Revenue
Code of 1986 (relating to rate of tax on cigars) is amended-
(A) by striking "$1.125 cents per thousand (93.75 cents per
thousand on cigars removed during 1991 and 1992)" in paragraph
(1) and inserting "$5.8125 per thousand"; and
(B) by striking paragraph (2) and inserting the following new
paragraph:
(2) LARGE CIGARS. -ON CIGARS WEIGHING MORE THAN 3 POUNDS PER
THOUSAND, A TAX EQUAL TO 65.875 PERCENT OF THE PRICE FOR WHICH SOLD
BUT NOT MORE THAN $155 PER THOUSAND.'
(2) CIGARETTES.-Subsection (b) of section 5701 of such Code
(relating to rate of tax on cigarettes) is amended-
(A) by striking "$12 per thousand ($10 per thousand on
cigarettes removed during 1991 and 1992)" in paragraph (1) and
inserting "$62 per thousand": and
(B) by striking "$25.20 per thousand ($21 per thousand on
cigarettes removed during 1991 and 1992)" in paragraph (2) and
inserting "$130.20 per thousand".
(3) CIGARETTE PAPERS.-SUBSECTION (c) OF SECTION 5701 OF SUCH CODE
(RELATING TO RATE OF TAX ON CIGARETTE PAPERS) IS AMENDED BY STRIKING
"0.75 CENT (0.625 CENT ON CIGARETTE PAPERS REMOVED DURING 1991 OR
1992)" AND INSERTING "3.875 CENTS".
(4) CIGARETTE TUBES.-SUBSECTION (D) OF SECTION 5701 OF SUCH CODE
PAGE
8
S. 598 MARCH 24, 1995 -- VERSION: 1
(RELATING TO RATE OF TAX ON CIGARETTE TUBES) IS AMENDED BY STRIKING
"1.5 CENTS (1.25 CENTS ON CIGARETTE TUBES REMOVED DURING 1991 OR
1992)" AND INSERTING "7.75 CENTS".
(5) SNUFF. -Paragraph (1) of section 5701 (e) of such Code (relating
to rate of tax on smokeless tobacco) is amended by striking "36 cents
(30 cents on snuff removed during 1991 or 1992)" and inserting
"$1.86".
(6) CHEWING TOBACCO.-Paragraph (2) of section 5701 (e) of such Code
is amended by striking "12 cents (10 cents on chewing tobacco removed
during 1991 or 1992)" and inserting "62 cents".
(7) PIPE TOBACCO.-Subsection (f) of section 5701 of such Code
(relating to rate of tax on pipe tobacco) is amended by striking
"67.5 cents (56.25 cents on chewing tobacco removed during 1991 or
1992)" and inserting "$3.4875".
(8) EFFECTIVE DATE.-The amendments made by this subsection shall
apply with respect to cigars, cigarettes, cigarette paper, cigarette
tubes, snuff, chewing tobacco, and pipe tobacco removed after
December 31, 1995.
(b) IMPOSITION OF EXCISE TAX ON MANUFACTURE OR IMPORTATION OF
ROLL-YOUR-OWN TOBACCO.-
(1) IN GENERAL.-SECTION 5701 OF THE INTERNAL REVENUE CODE OF 1986
(RELATING TO RATE OF TAX) IS AMENDED BY REDESIGNATING SUBSECTION (G)
AS SUBSECTION (H) AND BY INSERTING AFTER SUBSECTION (F) THE FOLLOWING
NEW SUBSECTION:
(G) ROLL-YOUR-OWN TOBACCO.- ROLL-YOUR-OWN TOBACCO, MANUFACTURED IN
OR IMPORTED INTO THE UNITED STATES, THERE SHALL BE IMPOSED A TAX OF $1.86
PER POUND (AND A PROPORTIONATE TAX AT THE LIKE RATE ON ALL FRACTIONAL
PARTS OF A POUND).
(2) ROLL-YOUR-OWN TOBACCO.-SECTION 5702 OF SUCH CODE (RELATING TO
DEFINITIONS) IS AMENDED BY ADDING AT THE END THE FOLLOWING NEW
SUBSECTION:
"(P) ROLL-YOUR-OWN TOBACCO.-THE TERM 'ROLL-YOUR-OWN TOBACCO' MEANS ANY
TOBACCO WHICH, BECAUSE OF ITS APPEARANCE, TYPE, PACKAGING, OR LABELING,
IS SUITABLE FOR USE AND LIKELY TO BE OFFERED TO, OR PURCHASED BY,
CONSUMERS AS TOBACCO FOR MAKING CIGARETTES."
(3) TECHNICAL AMENDMENTS.-
(A) SUBSECTION (c) OF SECTION 5702 OF SUCH CODE IS AMENDED BY
STRIKING "AND PIPE TOBACCO" AND INSERTING "PIPE TOBACCO, AND
ROLL-YOUR-OWN TOBACCO".
(B) SUBSECTION (D) OF SECTION 5702 OF SUCH CODE IS AMENDED-
(I) IN THE MATERIAL PRECEDING PARAGRAPH (1), BY STRIKING
"OR PIPE TOBACCO" AND INSERTING "PIPE TOBACCO, OR
ROLL-YOUR-OWN TOBACCO", AND
(II) BY STRIKING PARAGRAPH (1) AND INSERTING THE FOLLOWING
NEW PARAGRAPH:
"(1) A PERSON WHO PRODUCES CIGARS, CIGARETTES, SMOKELESS TOBACCO,
PIPE TOBACCO, OR ROLL-YOUR-OWN TOBACCO SOLELY FOR THE PERSON'S OWN
PERSONAL CONSUMPTION OR USE, AND".
(c) THE CHAPTER HEADING FOR CHAPTER 52 OF SUCH CODE IS AMENDED
TO READ AS FOLLOWS:
"CHAPTER 52-TOBACCO PRODUCTS AND CIGARETTE PAPERS AND TUBES".
(D) The table of chapters for subtitle E of such Code is
amended by striking the item relating to chapter 52 and inserting
the following new item:
"CHAPTER 52. Tobacco products and cigarette papers and tubes."
PAGE
9
S. 598 MARCH 24, 1995 -- VERSION: 1
(4) EFFECTIVE DATE.-
(A) IN GENERAL.-THE AMENDMENTS MADE BY THIS SUBSECTION SHALL
APPLY TO ROLL-YOUR-OWN TOBACCO REMOVED (AS DEFINED IN SECTION
5702 (P) OF THE INTERNAL REVENUE CODE OF 1986, AS ADDED BY THIS
SUBSECTION) AFTER DECEMBER 31, 1995.
(B) TRANSITIONAL RULE.-ANY PERSON WHO-
(I) ON THE DATE OF THE ENACTMENT OF THIS ACT IS ENGAGED IN
BUSINESS AS A MANUFACTURER OF ROLL-YOUR-OWN TOBACCO OR AS AN
IMPORTER OF TOBACCO PRODUCTS OR CIGARETTE PAPERS AND TUBES,
AND
(II) BEFORE JANUARY 1. 1996, SUBMITS AN APPLICATION UNDER
SUBCHAPTER B OF CHAPTER 52 OF SUCH CODE TO ENGAGE IN SUCH
BUSINESS,
MAY, NOTWITHSTANDING SUCH SUBCHAPTER B, CONTINUE TO ENGAGE IN
SUCH BUSINESS PENDING FINAL ACTION ON SUCH APPLICATION. PENDING
SUCH FINAL ACTION, ALL PROVISIONS OF SUCH CHAPTER 52 SHALL APPLY
TO SUCH APPLICANT IN THE SAME MANNER AND TO THE SAME EXTENT AS IF
SUCH APPLICANT WERE A HOLDER OF A PERMIT UNDER SUCH CHAPTER 52 TO
ENGAGE IN SUCH BUSINESS.
(c) FLOOR STOCKS.-
(1) IMPOSITION OF TAX.-On cigars, cigarettes, cigarette paper,
cigarette tubes, snuff, chewing tobacco, and pipe tobacco
manufactured in or imported into the United States which is removed
before January 1, 1996, and held on such date for sale by any person,
there shall be imposed the following taxes:
(A) SMALL CIGARS. -On cigars, weighing not more than 3 pounds
per thousand, $4.6875 per thousand.
(B) LARGE CIGARS. -On cigars. weighing more than 3 pounds per
thousand, a tax equal to 53.125 percent of the price for which
sold, but not more than $125 per thousand.
(c) SMALL CIGARETTES.-On cigarettes, weighing not more than 3
pounds per thousand, $50 per thousand.
(D) LARGE CIGARETTES.-C cigarettes, weighing more than 3
pounds per thousand, $105 per thousand; except that, if more than
6 1/2 inches in length, they shall be taxable at the rate
prescribed for cigarettes weighing not more than 3 pounds per
thousand, counting each 2 3/4 inches, or fraction thereof, of
the length of each as one cigarette.
(E) CIGARETTE PAPERS. -ON CIGARETTE PAPERS, 3.125 CENTS FOR EACH
50 PAPERS OR FRACTIONAL PART THEREOF; EXCEPT THAT, IF CIGARETTE
PAPERS MEASURE MORE THAN 6 1/2 INCHES IN LENGTH, THEY SHALL BE
TAXABLE AT THE RATE PRESCRIBED, COUNTING EACH 2 3/4 INCHES, OR
FRACTION THEREOF, OF THE LENGTH OF EACH AS ONE CIGARETTE PAPER.
(F) CIGARETTE TUBES.-O CIGARETTE TUBES, 6.25 CENTS FOR EACH 50
TUBES OR FRACTIONAL PART THEREOF; EXCEPT THAT, IF CIGARETTE TUBES
MEASURE MORE THAN 6 1/2 INCHES IN LENGTH, THEY SHALL BE TAXABLE
AT THE RATE PRESCRIBED, COUNTING EACH 2 3/4 INCHES, OR FRACTION
THEREOF, OF THE LENGTH OF EACH AS ONE CIGARETTE TUBE.
(G) SNUFF. -On snuff, $1.50 per pound and a proportionate tax at
the like rate on all fractional parts of a pound.
(H) CHEWING TOBACCO.-O chewing tobacco, 50 cents per pound and
a proportionate tax at the like rate on all fractional parts of a
pound.
(I) PIPE TOBACCO. -On pipe tobacco, $2.8125 per pound and a
proportionate tax at the like rate on all fractional parts of a
PAGE
10
S. 598 MARCH 24, 1995 -- VERSION: 1
pound.
(2) LIABILITY FOR TAX AND METHOD OF PAYMENT.-
(A) LIABILITY FOR TAX. -A person holding cigars, cigarettes,
cigarette paper, cigarette tubes, snuff. chewing tobacco, and
pipe tobacco on January 1, 1996, to which any tax imposed by
paragraph (1) applies shall be liable for such tax.
(B) METHOD OF PAYMENT. -The tax imposed by paragraph (1) shall
be treated as a tax imposed under section 5701 of the Internal
Revenue Code of 1986 and shall be due and payable on February 15,
1996. in the same manner as the tax imposed under such section is
payable with respect to cigars, cigarettes, cigarette paper,
cigarette tubes, snuff, chewing tobacco, and pipe tobacco removed
on January 1. 1996.
(3) CIGARS, CIGARETTES, CIGARETTE PAPER. CIGARETTE TUBES, SNUFF,
CHEWING TOBACCO, AND PIPE TOBACCO. For purposes of this subsection,
the terms "cigar", "cigarette", "cigarette paper", "cigarette tubes",
"snuff", "chewing tobacco", and "pipe tobacco" shall have the meaning
given to such terms by subsections (a), (b), (e), and (g), paragraphs
(2) and (3) of subsection (n), and subsection (o) of section 5702 of
the Internal Revenue Code of 1986, respectively.
(4) EXCEPTION FOR RETAIL STOCKS The taxes imposed by paragraph (1)
shall not apply to cigars, cigarettes, cigarette paper, cigarette
tubes, snuff, chewing tobacco, and pipe tobacco in retail stocks held
on January 1, 1996, at the place where intended to be sold at retail.
(5) FOREIGN TRADE ZONES.-Notwithstanding the Act of June 18, 1934
(19 U.S.C. 81a et seq.) or any other provision of law-
(A) cigars, cigarettes, cigarette paper, cigarette tubes,
snuff, chewing tobacco, and pipe tobacco-
(1) on which taxes imposed by Federal law are determined,
or customs duties are liquidated, by a customs officer
pursuant to a request made under the first proviso of section
3(a) of the Act of June 18, 1934 (19 U.S.C. 81c(a)) before
January 1, 1996, and
(ii) which are entered into the customs territory of the
United States on or after January 1, 1996, from a foreign
trade zone, and
(B) cigars, cigarettes, cigarette paper, cigarette tubes,
snuff, chewing tobacco, and pipe tobacco which-
(1) are placed under the supervision of a customs officer
pursuant to the provisions of the second proviso of section
3(a) of the Act of June 18, 1934 (19 U.S.C. 81c (a)) before
January 1. 1996, and
(11) are entered into the customs territory of the United
States on or after January 1, 1996, from a foreign trade
zone,
shall be subject to the tax imposed by paragraph (1) and such cigars,
cigarettes, cigarette paper, cigarette tubes, snuff, chewing tobacco,
and pipe tobacco shall, for purposes of paragraph (1), be treated as
being held on January 1, 1996, for sale.
(d) ESTABLISHMENT OF TRUST FUND.-
(1) IN GENERAL. -SUBCHAPTER A OF CHAPTER 98 OF THE INTERNAL REVENUE
CODE OF 1986 (RELATING TO TRUST FUND CODE) IS AMENDED BY ADDING AT
THE END THE FOLLOWING NEW SECTION:
"SEC. 9512. TOBACCO CONVERSION TRUST FUND.
PAGE 11
S. 598 MARCH 24, 1995 -- VERSION: 1
"(a) CREATION OF TRUST FUND.-THERE IS ESTABLISHED IN THE TREASURY OF
THE UNITED STATES A TRUST FUND TO BE KNOWN AS THE TOBACCO CONVERSION
TRUST FUND' (HEREAFTER REFERRED TO IN THIS SECTION AS THE 'TRUST FUND'),
CONSISTING OF SUCH AMOUNTS AS MAY BE APPROPRIATED OR CREDITED TO THE
TRUST FUND AS PROVIDED IN THIS SECTION OR SECTION 9602(B).
(B) TRANSFERS TO TRUST FUND. THE SECRETARY SHALL TRANSFER TO THE TRUST
FUND AN AMOUNT EQUIVALENT TO 3 PERCENT OF THE NET INCREASE IN REVENUES
RECEIVED IN THE TREASURY ATTRIBUTABLE TO THE AMENDMENTS MADE TO SECTION
5701 BY SUBSECTIONS (A) AND (B) OF SECTION 2 AND THE PROVISIONS CONTAINED
IN SECTION 2(c) OF THE TOBACCO CONSUMPTION REDUCTION AND HEALTH
IMPROVEMENT ACT OF 1995, AS ESTIMATED BY THE SECRETARY.
(c) DISTRIBUTION OF AMOUNTS IN TRUST FUND.-AMOUNTS IN THE TRUST FUND
SHALL BE AVAILABLE TO THE SECRETARY OF AGRICULTURE, AS PROVIDED BY
APPROPRIATION ACTS, FOR MAKING EXPENDITURES FOR PURPOSES OF-
'(1) PROVIDING ASSISTANCE TO FARMERS IN CONVERTING FROM TOBACCO TO
OTHER CROPS AND IMPROVING THE ACCESS OF SUCH FARMERS TO MARKETS FOR
OTHER CROPS, AND
'(2) PROVIDING GRANTS OR LOANS TO COMMUNITIES. AND PERSONS INVOLVED
IN THE PRODUCTION OR MANUFACTURE OF TOBACCO OR TOBACCO PRODUCTS, TO
SUPPORT ECONOMIC DIVERSIFICATION PLANS THAT PROVIDE ECONOMIC
ALTERNATIVES TO TOBACCO TO SUCH COMMUNITIES AND PERSONS.
THE ASSISTANCE REFERRED TO IN PARAGRAPH (1) MAY INCLUDE GOVERNMENT
PURCHASE OF TOBACCO ALLOTMENTS FOR PURPOSES OF RETIRING SUCH ALLOTMENTS
FROM ALLOTMENT HOLDERS AND FARMERS WHO CHOOSE TO TERMINATE THEIR
INVOLVEMENT IN TOBACCO PRODUCTION."
(2) CLERICAL AMENDMENT. The table of sections for such subchapter A
is amended by adding at the end the following new item:
"Sec. 9512. Tobacco Conversion Trust Fund."
LOAD-DATE: March 27, 1995
PAGE
2
1ST DOCUMENT of Level 1 printed in FULL format.
FULL TEXT OF BILLS
105TH CONGRESS: 1ST SESSION
IN THE SENATE OF THE UNITED STATES
AS INTRODUCED IN THE SENATE
S. 826
1997 S. 826; 105 S. 826
<=1> Retrieve Bill Tracking Report
SYNOPSIS:
A BILL To amend the Public Health Service Act to protect the public from health
hazards caused by exposure to environmental tobacco smoke, and for other
purposes.
DATE OF INTRODUCTION: JUNE 3, 1997
DATE OF VERSION: JUNE 5, 1997 -- VERSION: 1
SPONSOR (s):
Mr. LAUTENBERG (FOR HIMSELF, MR. DURBIN, and Mr. KERRY of Massachusetts)
introduced the following bill; which was read twice and referred to the
Committee on Environment and Public Works
TEXT:
* Be it enacted by the Senate and House of Representatives of the United*
*States of America in Congress assembled,
*
SECTION 1. SHORT TITLE.
This Act may be cited as the "Smoke-Free Environment Act of 1997".
SEC. 2. SMOKE-FREE ENVIRONMENT POLICY.
The Public Health Service Act (42 U.S.C. 201 et seq.) is amended by
adding at the end the following:
"TITLE XXVIII-SMOKE-FREE ENVIRONMENTS
"SEC. 2801. SMOKE-FREE ENVIRONMENT POLICY.
"(a) POLICY REQUIRED. IN ORDER TO PROTECT CHILDREN AND ADULTS FROM
CANCER, RESPIRATORY DISEASE, HEART DISEASE, AND OTHER ADVERSE HEALTH
EFFECTS FROM BREATHING ENVIRONMENTAL TOBACCO SMOKE, THE RESPONSIBLE
ENTITY FOR EACH PUBLIC FACILITY SHALL ADOPT AND IMPLEMENT AT SUCH
FACILITY A SMOKE-FREE ENVIRONMENT POLICY WHICH MEETS THE REQUIREMENTS OF
SUBSECTION (B).
'(B) ELEMENTS OF POLICY.-EACH SMOKE-FREE ENVIRONMENT POLICY FOR A
PUBLIC FACILITY SHALL-
"(1) PROHIBIT THE SMOKING OF CIGARETTES, CIGARS, AND PIPES, AND ANY
OTHER COMBUSTION OF TOBACCO, WITHIN THE FACILITY AND ON FACILITY
PROPERTY WITHIN THE IMMEDIATE VICINITY OF THE ENTRANCE TO THE
FACILITY: AND
"(2) POST A CLEAR AND PROMINENT NOTICE OF THE SMOKING PROHIBITION
IN APPROPRIATE AND VISIBLE LOCATIONS AT THE PUBLIC FACILITY.
THE POLICY MAY PROVIDE AN EXCEPTION TO THE PROHIBITION SPECIFIED IN
PARAGRAPH (1) FOR ONE OR MORE SPECIALLY DESIGNATED SMOKING AREAS WITHIN A
PUBLIC FACILITY IF SUCH AREA OR AREAS MEET THE REQUIREMENTS OF SUBSECTION
(c).
PAGE
3
S. 826 JUNE 5, 1997 -- VERSION: 1
"(c) SPECIALLY DESIGNATED SMOKING AREAS.-A SPECIALLY DESIGNATED SMOKING
AREA MEETS THE REQUIREMENTS OF THIS SUBSECTION IF IT SATISFIES EACH OF
THE FOLLOWING CONDITIONS:
"(1) THE AREA IS VENTILATED IN ACCORDANCE WITH SPECIFICATIONS
PROMULGATED BY THE ADMINISTRATOR THAT ENSURE THAT AIR FROM THE AREA
IS DIRECTLY EXHAUSTED TO THE OUTSIDE AND DOES NOT RECIRCULATE OR
DRIFT TO OTHER AREAS WITHIN THE PUBLIC FACILITY.
'(2) NONSMOKING INDIVIDUALS DO NOT HAVE TO ENTER THE AREA FOR ANY
PURPOSE.
"(3) CHILDREN UNDER THE AGE OF 15 ARE PROHIBITED FROM ENTERING THE
AREA.
"SEC. 2802. CITIZEN ACTIONS.
"(a) IN GENERAL. -AN ACTION MAY BE BROUGHT TO ENFORCE THE REQUIREMENTS
OF THIS TITLE BY ANY AGGRIEVED PERSON, ANY STATE OR LOCAL GOVERNMENT
AGENCY, OR THE ADMINISTRATOR.
"(B) VENUE. -ANY ACTION TO ENFORCE THIS TITLE MAY BE BROUGHT IN ANY
UNITED STATES DISTRICT COURT FOR THE DISTRICT IN WHICH THE DEFENDANT
RESIDES OR IS DOING BUSINESS TO ENJOIN ANY VIOLATION OF THIS TITLE OR TO
IMPOSE A CIVIL PENALTY FOR ANY SUCH VIOLATION IN THE AMOUNT OF NOT MORE
THAN $5,000 PER DAY OF VIOLATION. THE DISTRICT COURTS SHALL HAVE
JURISDICTION, WITHOUT REGARD TO THE AMOUNT IN CONTROVERSY OR. THE
CITIZENSHIP OF THE PARTIES, TO ENFORCE THIS TITLE AND TO IMPOSE CIVIL
PENALTIES UNDER THIS TITLE.
"(c) NOTICE. -AN AGGRIEVED PERSON SHALL GIVE ANY ALLEGED VIOLATOR NOTICE
OF AT LEAST 60 DAYS PRIOR TO COMMENCING AN ACTION UNDER THIS SECTION. NO
ACTION MAY BE COMMENCED BY AN AGGRIEVED PERSON UNDER THIS SECTION IF SUCH
ALLEGED VIOLATOR COMPLIES WITH THE REQUIREMENTS OF THIS TITLE WITHIN SUCH
60-DAY PERIOD AND THEREAFTER.
"(D) COSTS.-THE COURT, IN ISSUING ANY FINAL ORDER IN ANY ACTION BROUGHT
PURSUANT TO THIS SECTION, MAY AWARD COSTS OF LITIGATION (INCLUDING
REASONABLE ATTORNEY AND EXPERT WITNESS FEES) TO ANY PREVAILING PARTY,
WHENEVER THE COURT DETERMINES SUCH AWARD IS APPROPRIATE.
"(E) PENALTIES. THE COURT IN ANY ACTION UNDER THIS SECTION TO APPLY
CIVIL PENALTIES SHALL HAVE DISCRETION TO ORDER THAT SUCH CIVIL PENALTIES
BE USED FOR PROJECTS THAT FURTHER THE POLICIES OF THIS TITLE. THE COURT
SHALL OBTAIN THE VIEW OF THE ADMINISTRATOR IN EXERCISING SUCH DISCRETION
AND SELECTING ANY SUCH PROJECTS.
"(F) DAMAGES. -NO DAMAGES OF ANY KIND, WHETHER COMPENSATORY OR PUNITIVE,
SHALL BE AWARDED IN ACTIONS BROUGHT PURSUANT TO THIS TITLE.
" (G) ISOLATED INCIDENTS. -VIOLATIONS OF THE PROHIBITION SPECIFIED IN
SECTION 2801 (B) (1) BY AN INDIVIDUAL WITHIN A PUBLIC FACILITY OR ON
FACILITY PROPERTY SHALL NOT BE CONSIDERED VIOLATIONS OF THIS TITLE ON THE
PART OF THE RESPONSIBLE ENTITY IF SUCH VIOLATIONS-
"(1) ARE ISOLATED INCIDENTS THAT ARE NOT PART OF A PATTERN OF
VIOLATIONS OF SUCH PROHIBITION: AND
"(2) ARE NOT AUTHORIZED BY THE RESPONSIBLE ENTITY.
"SEC. 2803. PREEMPTION.
"Nothing in this title shall preempt or otherwise affect any other
Federal. State or local law which provides protection from health hazards
from environmental tobacco smoke.
"SEC. 2804. REGULATIONS.
"The Administrator is authorized to promulgate such regulations as the
Administrator deems necessary to carry out this title.
"SEC. 2805. EFFECTIVE DATE.
"The requirements of this title shall take effect on the date that is 1
PAGE
4
S. 826 JUNE 5, 1997 -- VERSION: 1
year after the date of the enactment of the Smoke-Free Environment Act of
1997.
"SEC. 2806. DEFINITIONS.
"In this title:
"(1) ADMINISTRATOR.-THE TERM 'ADMINISTRATOR' MEANS THE
ADMINISTRATOR OF THE ENVIRONMENTAL PROTECTION AGENCY.
"(2) PUBLIC FACILITY. THE TERM 'PUBLIC FACILITY' MEANS ANY BUILDING
REGULARLY ENTERED BY 10 OR MORE INDIVIDUALS AT LEAST ONE DAY PER
WEEK, INCLUDING ANY SUCH BUILDING OWNED BY OR LEASED TO A FEDERAL:
STATE, OR LOCAL GOVERNMENT ENTITY. SUCH TERM SHALL NOT INCLUDE ANY
BUILDING OR PORTION THEREOF REGULARLY USED FOR RESIDENTIAL PURPOSES.
(3) RESPONSIBLE ENTITY. -THE TERM 'RESPONSIBLE ENTITY' MEANS, WITH
RESPECT TO ANY PUBLIC FACILITY. THE OWNER OF SUCH FACILITY, EXCEPT
THAT IN THE CASE OF ANY SUCH FACILITY OR PORTION THEREOF WHICH IS
LEASED, SUCH TERM MEANS THE LESSEE."
SEC. 3. PROHIBITIONS AGAINST SMOKING ON SCHEDULED FLIGHTS.
(a) IN GENERAL.-Section 41706 of title 49, United States Code, is
amended to read as follows:
"41706. Prohibitions against smoking on scheduled flights
(a) SMOKING PROHIBITION IN INTRASTATE AND INTERSTATE AIR
TRANSPORTATION. -An individual may not smoke in an aircraft on a scheduled
airline flight segment in interstate air transportation or intrastate air
transportation.
"(b) SMOKING PROHIBITION IN FOREIGN AIR TRANSPORTATION. The Secretary
of Transportation shall require all air carriers and foreign air carriers
to prohibit. on and after the 120th day following the date of the
enactment of the Smoke-Free Environment Act of 1997, smoking in any
aircraft on a scheduled airline flight segment within the United States
or between a place in the United States and a place outside the United
States.
"(c) LIMITATION ON APPLICABILITY.-With respect to an aircraft operated
by a foreign air carrier, the smoking prohibitions contained in
subsections (a) and (b) shall apply only to the passenger cabin and
lavatory of the aircraft.
"(d) REGULATIONS. The Secretary shall prescribe regulations necessary
to carry out this section."
(b) EFFECTIVE DATE.-The amendment made by subsection (a) shall take
effect on the 60th day following the date of the enactment of this Act.
PAGE 5
S. 826 JUNE 5, 1997 -- VERSION: 1
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Copyright 1997 The Baltimore Sun Company
The Baltimore Sun
March 26, 1997, Wednesday, FINAL EDITION
SECTION: LOCAL (NEWS), Pg. 5C, Assembly Digest
LENGTH: 229 words
HEADLINE: House votes to keep vehicle emissions test on voluntary basis
SOURCE: From staff reports
BODY:
Ways and Means Committee, $ 20 million would be earmarked for drug and
alcohol treatment and tobacco education, $ 5 million for crop conversion
programs for tobacco farmers and the remainder for the state's general fund.
If the tax increase is approved by the full House, it would face a chilly
LEVEL 1 - 4 OF 5 STORIES
Copyright 1996 Bangor Daily News
BANGOR DAILY NEWS (BANGOR, MAINE)
September 21, 1996 Saturday
LENGTH: 1303 words
HEADLINE: ISSUES
Forestry compact favored; governor's role supported
BYLINE: A. Jay Higgins Of the NEWS Staff
BODY:
smoke was not harmful. Nine percent were not sure.
The sample survey split again on whether the federal
government should provide crop-conversion programs and compensation
to tobacco farmers who are damaged financially by increased taxes
on cigarettes. Forty-four percent thought there should be some
consideration extended,
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LEVEL 1 - 5 OF 5 STORIES
Copyright 1996 U.S. Newswire, Inc.
U.S. Newswire
August 26, 1996
SECTION: NATIONAL DESK
LENGTH: 4654 words
HEADLINE: Transcript of White House Press Briefing by Mike McCurry
CONTACT: White House Press Office, 202-456-2100
DATELINE: WASHINGTON, Aug. 23
BODY:
help
MR. MCCURRY: Yes, there are state programs that are available that
are helping -- usually run through extension service and others -- that are
helping tobacco burly farmers make conversion to other crops. That's
principally what it is.
Q We're asking is he talking about doing something new or something
that
I have not heard. I have not heard anything on
that. My understanding is that -- there is currently federal assistance
for some of the crop conversion efforts that the states primarily run.
I Can you give us a little idea now on the President's preparation
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LEVEL 2 - 8 OF 14 STORIES
The Associated Press
The materials in the AP file were compiled by The Associated Press. These
materials may not be republished without the express written consent of The
Associated Press.
July 21, 1994, Thursday, PM cycle
SECTION: Business News
LENGTH: 631 words
HEADLINE: Agriculture Spending Bill Paves Way for Tobacco Quotas
BYLINE: By ROBERT GREENE, Associated Press Farm Writer
DATELINE: WASHINGTON
BODY:
With their beloved tobacco under assault, senators from Kentucky and North
Carolina took Western lawmakers' sacred COW hostage: low-cost grazing fees on
federal lands.
By threatening to raise grazing fees, tobacco-state lawmakers won an early
fight Wednesday in their effort to use a global trade agreement to restrict
tobacco imports.
Sen. Hank Brown, R-Colo., had proposed amending the 1995 spending bill for
the Agriculture Department to make sure tobacco growers, and not taxpayers or
other farmers, pay the cost of any import restrictions.
The amendment failed on a 63-37 vote, with help from most cattle and farm
state lawmakers. The Senate went on to approve the $ 68 billion spending bill
92-8. The bill must be reconciled with the House-passed version.
"This is the laughing stock of the country, " Brown said before the tobacco
vote. "How many people believe it makes sense to subsidize a product and then
turn around and urge them not to use it? We ought to make up our mind."
But the tobacco senators had another story. They suggested Brown cared more
about African, Asian or South American farmers than Americans, said other crops
might need similar protection in the future and said Brown was stepping onto
turf only tobacco folks could understand.
"It proves that here's an individual who has not grown up in the culture of
tobacco, has not grown up in understanding this part of our economic life, has
gone to meddling," said Sen. Wendell Ford, D-Ky.
Brown was fighting efforts to put tobacco import restrictions into another
bill - one implementing the new world trade agreement negotiated under the
General Agreement on Tariffs and Trade.
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The Associated Press, July 21, 1994
That language would let the administration to use Article 28 of GATT to set a
prohibitively high tariff on tobacco imports above a fixed quota.
Supporters are taking the GATT route because a trade dispute panel last
Friday ruled that significant portions of the domestic content law, part of the
budget-balancing bill passed last year, violated the agreement.
The law required all American-made cigarettes to contain at least 75 percent
U.S. tobacco and charged fees on tobacco imports above the 25 percent quota.
Under Article 28 of GATT, however, countries that suffer from the
restrictions can seek compensation through curtailed imports of some U.S.
products.
The Agriculture Department estimated when the domestic content bill was being
implemented that the restrictions would cost manufacturers $ 200 million in 1994
alone in higher tobacco costs.
In other amendments, the Senate:
-Approved disaster relief for farmers and other rural victims of flooding in
Alabama, Florida, and Georgia and for other 1994 crop disasters in the rest of
the country.
-Said no Agriculture Department employee may be reassigned without a hearing
because of remarks critical of department policies made while "on personal
time."
The amendment, by Sen. Dale Bumpers, D-Ark., overrode an amendment by Sen.
Jesse Helms, R-N.C., aimed at protecting an equal employment opportunity manager
who was reassigned after he criticized, in a television interview, the
department's efforts to protect homosexual rights.
The Helms amendment referred to remarks on homosexuals, while the Bumpers
amendment was not specific. Earlier, the Senate approved a Helms amendment
forbidding money to be used to promote "special rights" for homosexuals.
-Removed the 100, 000-acre cap on additions to the Wetlands Reserve Program,
which pays farmers to restore wetlands.
-Allowed the Agriculture Department to continue to consider requests by
states or counties to try alternatives to food stamps.
-Continued the controversial Market Promotion Program that critics contend
subsidizes the overseas advertising budgets of large food companies.
LANGUAGE: ENGLISH
LOAD-DATE: July 21, 1994
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LEVEL 2 - 10 OF 14 STORIES
Copyright 1993 The Economist Newspaper, Ltd.
The Economist
July 17, 1993
SECTION: World politics and current affairs; AMERICAN SURVEY; Pg. 25 (U.K.
Edition Pg. 43)
LENGTH: 731 words
HEADLINE: Tobacco;
Armageddon and Appalachia
DATELINE: BUFFALO JUNCTION, VIRGINIA
BODY:
SPEAK ill of tobacco, as Hillary Clinton has a habit of doing, and Virginia
quakes. Suggest "sin taxes" on it, and Carlton Coulter, of the Virginia
Agribusiness Council, mutters of Armageddon. Virginia is not the nation's
biggest tobacco producer it ranks fourth behind North Carolina, Kentucky and
Tennessee but no other state's history is so bound up with the golden leaf.
From the earliest days of the former colony, in the early 1600s, tobacco was
exported to England and the empire. Notes based on tobacco credits with London
merchants were, for a while, the state currency.
Tobacco is now the state's richest cash crop, generating nearly $ 196m each
year. Thousands of jobs depend on it, including 10,000 at Philip Morris's giant
cigarette factory in Richmond. In the red clay underbelly of the state, down by
the North Carolina border, tobacco farming is almost the only way of life. The
area already expects to lose the remnants of its textile industry to Mexico
under the proposed North American Free Trade Agreement. According to Kent
Hudson, a tobacco-grower-turned supplier in Mecklenburg County, "If they passed
this [tobacco] tax, it would make Southside Virginia look worse than the
Appalachia.'
"
Mr Hudson, a fourth-generation tobacco-grower, remembers how it used to be,
"My daddy had two and a half to three acres that he raised us on, and sent my
sister off for five years of college. When he died, he had money in the bank.
We did all the work ourselves. Now, to make a living, a whole lot of these
farmers have to have a half-million dollars of farm and equipment. It's all
borrowed money, too."
He overstates the case. Tobacco farming has never been easy work; but it has
its compensations. In the 1950s, a grower could count on a profit if he planted
ten to 15 acres. Nowadays, although the cost of equipment has climbed and a
farmer may need ten times as many acres to turn a profit, tobacco is still the
nation's most lucrative crop. Federal price-supports (in effect, limits on
production) make sure of that. A tobacco farmer's average gross income is
around $ 3,800 for every acre planted, against $ 101 for wheat. Instead,
American tobacco-growers are pricing themselves out of the market. Brazilian
flue-cured tobacco, for example, costs about half as much as its American
equivalent.
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The Economist, July 17, 1993
Cigarettes are taxed both by the federal government (with an excise tax of 24
cents a pack) and by the states, where the tax ranges from around 10 cents in
Massachusetts. The tobacco industry is certain that a heavy federal excise tax
the talk is of two dollars a pack would snuff out more tobacco farms, in
Virginia and elsewhere. There are already only 15,000 such farms left in
Virginia, down from 25,000 in 1980.
Virginia's towns and cities have also felt the winds of change. Petersburg,
which was besieged during the civil war, was battered again in the 1980s by the
departure of Brown & Williamson, a cigarette company, for Macon, Georgia.
Richmond, where the aroma of tobacco wafts through the city on breezy summer
days, has already seen big staff reductions at Philip Morris, and expects more
as a result of the slump in the company's share price. But tobacco is still,
for the most part, a safe bet. Although cigarette sales are falling at home,
exports are booming to make up for that.
Tobacco farmers are not short of help. The government still props up their
prices; and is likely to go on doing so, whether or not it imposes swingeing
taxes with the other hand. And the tobacco industry retains great power:
continuing, for example, to fight, with extraordinary energy and persistence,
attempts to link passive smoking to cancer. Cigarette-makers are hoping to
mobilise a national network of heavy smokers to resist a tax increase, if it
comes. But the industry can no longer count on a generally sympathetic ear in
the White House, nor on the past successes of south-eastern politicians in
keeping a massive tobacco tax at bay. They are living on borrowed time.
For proof of that, they have only to look at Virginia. The state has joined
a growing list of jurisdictions that restrict smoking in public. And this year
the governor, Douglas Wilder, vetoed a law that would have protected smokers
from "discrimination": in other words, from the growing distaste of Americans
for public lighting-up.
GRAPHIC: Graph, no caption; Picture, Just don't bring Hillary here
LANGUAGE: ENGLISH
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Copyright 1997 International Herald Tribune
International Herald Tribune
June 24, 1997, Tuesday
SECTION: News; Pg. 3
LENGTH: 800 words
HEADLINE: Sullen Tobacco Farmers: Somebody's Blowing Smoke
BYLINE: By Adam Nossiter; New York Times Service
DATELINE: LUCAMA, North Carolina
BODY:
The tobacco farmer lunged forward, his face red with anger at the latest
provocation from Washington.
'Don't get me wrong, said Billy Bass, a gold tobacco leaf swinging from
its chain around his neck. 'Tobacco is bad. I wouldn't tell it any other way.
But as long as it's legal, I'll grow it
The tobacco farmers here have long felt scorned by outsiders. Each
development in the anti-smoking wars is another blow, and in the wake of the
wide-ranging settlement announced in Washington last week, the haze of freshly
hurt pride was as palpable in eastern North Carolina as the new summer's heat.
The deal left tobacco farmers here in Wilson County, the heart of eastern
North Carolina's tobacco country, feeling like agriculture's pariahs. They do
not know if the deal will mean fewer cigarette buyers, less money for their crop
or even eventual ruin for themselves, but none of a half-dozen farmers
interviewed suggested quitting.
''It hurts my feelings, if you want to know the truth, said Donnie
Boyette, who farms 113 acres (45 hectares) near here.
The farmers' houses are surrounded by the plants, already robust and dark
green. Their ancestors grew tobacco - Mr. Bass said his family had grown tobacco
on the same land since 1741. But they are ambivalent about this lucrative crop.
Most of the farmers volunteered that they did not smoke, did not want their
children to smoke and did not want any teenagers to smoke.
They also insisted, vehemently, that they are good, hard-working citizens.
In America's tobacco wars, they said, they are at least blameless. In their
view, the crop is legal, so if there are ill effects from it, they are not
responsible.
Tobacco farmers are good people, I said Thad Sharp Jr., who lives nearby
up Highway 581 in the hamlet of Sims. 'They'd give you the shirt off their back
if you had chill bumps.
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International Herald Tribune, June 24, 1997
'We're the people that's the salt of the earth, that's paying the taxes,
said Mr. Sharp, whose 200 acres of tobacco provide 70 percent of his net
profit, though he grows soybeans, corn and tomatoes on 1,800 additional acres.
He was sitting in an air-conditioned office, saying he was grateful that
tobacco had brought him all the way there from a Depression-era boyhood.
''I'm just as good a citizen as I was yesterday, Mr. Sharp said. ''I have
no problem with my conscience.
The $360 billion deal notwithstanding, the short-term outlook for these
farmers is not all gloomy, said an agricultural economist, Blake Brown.
They are producing more tobacco than 10 years ago, and the huge export
market is helping to make up for drastic declines in domestic consumption, said
Mr. Brown, who works at North Carolina State University.
About 40 percent of flue-cured tobacco, the kind produced here, is exported.
Still, Mr. Brown said, the farmers are earning less than in the 1970s, as is
North Carolina as a whole. Tobacco was 46 percent of the state's farm income in
1964, but only 15 percent 30 years later.
To the tobacco farmers, who often refer to the crop's historic pedigree,
there is something unpatriotic about the tobacco deal.
Why, they ask, should the tobacco companies, and perhaps they, too, have to
pay for something so fundamentally American as the exercise of free choice - the
N
decision to buy a pack of cigarettes?
''I think it's legalized extortion, but that's neither here nor there, Mr.
Boyette said.
''You've got a U.S. company marketing a legal product to a public that can
buy or not buy it. You, as a free American, choose the pack of cigarettes - that
was your choice. Now, we've got to pay for your sickness?'
Mr. Bass said: ''If I was growing marijuana out here, I could understand
this. Tobacco put this country on its feet, used to have a lot of support. Now
everybody's sold it out.
LANGUAGE: ENGLISH
LOAD-DATE: June 24, 1997
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LEVEL 1 - 2 OF 50 STORIES
Copyright 1997 The Post and Courier (Charleston, SC)
The Post and Courier (Charleston, SC)
June 11, 1997, Wednesday, POST AND COURIER EDITION
SECTION: A, Pg. 17
LENGTH: 901 words
HEADLINE: Joining tobacco suit meant to protect the state's growers
BYLINE: Atty. Gen. Charles M. Condon
BODY:
South Carolina editors and reporters have spent a good deal of energy
speculating on the wisdom of South Carolina's involvement in the current suit
against the nation's tobacco manufacturers. Of necessity, some of this
speculation has been uninformed, since the negotiations have been held behind
closed doors. Fortunately, the time has come when I can clarify much of the
misunderstanding that has arisen over this issue.
Let me make three points:
First, we did not - as some have suggested - enter the suit merely to "pile
on" the tobacco industry. We were interested in protecting South Carolina
citizens, and particularly the tobacco growers who - until we filed suit - had
no voice at the table.
As a matter of fact, the position paper we submitted specifically and
exclusively addressed the plight of tobacco farmers, who neither deceived the
public about the harmful effects of smoking nor attempted to hook young people
on the habit.
Here is what we proposed:
Currently, the tobacco growers of South Carolina maintain their own
"stabilization program" by contributing to a fund that guarantees a fair market
price for their crop each year. The settling companies should wholly support
this program in the future by an annual contribution equal to what the farmers
now contribute.
The settling companies should agree to buy exclusively from American
tobacco growers until the domestic crop is exhausted. Only then should they
purchase from foreign vendors. Also, tobacco poundage should not be reduced
below the 1997 level.
One percent of the settlement should be allocated to states that produce
cigarette tobacco.
We recommended that these funds be administered by "Groups composed of
farmers and other concerned citizens" who would "develop an allocation plan for
the use of received funds. " We suggested the following formula:
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The Post and Courier (Charleston, SC), June 11, 1997
Thirty percent for basic farm development (for example, the purchase of new
equipment and other improvements), which might be disbursed in the form of
matching grants or low-interest loans.
Twenty-five percent for matching grants or low-interest loans for strategic
farm development - that is, the development of new sources of income to replace
income currently derived from tobacco farming.
Ten percent for the development of value-added enterprises off the farm - for
example, processing plants and distribution centers.
Twenty-five percent for tobacco quota retirement credits in the event the
federal government reduces the tobacco quota for farmers. Farmers could use
these credits as matching funds for basic or strategic farm development, as
outlined above.
Ten percent for administration, research and marketing. Farmers could use
this portion of the settlement to fund grants to market crops and products that
are produced locally.
A second point: The attorneys we hired will not be paid from funds that would
otherwise have gone to the state or to private citizens. Long before we entered
the suit, the tobacco companies had agreed to pay attorney's fees - and to do SO
out of funds separate from the $ 300 billion to $ 375 billion package reserved
for the settlement.
Our participation simply meant that lawyers from other states would get a
smaller slice of the separate pie and not that the state of South Carolina or
its citizens would receive less money. In effect, the companies were paying
damages plus legal expenses - a common practice in civil suits.
And third, our participation in this suit did nothing to injure the tobacco
industry. The amount the manufacturers agreed to put on the table remained
unchanged after we filed. By doing so, we simply insured that our tobacco
farmers had a voice in the negotiations and that South Carolinians got a
slightly larger piece of that substantial pie.
I believe it's important to make a distinction between the tobacco
manufacturers and the industry as a whole. The industry includes farmers as well
as companies like Philip Morris. As the negotiations developed, we got the
distinct impression that the manufacturers weren't enormously concerned with the
welfare of the farmers. So we asked to come to the table as an interested party.
When we were told that only suing states would be allowed, we sent the
manufacturers a letter, giving them one last chance to welcome us aboard. When
most refused even to respond, we sued. The choice was really theirs, not ours.
South Carolinians in general, and tobacco farmers in particular, must realize
that we are fighting a rear-guard action to protect our interests. An
overwhelming majority of the 50 states have no reason to protect either tobacco
growers or manufacturers.
As a matter of fact, some participants in these discussions would love to
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The Post and Courier (Charleston, SC), June 11, 1997
wipe out the industry completely if they could. That's why we had to be there -
to prevent a deal that would inflict significant damage on the state's economy.
Though the negotiations are still going on, we now have reason to believe
that we've made substantial progress. We fielded an experienced team to battle
for us in this high-powered arena.
They represent every section of South Carolina and both political parties.
Because of their diligence and competence, tobacco farmers now have a voice in
the discussions.
We're confident that if and when there's a settlement, the state of South
Carolina and its citizens will be among the big winners.
GRAPHIC: PHOTO; B&W mug of Condon
LOAD-DATE: June 12, 1997
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LEVEL 1 - 6 OF 50 STORIES
Copyright 1997 The Florida Times-Union
The Florida Times-Union (Jacksonville, FL)
April 7, 1997 Monday, City Edition
SECTION: NATIONAL/INTERNATIONAL; Pg. A-1
LENGTH: 1405 words
HEADLINE: New threats loom for farmers;
Tobacco growers worry about when legal smoke clears
BYLINE: Teresa Stepzinski, Times-Union staff writer
BODY:
Chase Grantham is following in his father's footsteps down a long hard row.
A frown of concentration melted into a shy smile of satisfaction Thursday as
the 8year-old Coffee County, Ga., boy placed a tobacco seedling in a hole he
punched in the rich sandy soil of the third-generation family farm.
Scrambling to his feet, Chase dashed between the freshly turned furrows to
catch up with his father, Van Grantham, as he walked the 35-acre field in the
dust behind a mechanized tobacco planter.
Grantham slowed his stride, then patted his son's shoulder as they looked for
empty spots in the furrows where the planter failed to deposit a broadleafed
sprout.
I'm not advocating smoking. I wouldn't want my children to smoke. I don't
smoke, Grantham said. 'My livelihood is farming. Tobacco is my No. 1 cash crop.
It feeds my family, pays my bills and taxes
and hopefully, it will help
ensure a better life for my children.'
Bad weather, insects and blight are old foes for Grantham and other South
Georgia family farmers whose fields are the lifeblood of the state's tobacco
industry.
But new threats loom, the farmers say.
Multiplying product liability lawsuits against cigarette manufacturers have
fostered a negative public perception of tobacco farmers, many growers and
agriculture officials say.
The latest court battle begins today in a state courtroom in Jacksonville.
Three children of a longtime smoker who died - in 1995 at age 49 are suing R.J.
Reynolds Tobacco Co., the nation's second-largest cigarette maker. The company
could be hit with a huge punitive damage award, the first in tobacco litigation.
The farmers also worry when the legal smoke clears, their children and
grandchildren will reap a bitter harvest of tighter government regulations and
dwindling tobacco prices that will force them to abandon their heritage along
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The Florida Times-Union (Jacksonville, FL) April 7, 1997 Monday,
with their land.
'We're not out to poison anybody or shorten anybody's life, said Larry
Downing, a former smoker who is a third-generation tobacco farmer in Lowndes
County.
'Smoking is a choice, an adult decision, not one for children, Downing said.
'If you choose to do it, there is the risk it will shorten your life. It is the
chance you take.'
As tobacco planting season reached its peak last week, many South Georgia
farmers kept up with the cigarette controversy through news reports when they
weren't in the fields.
'Right now, smoking is a political football, Downing said 'You have to take
all the talk with a grain of salt. Most of it is just politicians talking. It
can be depressing and frustrating if you let it get to you. STATE CASH CROP
Tobacco, farmers say, is a fragile plant susceptible to bugs and disease. It
also is a profitable crop; it makes a lot of money for a small amount of land
used, farmers say.
Tobacco was the third largest cash crop produced last year in Georgia,
following cotton and peanuts, say Georgia Department of Agriculture officials.
Georgia farmers harvested 46,000 acres of tobacco in 1996, which resulted in
a total production value of $ 205 million, said Larry E. Snipes of the Georgia
Agricultural Statistics Service.
Tobacco is not a major crop in Florida, said Bob Blankenship of the Florida
Department of Agriculture. Florida farmers devoted only 7,500 acres to tobacco
last year.
Harvesting almost 114 million pounds, Georgia ranked fifth in the nation last
year in total tobacco production following North Carolina, Kentucky, South
Carolina and Tennessee, Snipes said.
Georgia Agriculture Commissioner Tommy Irvin said virtually all of the
state's tobacco is grown on family-owned farms. Although most farmers also grow
other crops such as cotton, peanuts, corn or wheat, tobacco remains their
primary moneymaker, he said.
Most of Georgia's tobacco at least 65 to 68 percent is exported
overseas, agriculture officials said.
'Domestic consumption has leveled out over the past few years, but our
exports worldwide have increased substantially, Irvin said.
Last year was the best year for tobacco production in state history, Irvin
said.
By the end of last week, about 20 percent of the state's 1997 tobacco crop
had been planted, he said. The remainder should be planted within a week to 10
days, depending on the weather.
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The Florida Times-Union (Jacksonville, FL) April 7, 1997 Monday,
'We're off to a good start this year. If the weather holds fair and barring
insect infestation and disease, we could have another record year, Irvin
said. DEEP ROOTS
Coffee County, population 29,592, was the second-largest tobacco producer in
the state last year, according to Rick Reed, county agricultural agent.
To the southwest, Lowndes County, population 75,981, was the fourth-largest
producer in the state, said Jimmy Land, county agricultural agent.
Most farmers in the two counties can trace their roots in the land back at
least two generations, county officials said.
Downing, 53, plants 50 acres of tobacco on the farm he operates with his
51-year-old brother, Bill Downing, near Valdosta, Ga., in western Lowndes
County. The brothers also grow cotton and peanuts.
Grantham, 40, also has dedicated 50 acres to tobacco. He also grows cotton,
peanuts, wheat, corn and vegetables and raises broiler chickens on his farm
located near Douglas, Ga., in Coffee County.
Larry Downing has been farming 25 years, while Grantham has been doing it 22
years. Both were about 8 years old when they began helping their fathers in the
fields.
Downing and Grantham say they deeply love farming a highly regulated
business that often requires them to spend 12 to 14 hours a day in the fields.
Their wives and children also help with farm operations.
'I stay in because it's in my blood, Grantham said. Farming is the only
thing I've ever done. It's the only thing I enjoy doing. RISKY BUSINESS
Tobacco farming is a specialized and expensive business, Downing and Grantham
said.
'It's like a roll of the dice, Downing said. 'You live crop to crop.
The men said the money they make selling tobacco is their farms' main income.
'It gets scary when you sit down and think about it, Downing said. 'Once you
get into it, you get so much money invested in the equipment and plants that the
only way you get out is if the banker sells you out or you die.
A tobacco combine costs a minimum of $ 90,000 to $ 100,000; a barn runs $
15,000 to $ 20,000 to build; an irrigation system costs at least $ 25,000, not
to mention a water pump, which costs about $ 15,000, Downing said.
'Most of the equipment is so specialized that it can't be used for anything
but tobacco farming, Downing said.
Tobacco seedlings cost about $ 23 per 1,000; many farms use about 7,000 per
acre, Grantham said.
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The Florida Times-Union (Jacksonville, FL) April 7, 1997 Monday,
Grantham also said property taxes, wages and insurance for hired farm workers
also take a sizable chunk out of the farm budget.
'One bad year, and you can lose everything, he said. 'If I lose my tobacco
crop, it affects me for years down the road. But if I lose my income from
tobacco, I'd probably have to quit farming.
Many farmers have decided the gamble is not worth the risk, Downing said.
'Twenty years ago, everybody living along our road farmed or rented out their
land for farming. There were about 25 other farms beside ours. Now there are
only three besides us left farming, Downing said.
Farmers aren't the only losers when a tobacco crop fails, said Land, Lowndes
County's agricultural agent. Businesses in the community such as groceries, gas
stations and shops also feel the pinch, he said. 'The farmer's taxes help keep
our schools open and roads paved. UNCERTAIN FUTURE
Chase Grantham wants to be a farmer.
'I want to be out here. I like being with my daddy, he said.
Chase and his 5-year-old brother, Chan, have ridden with their father in his
tractor since they were toddlers.
'My father didn't want me to follow in his footsteps. He wanted me to get a
college degree and have a better life,' Grantham said. 'But I have no regrets.
I've always loved farming.
Grantham said he hopes his sons will take over the farm when he retires.
Downing plans to remain in farming, although he admits he sometimes thinks
about quitting. He also said that he would not encourage his 25-year-old son,
Kevin, or 23-year-old daughter, Melinda, to take up farming, but will support
whatever choice they make.
'There are a lot better and easier ways to make a living, Downing said.
GRAPHIC: Staff Chart: (b/w) 1996 GEORGIA TOBACCO CROP
Total acres harvested: 46,000.
Yield: 2,470 pounds per acre
Total yield harvested: 113,620,000 pounds.
Price per pound: $ 1.81.
Total value of production: $ 205 million. Source: Georgia Agricultural
Statistics Service Jetta Fraser/staff Photos: (c) 1. Van Grantham (left) digs a
hole so that his 8-year-old son, Chase, can plant a tobacco seedling. 'I'm not
advocating smoking. I wouldn't want my children to smoke. I don't smoke,
Grantham said. 'my livelihood is farming. 2. Van Grantham, holding a tobacco
plant, has dedicated 50 acres to tobacco. He also grows cotton, peanuts, wheat,
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The Florida Times-Union (Jacksonville, FL) April 7, 1997 Monday,
corn and vegetables. 3. With one person operating the tractor, four others
plant tobacco for Van Grantham in Coffee County, Ga.
Illustration: Chart; Photo
LANGUAGE: ENGLISH
LOAD-DATE: April 08, 1997
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Page 12
LEVEL 1 - 8 OF 50 STORIES
Copyright 1996 The News and Observer
The News and Observer (Raleigh, NC)
August 16, 1996 Friday, FINAL EDITION
SECTION: EDITORIAL/OPINION; Pg. A20
LENGTH: 273 words
HEADLINE: Tobacco realities
BODY:
According to the Journal of the American Medical Association, North Carolina
and five other major tobacco-growing states would lose about 300, 000 jobs if
Americans stopped smoking. Restrictions proposed by the Food and Drug
Administration would discourage consumption or eliminate tobacco use altogether.
The AMA, EPA, and other agencies will not rest until all the tobacco farmers
in North Carolina, Kentucky, South Carolina, Virginia, Tennessee and Georgia are
deprived of their legal livelihood. Prohibition of the use of tobacco will be
about as successful as the prohibition of alcohol was some 60 years ago.
Tobacco today is being increasingly grown overseas and exported to this
country in competition with domestic growers. This foreign supply would
ultimately replace all U.S. tobacco now being grown. Southern farmers would be
forced to the unemployment and welfare rolls.
There is no single legal crop that would produce as much revenue per acre as
tobacco. The suggestion that tobacco farmers could and should grow alternate
crops is ridiculous.
Of course tobacco is addictive. Nearly everyone recognizes this fact except
the tobacco company owners who were made to look like idiots before a
congressional committee hearing. Is it the intent of the federal government to
outlaw all legal addictive products? What about alcohol, caffeine and chocolate?
Why just tobacco?
There are warnings on all tobacco products. If people choose to smoke and
their choice does not offend nonsmokers, then they should be allowed to do SO
with no governmental interference and no public condemnation.
###
BEN GRANTHAM
Carrboro
LANGUAGE: ENGLISH
LOAD-DATE: March 9, 1997
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LEVEL 1 - 10 OF 50 STORIES
Copyright 1996 The Journal of Commerce, Inc.
Journal of Commerce
July 5, 1996, Friday
SECTION: EDITORIAL, Pg. 7A
LENGTH: 829 words
HEADLINE: LIMITED FREEDOM TO FARM
BYLINE: DENNIS T. AVERY
DATELINE: CHURCHVILLE, Va.
BODY:
Freedom to Farm, the legislation signed into law earlier this year, is the
most sweeping change in U.S. farm programs in 60 years. It has freed U.S.
farmers from the old acreage allotments, and just in time to help meet growing
food and meat demand in the Pacific Rim countries.
But even this historic reform hasn't given our farmers all the ''freedom to
farm'' they will need. The so-called minor crops - peanuts, sugar and tobacco -
were left out of the new farm bill. Farmers still need federal ''licenses'' to
grow and market these crops.
So, unfortunately, the United States still has trade barriers in place to
protect these minor crops and their subsidies. There are tight controls on
imports of peanuts and sugar to protect domestic prices and a
government-sponsored cartel for tobacco growers.
Those trade barriers could wreck the effort to get international farm trade
liberalized under the World Trade Organization.
Densely populated countries such as India and China are using our farm trade
barriers to justify their farm import barriers and their pursuit of expensive
food self-sufficiency. Without WTO farm trade reform, the rest of the United
States' vast agriculture infrastructure will stew in its own rising
productivity.
For years, the U.S. peanut program has discouraged both domestic peanut
consumption and exports. Production was deliberately limited to satisfy only the
highest-priced existing markets. U.S. food use of peanuts has dropped 10 percent
since 1990, snack food peanut use has dropped 31 percent, and peanut butter (the
biggest chunk of the market) has fallen 19 percent.
Peanut exports have been an afterthought. But in countries like India, where
people don't eat much meat, peanut butter should be a natural addition to their
diets. The potential for Asian peanut product exports is huge, and U.S. peanut
growers have a quality edge - the world's lowest levels of aflatoxin, a potent
natural carcinogen produced by a mold.
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Journal of Commerce July 5, 1996, Friday
Now, the peanut program is forcing its own growers to commit economic
suicide. The Uruguay Round trade agreement requires the United States to permit
the import of at least 3 percent of our consumption of any food, including
peanuts. The peanut law requires the quota to be cut back each year by the
amount of the imports.
How many years will it be before the shrinking U.S. peanut quota will mandate
that all our peanuts be imported?
For decades, the federal government also has tried to aid the small farmers
who produce tobacco. But today a government tobacco program simply draws
additional fire from anti-smoking activists. In addition, the paradox of rising
health care costs and government support for the tobacco industry may soon
produce a negative backlash among voters.
Ironically, the Asian tobacco market is booming. In China alone, cigarette
sales have tripled to 1.7 billion pieces per year. If the world's farm trade
rules were liberalized, U.S. farmers would be able to help supply whatever level
of tobacco Asia chooses to consume.
American tobacco is regarded as the best in the world. There's no need for
federally sponsored payments to tobacco growers and certainly no need for a
government-sponsored tobacco-growers cartel.
And then there's the U.S. sugar program, which has locked the country into
high sugar prices. Corn sweeteners have taken more than half the market and all
the market growth. That's why all of our soft drinks and most of our canned and
frozen foods are now sweetened with high-fructose corn sweetener instead of
sugar. (If you really want classic Coke, buy it in Canada.)
U.S. beet sugar producers are planting less acreage than they did 20 years
ago, and are nervously awaiting a dry high-fructose product that would take cake
mixes and the rest of the market. However, they farm some of the world's best
cropland and could earn high returns selling grain and meat to Indonesia and
China if farm trade were liberalized.
The future of U.S. cane sugar production is largely tied to the Everglades
and the question of whether cane sugar production is or is not destroying the
Everglades' ecosystem.
The real problem: Minor crops subsidies, which offer questionable benefits to
a few thousand farmers, could block the future for the rest of American
agriculture.
Agriculture, and the industries related to it, employ nearly 20 percent of
the U.S. work force. With free trade, those industries should become the
nation's fastest-growing job creators. Without free farm trade, they will
shrivel and decline even if the world does add another 3 billion affluent
consumers.
The growers of peanuts, tobacco and sugar must be cut loose from their
federal subsidies for the sake of millions of rural Americans and the nation's
trade balance.
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Journal of Commerce July 5, 1996, Friday
However, they should get reasonable buyouts of their investment in acreage
allotments. They should also find lucrative earnings in a world market that is
set to multiply its farming demands.
EDITOR-NOTE:
Dennis T. Avery is editor of the Global Food Quarterly, published by
LANGUAGE: ENGLISH
LOAD-DATE: December 13, 1996
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LEVEL 1 - 14 OF 50 STORIES
Copyright 1996 The New York Times Company
The New York Times
May 30, 1996, Thursday, Late Edition - Final
SECTION: Section D; Page 1; Column 2; Business/Financial Desk
LENGTH: 1685 words
HEADLINE: On Tobacco Road, A Generation Gap;
Young Farmers Are Questioning The Future of a Lucrative Crop
BYLINE: By GLENN COLLINS
DATELINE: BROWNS SUMMIT, N.C.
BODY:
Luke Lambeth eyed the neat rows of tobacco shoots on his 150-acre farm and
ventured an up-to-the-minute assessment of job security on Tobacco Road. "This
life was a lot more stable for my grandfather," he said. "But now you have to
think ahead. Because you just don't know how long the tobacco is going to go." II
To be sure, the rangy, 32-year-old Mr. Lambeth, a third-generation tobacco
farmer, is optimistic about 1996. Despite a late start after a harsh winter and
a wet spring, he hopes to have a good crop and fetch an equally good price.
But "you never know when your livelihood won't be there, II he said. "That's
my worry. Because I owe everything I own to tobacco.'
Tobacco farmers have often been stereotyped as a monolithic group. But there
are deep, generational divisions in tobacco country, where farmers have recently
transplanted seedlings from their greenhouse beds into rows in the ground.
The older farmers in this tradition-rich industry seem able to shrug off the
assaults on the $45-billion-a-year domestic tobacco business the intense
regulatory scrutiny; the threat posed by cheap tobacco from Brazil and Africa;
the attacks by lawyers and health groups, Congress and the White House.
Younger farmers, though, are more concerned than ever that their way of life
is coming to an end and with it the fast-vanishing family-farm ethos that was
a cornerstone of the rural South.
"There is a generation gap, " said Ferrell Guillory, a fellow at MDC Inc., a
nonprofit economic development research company in Chapel Hill, N.C. It is the
younger farmers, he said, who "are going to have to manage the transition to the
future. "
The dismissal last week of a giant class action lawsuit that threatened the
solvency of cigarette companies barely lightened the load. "We don't hear much
good news, so that court case is an encouragement, Mr. Lambeth said. "But it's
not going to make any difference to us growers. The companies will still only
pay us a nickel a pack for our tobacco. "
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The New York Times, May 30, 1996
That kind of skepticism is just one of the traits that distinguishes the
younger generation. According to the first national study of tobacco farmers,
younger and older farmers hold quite different views about the long-term
uncertainties of tobacco, the need to diversify their crops, and the
trustworthiness of American cigarette manufacturers.
The generation gap is especially apparent here in the state that grows
two-thirds of the nation's flue-cured tobacco, the heat-dried, golden-hued
"bright leaf" that is the aromatic heart of American cigarettes.
Younger farmers in North Carolina "view tobacco as a way of life that may not
continue, but they want to stay in it as long as they can," said Rick Apple, 38,
who grows 100 acres of tobacco with his father.
But older farmers take a less fatalistic view. "There has been some fight or
other about tobacco all my life, and I'm not about to throw in the towel, "said
Bruce L. Flye, at 63 a third-generation farmer in Battleboro, N.C. Mr. Flye
makes half his income from 85 acres of tobacco and the rest from 1, 115 acres of
cotton, corn and peanuts. "Tobacco has been here since the 1600's and will
continue to be, " he said.
"But younger farmers are really concerned," said Mr. Flye, president of the
Flue-Cured Tobacco Cooperative Stabilization Corporation, a grower-supported
group that helps administer the Federal quota program that prevents
boom-and-bust price swings for growers. "The young ones have more anxiety. Their
future is at stake. "
Indeed, about two-thirds of tobacco farmers under 45 say they have undertaken
money-making ventures to supplement tobacco growing, according to the tobacco
study, conducted by the Bowman Gray School of Medicine at Wake Forest University
in Winston-Salem, and the Center for Sustainable Systems in Berea, Ky., a
nonprofit organization that studies rural development.
The study, of 992 farmers in six states, was completed last fall. The ages of
those surveyed ranged from 20 to 70, and a quarter were under 50.
"I have learned that there is life after tobacco, said Mr. Apple, whose
ancestors began tobacco farming in the 1700's. Breaking with tradition in 1980,
Mr. Apple began growing flowers and ornamental trees in a single greenhouse,
grossing $4,000. Now, along with his tobacco, Mr. Apple and 20 year-round
employees grow flowers and ornamentals in 30 greenhouses and on 12 acres. His
thriving garden center, A & A Plants Inc. in Browns Summit, had 1995 sales of
$1.2 million.
According to the study, almost twice as many younger farmers as older ones
have increased their income from crops like flowers and ornamentals in the last
five years. Indeed, tobacco farmers are supplementing their income with
everything from alfalfa-growing to chicken-raising and hog-farming.
But Richard Jenks, whose family has been tobacco farming "since the beginning
of time, was one of the older farmers who insisted that diversification was no
panacea.
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The New York Times, May 30, 1996
"We have about 10 acres of strawberries in our community,' Mr. Jenks said of
Apex, N.C., where the 59-year-old farmer grows 16 acres of tobacco. "But if
everyone starts planting, you won't be able to give those strawberries away. "
He added, "Tobacco, it's the only thing pays the bills.' Farmers' profits
last year amounted to as much as $1,000 an acre for tobacco, far more than crops
like corn ($150 an acre), soybeans ($100) or peanuts ($300).
As a state, North Carolina is far ahead of its tobacco farmers: it long ago
diversified and enjoys a 4 percent unemployment rate despite the loss of
thousands of tobacco- and textile-related jobs. As recently as 1964, tobacco was
a keystone of the economy, accounting for 46 percent of the state's cash farm
income. By 1994, that had declined to 15 percent.
Despite that decline, tobacco pumps about $1 billion a year into North
Carolina's economy. Farmers here still call it the golden leaf, a single,
high-value crop that keeps them on the farm.
But "tobacco is in a slow-motion decline," said Mr. Guillory, the economic
development researcher. Despite near-record profits for cigarette makers, the
tobacco sector of the farm economy continues to shrink along with domestic
cigarette consumption. Nationwide, 674 million acres were planted in 1995, down
10 percent from 1993.
"If farmers knew the international realities, they'd want to get out of the
business, " said Dr. David G. Altman, an associate professor at Bowman Gray who
helped conduct the study of farmer attitudes. "They are living in the past, and
the floor is going to drop out beneath them.
That prospect might cheer the growing anti-tobacco forces in a nation where,
by Food and Drug Administration estimates, smoking causes 420,000 premature
deaths a year. Anti-smoking groups have excoriated them, but tobacco farmers,
young and old alike, are overwhelmingly united in wanting to carry on their
agricultural heritage.
"It is a legal crop, " said Steve Troxler, a 44-year-old farmer who grows 110
acres of tobacco in Browns Summit. "Yet people call us names, they label us
pushers. That upsets me more than anything else, because tobacco was a thing of
pride. The government gets a lot from tobacco taxes, and tobacco produces plenty
of employment."
He added: "The attacks on us are based on ignorance and hypocrisy. They don't
know who we are. They don't know how hard we work. Tobacco farmers are the
pillars of the community. This is the greatest life style in the world for
raising kids and keeping a family together." "
Still, the study found that younger farmers are more willing than their
elders to acknowledge smoking's risks: 64 percent of the farmers under 45 agreed
that smoking is harmful, versus just 47 percent of the farmers over 65.
Nor is their intergenerational agreement among the farmers about the good
will of America's cigarette makers. These days, the study found, older farmers
like Mr. Flye are more likely to be sympathetic. They "supported us, buying the
surplus, he said, referring to a crisis in 1994, when the companies agreed to
buy hundreds of millions of pounds of surplus tobacco that had accumulated under
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The New York Times, May 30, 1996
the Federal price stabilization program, which celebrates its 50th anniversary
June 1.
But 80 percent of the farmers said the purchase of foreign tobacco by
American manufacturers was a grave threat to their future, and younger farmers
are more outspoken on the subject. Mr. Apple, a former president of the North
Carolina Tobacco Growers Association, called the companies' actions "shameful."
He added: "They continually raise their wholesale prices, but they have told
the growers to lower their prices. They gave Brazil and Zimbabwe the
technological know-how to produce better tobacco because it will increase the
supply and lower the price."
Mr. Lambeth, whose license-plate holder reads "Tobacco Pays My Bills, " went
further: "The companies want to keep us where we barely get by. The only time
they go down on their knees to us is when they want us to go to Washington. And
that's not right."
The companies are used to criticism from farmers. "Sometimes growers are mad
at us, but we are all in this thing together," said Nat Walker, a spokesman for
the R. J. Reynolds Tobacco Company. He spoke of the growers' and manufacturers'
"interdependence, and cited the company's $1 billion investment in its modern
Tobaccoville plant near Winston-Salem as evidence of the company's commitment to
North Carolina. Tobacco companies, however, "have to be competitive offshore,
and price has an impact on that. "
For now, once again, as tobacco reaches toward the North Carolina sun, the
future seems only as long as a season. Mr. Troxler, when asked about what lies
ahead, is wary. "In all probability this summer will be too something," he said.
"Too hot. Or too wet. Or too dry. Or too cold. Because something always comes
along. "
But Mr. Flye, when asked to prognosticate, summoned up the optimism of his
years. Tobacco "is a weed, a golden weed," he said, in a phrase certain to
dismay the tobacco critics, "and weeds are hard to kill."
GRAPHIC: Photo: Luke Lambeth, 32, a tobacco farmer from Browns Summit, N.C.,
whose license-plate holder reads "Tobacco Pays My Bills, worries about his
farm's future and is critical of cigarette manufacturers. (Rob Amberg/Impact
Visuals for The New York Times) (pg. D1)
Graph: "Different Outlooks"
A study found that younger tobacco farmers hold more negative views of their
industry than do their elders. Graph outlines some of the survey's questions and
responses. (Sources: Bowman Gray School of Medicine, Wake Forest University;
Center for Sustainable Systems, Berea, Ky.) (pg. D1)
Map/Graph: "A Declining Industry" tracks U.S. share of worldwide tobacco
production from 1970 through 1995. Map shows areas in the U.S. where tobacco is
farmed. (Source: Department of Agriculture) (pg. D4)
LANGUAGE: ENGLISH
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LEVEL 1 - 22 OF 50 STORIES
Copyright 1995 The Dayton Daily News
The Dayton Daily News
August 26, 1995, SATURDAY, CITY EDITION
SECTION: NEWS, Pg. 9A
LENGTH: 301 words
HEADLINE: RIPLEY CELEBRATES WITH TOBACCO FEST
BODY:
RIPLEY (AP) - In this Ohio River tobacco farming town, they are celebrating
the regional economic virtues of their product. Fifty miles to the northwest,
Cincinnati health authorities are touting smoking bans in many buildings.
The annual tobacco festival in this village of 1,800 people hit full stride
Friday with a parade, the same event that last year featured chain-smoking
Cincinnati Reds owner Marge Schott as grand marshal. The four-day festival,
which began Thursday, attracts about 50,000 people each year, village tax
collector Kim Pfeffer said Friday.
More than 60 percent of the 19 million pounds of tobacco grown in Ohio each
year is harvested in Brown County and neighboring Adams County. Without tobacco,
both counties would lose up to 35 percent of their annual income, said John
Grimes, Brown County agricultural extension agent.
I don't think the average person understands the economic importance of
this, said Grimes, whose family has grown tobacco for years. Farmers don't
see themselves as drug pushers. To them, it's just a cash crop.
Tobacco remains a profitable crop, despite a steady decline in the domestic
cigarette market. The average income per acre of tobacco is about $ 4,600,
compared with $ 250 per acre of corn.
In 1986, Cincinnati enacted one of the first municipal health ordinances
restricting smoking in most public places. It prompted protests.
But since then, many businesses have embraced the concept and banned smoking
within their premises, city Health Commissioner Malcolm Adcock said.
Opponents predicted smoking restrictions would prompt businesses to move
elsewhere, but that did not happen, Adcock said.
The law provided a $ 100 fine for a first violation and up to a 90-day jail
term for second and subsequent offenses.
LOAD-DATE: August 28, 1995
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LEVEL 1 - 24 OF 50 STORIES
Copyright 1995 The Durham Herald Co.
The Herald-Sun (Durham, N.C.)
July 16, 1995, Sunday
SECTION: Durham; Pg. B1
LENGTH: 974 words
HEADLINE: Drying leaf smells like money Growers say blue mold may cut yield of
this year's crop
BYLINE: MARK TOSCZAK The Herald-Sun
BODY:
OXFORD The sweet scent of burley tobacco wafted from the piles of dried
leaves laid out in rows from one end of the Farmers Warehouse to the other.
"That's the smell of money, II said Roy Crews, a semiretired tobacco farmer and
warehouse operator.
Crews, whose sons Jimmy and Sam now handle the bulk of the work in the
family's fields and warehouse, estimated that more than 100 tons of dried
tobacco sit in the warehouse, ready for the annual auctions that begin
Wednesday. All of the leaf now there is surplus left over from last year. As
it's sold, farmers will haul in more.
About 8,000 acres of tobacco are cultivated in Granville County, said
Agricultural Extension Agent Tommy Brooks. It is by far the most important
agricultural product in the county.
Over the next few months those acres will be harvested, dried in barns and
carted to one of four warehouses around Oxford to be sold to tobacco companies
in warehouse auctions.
Heavy rains in June damaged tobacco crops in many parts of the state and
provided ideal conditions for hostile fungi such as blue mold and target spot.
"Our yields probably will be off a little bit, Brooks said. "It just depends
on the roll of the dice."
Granville County farmers have been relatively fortunate. "I think we're in
the best area [for tobacco] / Crews said.
Brooks expects blue mold to cut yields by 1 percent to 2 percent from what
they would have been without the fungus, and target spot to cut them by 4
percent to 5 percent. Brooks and farmers say that if the weather doesn't get too
hot and too rainy, tobacco crops will be average for most farmers. A few have
been hit hard by the water and by fungal infections, while others will have
above-average yields. "Some growers weren't able to harvest the lower leaves as
early as they needed to," said farmer Danny Williams. In addition to about 125
acres of tobacco, Williams also grows wheat.
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The Herald-Sun (Durham, N.C.), July 16, 1995
He doesn't expect much profit from grain this year, but he's optimistic about
his tobacco. "We're looking to have a pretty good year, he said.
"We've still got the potential for some crops to be as good or better than
last year, " Williams said. "On our heavier clay land we've still got a real good
crop. "
A just-right mix of sunshine and rain showers is vital for maximum yield.
"We're about to get to the point where we could stand another shower, Brooks
said.
Though farmers have started harvesting their crops, they will continue until
the end of the summer. The weather for the next several weeks is as critical as
the weather over the past several.
Like many Granville farmers, Williams also has leaf left over from last year.
"Demand should be real strong for that old [tobacco] I call it our '94
model."
Last year's harvest produced large amounts of high-quality tobacco, the best
the county has seen in several years. It's just the kind of tobacco foreign
markets crave.
"The new crop of tobacco is probably going to lean more toward the domestic
market, " Williams said.
The piles of dried tobacco, loosely wrapped in burlap, that fill the Crews
family's Farmers Warehouse weigh from 150 to 250 pounds apiece. Depending on its
quality and manufacturers' needs, the tobacco will fetch between $ 1.40 and $
1.80 per pound, Crews said.
Only a portion of the tobacco stored in the warehouse will be sold on any
given sale day. Wednesday's opening day sale at the Farmers Warehouse will begin
at 1 p.m. It will be the third tobacco sale of the day in Granville County.
N.C. warehouse owners get a 2. 5-percent commission on all sales made. That
rate hasn't changed for a long time.
"Basically since 1800, a warehouse auction's been the same," Crews said. The
Farmers Warehouse has been owned by the Crews family for six years but was built
sometime in the 1940s, as best Crews can recall. Of course, the tobacco used to
arrive in horse-drawn carriages instead of on the backs of trucks, and the
political climate for tobacco was friendlier.
Attacks from politicians and health care groups, and the taxes imposed on
tobacco, worry those who make their living from the leaf but not too much.
"It's the backbone of agriculture here in this state," Williams said. "I feel
like the mood of the whole country was expressed last November."
Williams likes the Republican Congress' anti-regulation efforts. "I think
we've got folks in office now who are more realistic,' he said.
Crews lays attacks on tobacco at the feet of politicians. "I think the whole
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The Herald-Sun (Durham, N.C.), July 16, 1995
thing is a few people in Washington who want to get their name in front of
people, " he said.
Signs of loyalty to the golden leaf abound in Granville County from the
"Pride in Tobacco" signs that dot mailboxes and barns to the annual Tobacco
Heritage Celebration coming up Tuesday. Even the Granville County Chamber of
Commerce's monthly newsletter is called "Bright Leaf."
On the wall of the warehouse, above the U.S. Department of Agriculture poster
warning against sexual harassment, is a metal sign provided by the now-defunct
Tobacco Growers Information Committee. Written with a felt-tip marker is a
number that Crews points out to a visitor: $ 2,494,183.
That's the amount of excise taxes that will stream from the tobacco that will
be sold in the Farmers Warehouse Wednesday. Farmers, Crews said, will net about
$ 200,000 from that same sale.
Sitting on a pile of golden-brown leaves, puffing on a cigarette in the hot,
still air of the warehouse, Crews admits that attitudes about tobacco aren't the
same as they once were.
"There'll be changes, " he said. But he also raised his two sons on tobacco
money, and they are raising their families on the same. The golden leaf has been
good to Crews, and his allegiance to it is strong.
"As long as there's a country there's going to be tobacco, " he said.
LOAD-DATE: July 18, 1995
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LEVEL 1 - 27 OF 50 STORIES
Copyright 1995 News World Communications, Inc.
The Washington Times
April 24, 1995, Monday, Final Edition
SECTION: Part NATIONAL & WORLD AFFAIRS; NATION: REGULATION; Pg. 14
LENGTH: 2497 words
HEADLINE: Feds and Smokers Fume Over the Right to Inhale
BYLINE: Hank Cox; INSIGHT
BODY:
SUMMARY: The billion-dollar tobacco industry has taken some tough hits
recently from Congress and the medical community, among others. But would
smoking prohibitions really be good for the country's health?
TEXT: In February, Cindy Gilmer flew from Starkville, Miss., to the nation's
capital to testify before the Occupational Safety and Health Administration.
The experience, she said later, was a "real eye-opener.'
Gilmer owns and operates a billiards hall, the sort of establishment in
which smoking is de rigueur. OSHA wants to outlaw smoking in the workplace,
including restaurants and pool rooms. "You can't just throw a blanket over
business and treat us all the same, says Gilmer. "A lot of us do not need, and
certainly cannot afford, to spend $10,000 on a separate smoking room. It just
doesn't make any sense. "
Even as the Clinton administration championed a hefty 75-cents-per-pack tax
increase on cigarettes to fund health care reform, Congress was publicly
chastising tobacco executives. Last April, Rep. Henry Waxman, a Democrat from
California and then-chairman of the Energy and Commerce subcommittee on health
and the environment, seemed to revel in the role of righteous avenger as he
grilled the heads of the six leading tobacco companies. The antismoking drive
had kicked into overdrive.
In February 1994, for example, McDonald's Corp. banned smoking in all of
its 11,000 restaurants, prompting other restaurant chains to follow suit.
Within days, the Department of Defense imposed a worldwide ban on smoking at
military bases. The same month, the Food and Drug Administration began to
consider classifying nicotine as a regulated drug.
The antismoking lobby and the tobacco industry was headed for a major
legislative showdown when the November election ushered in a conservative
landslide, ceding control of key House committees to Republicans, who are less
interested in regulating behavior by legislative fiat. "The biggest setback was
an end to the investigation," an aide to Waxman tells Insight. "The tobacco
industry had agreed to surrender all internal documents relating to health
effects. Now we'll never see them. "
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The Washington Times, April 24, 1995
The recent shift in tobacco's fortunes in Congress was not reflected on
state and local levels, however. During the last 10 years, the number of
local governments restricting smoking has increased from 45 to more than 600.
Even anarchic New York City has adopted a comprehensive smoking ordinance that
goes into effect this month, for the first time extending smoking restrictions
to outdoor areas such as parks and stadiums. "This is where the rest of the
world is going,' explained Mayor Rudolph Giuliani.
Meanwhile, California withstood an assault on its antismoking law.
Proposition 188, heavily backed by the tobacco industry during the November
election, would have overturned not only the state measure but local antismoking
ordinances as well. "Even though Philip Morris outspent the opposition
20-to-1," says Cathy Leonard, who works for the State Assembly's Committee on
Labor and Employment, "Proposition 188 got less than 29 percent of the vote.
Most recently, Maryland has instituted one of the most comprehensive
antismoking ordinances in the nation. State health officials had proposed a ban
on smoking not only in office buildings, but also in bars, restaurants and
convention centers, although Democratic Gov. Parris Glendening has led a
compromise effort to allow smoking in bars. At any rate, the Maryland
antismoking measure will be the first instituted not by legislators or voters,
but by bureaucrats. "Both parties support restrictions on smoking, says Peter
Fisher of the Coalition on Smoking or Health, a Washington organization that
educates policymakers on tobacco-control topics. "It is a bipartisan issue."
Indeed, cigarette manufacturers, tobacco farmers and smokers are losing the
war as well as the battles over smoking. According to the Centers for Disease
Control and Prevention, the number of American adults who smoke has decreased by
almost half during the last 30 years, from a little more than 42 percent of the
population in 1965 to about 25 percent today. Nevertheless, while health
officials hope to eradicate smoking altogether, they face formidable financial
reality.
Tobacco is a major agricultural crop in the United States, especially in the
Southeast, with total farm sales of $2.8 billion in 1993. That year, the major
tobacco companies grossed $50 billion from domestic sales and another $5.7
billion in foreign sales, reporting more than $5 billion in net profits.
Perhaps more importantly, excise taxes collected on tobacco products, mainly
cigarettes, exceed $13 billion annually, or more than four times the total value
of tobacco products raised on the farm. That money supports many government
programs. According to a 1992 study by Price Waterhouse, the tobacco industry
accounts for more than 680, 000 jobs.
In addition, members of Congress, despite their public stands on smoking,
are not adverse to tobacco money. According to Common Cause magazine, 73
percent of senators accepted campaign contributions from tobacco companies
between 1989 and 1994; 66 percent of congressmen took tobacco money in the last
House election. Critics claim this "tainted" money extracts a far bigger price
on society. According to the Department of Health and Human Services,
tobacco-related illness costs society $50 billion annually.
While few people deny the hazards of smoking, some researchers claim that
the risks are exaggerated and social costs inflated. A 1991 study by the Rand
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The Washington Times, April 24, 1995
Corp. put the net external cost of cigarette smoking at 33 cents per pack;
since existing federal, state and local taxes on cigarettes total more than 50
cents per pack, smokers more than pay their own way.
The impact of tobacco on the nation's economy becomes even more smoky when
Social Security and other pension programs are factored in. John Shoven, an
economist at Stanford University, estimates that the 26 billion packs of
cigarettes smoked in 1989 shortened smokers' lives by 3 million years, and that
their premature deaths saved $20,000 per smoker in Social Security benefits
alone. The Congressional Research Service, in a report issued March 8, 1994,
observed that "smokers' early deaths leave their Social Security and pension
contributions unused and available to reduce future financing demands on
nonsmokers. "
More controversial still is the issue of secondary smoke. The Environmental
Protection Agency in 1993 claimed secondary smoke was responsible for up to
3,000 cases of lung cancer annually. But the EPA report has been challenged by
a diverse array of credible scientists. EPA performed no original research but
relied instead on a survey of 30 other studies, of which only six discerned a
statistically significant (but small) effect of secondary smoke on nonsmokers.
Of the remaining 24 studies, six actually showed a reduced incidence of illness
among those exposed to secondary smoke.
While the Clinton administration and major federal agencies target tobacco
for strict regulation, other branches of the national government continue their
long-established tradition of supporting prices and allotting production quotas.
The Tobacco Institute insists tobacco is not subsidized; strictly speaking, it
isn't. But the Rube Goldberg scheme that controls tobacco production, a
holdover from the New Deal of the 1930s, is wildly out of step with the
free-market agenda now dominant in Congress.
Only people who own "quotas" can legally grow and sell tobacco, and quotas
are passed along from generation to generation. A large number of people who
inherited tobacco quotas do not actually grow any crop. Currently, there are
380,000 quota holders but only 100,000 tobacco farmers - those farmers pay the
quota holders a fee for use.
Tobacco farmers are guaranteed minimum prices through price supports in
exchange for limiting production. Most of these subsidy costs are paid by
producers and purchasers through market assessments. (Administrative costs of
about $15 million a year are borne by taxpayers.) The sum effect: The price of
tobacco stays higher than it would in a free market, while excessive supplies of
the crop accumulate in warehouses.
As foreign nations stepped up competition and made it more difficult for the
United States to maintain artificially inflated price levels, the domestic
tobacco industry lobbied Congress to limit imports of foreign tobacco. Since
1993, any U.S. cigarette maker who uses more than 25 percent of foreign tobacco
must pay a penalty. Foreign producers naturally complain that price supports
violate the General Agreement on Tariffs and Trade, created specifically to
discourage arbitrary barriers to imports and exports. Industry experts worry
that when Congress is forced to address this problem, it simply will eliminate
price supports.
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The Washington Times, April 24, 1995
But federal bureaucracies promote and defend tobacco exports overseas. In
recent years, the U.S. trade representative has helped gain access for U.S.
tobacco exports to Japan, Taiwan, Thailand and South Korea. China is the
biggest plum of all, offering a market of 300 million smokers. In 1992, the
United States persuaded China to begin opening its market to cigarettes and
several other products by threatening to impose 300 percent tariffs on almost $4
billion worth of Chinese imports.
The Clinton administration has set up an interagency task force to review
policy on tobacco exports. According to spokesman Chris Marcich, the goal is to
ensure that health concerns raised by foreign nations about U.S. cigarettes are
not a ruse to protect their domestic brands from U.S. competition. "We expect
our trading partners to live up to their agreements, Marcich says. "Just as we
expect foreign cigarette makers selling their product here to apply warning
labels, we will honor their health-related requirements and restrictions."
Perhaps the greatest threat to the tobacco industry emanates not from
Congress, state and local governments or even foreign competitors, but from
courts of law. During the last four decades, the tobacco industry has attracted
more than 300 lawsuits attempting to establish liability for smoking-related
illnesses, thus far without success. But 1994 brought an avalanche of
litigation, possibly stimulated by stepped-up antismoking activity elsewhere,
and several states have joined the fray.
Minnesota, along with Blue Cross / Blue Shield of Minnesota and the law firm
of Robins, Kaplan, Miller & Ciresi, is suing the Big Six tobacco companies. The
lawsuit differs from others, however; the team is focusing not on the hazardous
products sold by tobacco companies, "Florida's taxpayers consistently have to
make withdrawals from their wallets to pay for the carnage,' says Florida Gov.
Lawton Chiles.
Most ambitious yet: A federal judge in New Orleans cleared the way for a
gigantic, nationwide class-action suit by a consortium of 60 law firms on behalf
of 100 million smokers and former smokers.
According to Michael Pertschuk, codirector of the Advocacy Institute in
Washington, tobacco companies spend more than $600 million on legal fees
annually, and the figure is rising. Increasingly, the industry is taking the
offensive. Philip Morris filed a $10 billion suit last year against ABC News
after a network program accused the company of adding nicotine to its product to
keep smokers addicted. Last summer, several tobacco companies sued the EPA over
its report about secondary tobacco smoke.
One further concern has been raised by the new chairman of the House Energy
and Commerce subcommittee on health and the environment. "The antismoking
people say they don't really want a ban,' Rep. Thomas J. Bliley, a Republican
from Virginia, tells Insight. "But that would be the logical result of what
they are doing. If federal agencies should ban smoking, and the lawyers put the
tobacco companies out of business, the result will be a thriving black market on
top of the existing black market for illegal drugs. What will be the impact of
that on this country? They don't think about that."
PUFFING THROUGH THE AGES
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The Washington Times, April 24, 1995
The first people to savor tobacco smoke - like the first to eat Chesapeake
Bay blue crabs - are lost to history. All that is known for certain is that
some Indian tribes in what is now Virginia and the Carolinas were fond of
tobacco when the first colonists arrived, and before long the tobacco leaf was
making inroads in Europe along with more practical commodities such as potatoes,
tomatoes and corn.
Even in those days, attitudes toward tobacco were decidedly mixed. Many
enjoyed it. Sir Walter Raleigh had a smoke to calm his nerves on the way to the
scaffold. But King James I of England described tobacco as "loathsome to the
eye, hateful to the nose, harmful to the brain, dangerous to the lungs. " Pope
Innocent X excommunicated smokers. None of these injunctions was particularly
effective. Today there are an estimated 1 billion smokers around the globe.
In the modern world, media advertising helped portray smoking as a sign of
sophistication or masculinity, depending on the target audience. By the 1950s,
cigarette ads were a staple of the new television industry, and celebrities -
including future President Ronald Reagan - gladly accepted money to endorse
cigarettes. To the extent health concerns were a factor, it was in advertising
campaigns that suggested doctors preferred certain brands over others. One
memorable pitch suggested women would do their health a favor by reaching for a
cigarette instead of candy.
A few lonely voices, such as the editors of Reader's Digest, issued bleak
warnings about the potential side effects of smoking, but without credible
scientific backing they had modest impact on consumer habits. Conscientious
parents issued vague cautions to their children that smoking would stunt their
growth, a claim generally greeted with ridicule.
The warnings gained credence in 1964 when Surgeon General Luther Terry first
branded cigarettes a threat to public health and Congress required warning
labels to be printed on each pack. By that time, the statistical link between
heavy cigarette smoking and a variety of illnesses - including lung cancer,
cardiovascular disease and emphysema - was irrefutable. In particular, the
once-rare disease of lung cancer had become common, a phenomenon largely
attributable to smoking. In response to growing public pressure, cigarette ads
were banned from television and replaced with public-service antismoking
messages.
GRAPHIC: Photo (color), They may be pariahs, but smokers pay for their
pleasure., By Kozak for Insight
LANGUAGE: ENGLISH
LOAD-DATE: May 24, 1995
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LEVEL 1 - 31 OF 50 STORIES
Copyright 1995 The Denver Post Corporation
The Denver Post
February 26, 1995 Sunday 2D EDITION
SECTION: PERSPECTIVE; Pg. D-03
LENGTH: 747 words
HEADLINE: Must all proposals be modest?
BYLINE: Jack Kisling
BODY:
Right now, while Congress and most state legislatures are getting tougher on
crime, would be a good time for them to get tougher on tobacco by outlawing it.
Well, maybe not pipes and cigars and snoose. Pipe smokers are harmless cranks
and there aren't enough of them to be a public menace. Cigar smokers are rich
guys and snuff dippers are kids and oafs. It wouldn't be smart to persecute the
rich, the harmless or the oafish.
But there are still plenty of cigarette smokers left, and criminalizing them
is an idea whose time has come. Again.
The first time it came was in the early 1890s, and from then to about 1920 no
fewer than 15 states banned the sale of cigarettes, which shows that some
Americans never know when they're well off.
At the height of the first war against cigarettes, most of these no-smoking
states were in the West and Midwest. The last outpost of decency was Kansas,
which repealed cigarette prohibition in 1927.
Now it is time to reinstate it nationwide, and this time, no more Mr. Nice
Guy. Along with sale, ban use and possession. Felonize.
Admittedly, this would cause some problems, but none would be insurmountable.
If cigarettes were outlawed, the gnomes of the tobacco industry would have
kittens, but they would calm down pretty fast if they were offered a tobacco
alternative with equally good growth potential. This could be done by legalizing
drugs that are illegal now and turning their production and marketing over to
the former tobacco companies.
This would be good for several reasons. Decriminalizing currently banned
drugs would relieve crowding in the nation's prisons, but not too soon. By the
time prisons now being built are ready for use, the growing ranks of cigarette
felons would ensure that the cells wouldn't go to waste. The current prison
population is about 1 out of every 145 Americans; this should hold up after the
transition or maybe even improve, which would be nice because the more Americans
we imprison, the more who won't smoke.
Criminalizing cigarettes would be good for business, too. By allowing tobacco
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The Denver Post, February 26, 1995 Sunday
merchants to take production of opium, cocaine and marijuana out of the hands of
foreigners, it would come to America where it belongs.
Domestic tobacco farmers would be happy to switch from tobacco to these other
crops, provided they still get their $ 275 million annually in government price
supports for growing tobacco. This could be done without disturbing the status
quo, and the subsidy would stimulate the stoop-labor job market, improving the
national employment picture.
In practice, making illegal drugs legal and legal drugs illegal would be so
easy that all but the people who can't set their clocks for Daylight Saving Time
would be able to make the switch without getting counseling, and the national
economy needn't falter at all.
The vast army of drug pushers, for instance, could switch to smokes with no
loss of jobs or need for retraining, and the vast army of DEA agents who now
hound them could keep right on hounding them without having to learn any new
tricks.
With overseas smuggling defunct, all those narcs who now patrol the
coastlines could be shifted to the borders of tobacco-producing states, where,
instead of having to shoot down airplanes and capture speedboats, the drug
agents would only have to chase cars, and SO should be able to kill more people
for less money than they now spend.
As always happens when the government decides to improve the health and
morals of its citizens by enforcing good conduct, some critics will attack the
Cigarette Amendment. They will say that two decades of hunting down and jailing
dope fiends, at the cost of untold millions of dollars, shows no sign of
stamping out or even containing the illicit drug epidemic, which kills far fewer
Americans annually than cigarette smoking. Citing this danger, they hammer
constantly at the idea of legalizing marijuana.
They're playing right into our hands. When we legalize marijuana they won't
have a leg to stand on. Using their argument about killer drugs, we will outlaw
cigarettes because they are worse than crack, smack and pot and because we can't
just let things slide.
When the war on cigarettes gets up to speed, America will be a lot safer
place, but it still won't be perfect, because there will still be sidestream
smoke from Canada and Mexico. Maybe we could install big fans.
Jack Kisling's observations on life run every Tuesday, Thursday and Sunday
LOAD-DATE: February 25, 1995
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LEVEL 1 - 35 OF 50 STORIES
Copyright 1994 News & Record (Greensboro, NC)
News & Record (Greensboro, NC)
October 11, 1994, Tuesday, ALL EDITIONS
SECTION: BUSINESS, Pg. B5
LENGTH: 336 words
HEADLINE: KENTUCKIAN OPPOSES QUOTA BUY-OUT PLAN
BYLINE: SCOTT SOLOMO, Staff Writer
BODY:
The question of whether to end the federal government's tobacco price support
was given a resounding ''no'' Monday by U.S. Rep. Scotty Baesler of Kentucky,
who said the program is too important to his state's rural economy.
Baesler said he opposes a proposal by U.S. Rep. Charlie Rose, a Fayetteville
Democrat, to pay growers $ 7.50 a pound to give up their federally-assigned
tobacco quotas.
Rose's buy-out proposal may be well-suited for flue-cured tobacco growers in
North Carolina, Baesler said, but it fails to take into account the many burley
farmers in Kentucky who rent quotas from someone else.
In addition, he said, it would devastate feed stores, fertilizer stores and
other businesses that support tobacco farmers.
If you do away with the program then you're basically doing away with
tobacco production as we know it here, said Baesler, a Democrat who attended a
meeting on the issue in Charlotte last week.
think that would be a tremendous hit on our rural economy.
Support by Kentucky lawmakers is considered critical to the proposal's
success.
Burley tobacco is an $ 800-million-a-year business in Kentucky, said Baesler,
who himself will grow 150,000 pounds this year.
Under Rose's plan, those farmers would be ''out in the cold, Baesler said.
Rose has suggested paying for the buyout, which would amount to about $
16,000 an acre, with an increase in the federal cigarette tax. In North Carolina
the estimated cost of such a plan is $ 4.1 billion, while nationwide it could
cost $ 10 billion.
Rose said he proposed phasing out the price-support system as a way to
invigorate sales of domestic tobacco and give farmers a financial incentive to
convert to other crops.
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Under the price-support system, the government establishes quotas, and
co-ops, with loans from the federal government, buy tobacco that does not
receive a bid at auction.
''I don't think on its face it will accomplish what (Rose) wants it to
accomplish, Baesler said of the plan.
LOAD-DATE: October 13, 1994
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LEVEL 1 - 44 OF 50 STORIES
Copyright 1993 The San Diego Union-Tribune
The San Diego Union-Tribune
March 28, 1993, Sunday
SECTION: BUSINESS; Ed. 1,2; Pg. I-2
LENGTH: 958 words
HEADLINE: Future of tobacco going up in smoke;
Industry
BYLINE: Fek; DALLAS MORNING NEWS
BODY:
For the people who depend on tobacco for their livelihood, these are
troubling times.
As talk swirls in Washington of a new assault on smoking, tobacco workers
fear for the survival of the farms and factories that pay their bills.
"It looks like it's a losing battle, said Leroy Whitfield, 62, who farms 35
acres of tobacco. "We're being hemmed in from all sides taxes and health
concerns and new laws. If
The Clinton administration is said to be considering increasing the 24-cent
federal cigarette tax to as high as $2 a pack to pay for health-care reforms.
Earlier this year, the Environmental Protection Agency blamed second-hand smoke
for causing 3,000 cases of lung cancer a year.
And, in a step heavy with symbolism, First Lady Hillary Rodham Clinton banned
smoking in the White House.
"The climate is one that causes great concern to the farmer and manufacturer
alike, " said Thomas Lauria, a spokesman for the Tobacco Institute, the
industry's lobbying group. "With talk of excise taxes and smoking bans, all
combined with the EPA report, that has people alarmed."
The tobacco industry thrives. Profits are up. Overseas sales are
increasing.
But if tobacco once was king, its kingdom has shrunk.
Grown by Indians, traded by colonists and smoked by generations of Americans,
tobacco today is losing its once-widespread acceptance in society. The number
of U.S. smokers is dropping 3 percent a year. Health experts say smoking causes
434,000 deaths a year and $65 billion in annual health-care costs.
Nowhere is tobacco's heritage felt more strongly than in North Carolina. It
is home to 40,000 of the country's 62,000 growers of flue-cured tobacco, the
primary ingredient in cigarettes. "Everyone knows someone who's in tobacco.' "
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The San Diego Union-Tribune, March 28, 1993
North Carolina lawmakers support the industry, with Sen. Jesse Helms
particularly renowned for his fervor. The state's nickel-a-pack cigarette tax is
among the nation's lowest, compared to 41 cents in Texas and 51 cents in
Massachusetts, the highest.
The levy is SO low that many tourists stock up on cigarettes. On Interstate
95, the warehouse-style J R Tobacco of America is a popular stop.
"Just a second ago, I rang up an order for $1,000," said cashier Sarah Jones,
22. "He was from New York, and he had a whole list of friends and relatives to
buy for. "
For people who oppose smoking, tobacco is a killer. For supporters, it's a
legal product whose harmful effects are questionable.
For the people who grow tobacco, it is a way of life.
They realize that the crop they tend 16 hours a day from April to July is
likened to poison. But many feel bound to a tradition that their
great-grandparents started a hundred years before the words "cancer" or "heart
disease" or "emphysema" appeared on cigarette boxes.
"I know the rest of the country and people right here among us look at the
growers as a real villain supplying a product that quote, unquote kills people,"
said Rick Apple, 35, a fifth-generation tobacco farmer in Brown Summit.
"What I'm saying from my end of it is, I went to the tobacco patch when I was
2 weeks old, and I've been there ever since, 11 Apple said. "I grew up with it.
My family's made a living from it. That's all we've ever done."
The economics of tobacco hardly sway its opponents.
Smoking, these critics say, must stop. And that means that tobacco farmers
like the slave traders and buffalo hunters before them must find a way to
make money that does not harm others, they say.
"There's another side to the tobacco industry's profit margin on this
product, 11 said Joe Marx, a spokesman for The Coalition on Smoking OR Health in
Washington, a joint project of the American Heart Association, Lung Association
and Cancer Society. "That's the death, disease and health-care bills that every
taxpayer foots. II
President Clinton cited such concerns when he confirmed last month that he
might seek higher cigarette taxes to finance his health-care plans. spending a
ton of money in private insurance and in government tax payments to deal with
the health-care problems, occasioned by bad health habits and particularly
smoking, which is costing us a lot of money," the president said.
Dr. Adam Goldstein, a family physician in Chapel Hill active in anti-smoking
efforts, said he empathizes with the tobacco workers who want to continue making
a living.
"Just as the patient is addicted to tobacco and you understand that addiction
and you try to get them off of it, the state is addicted to the economics of
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The San Diego Union-Tribune, March 28, 1993
tobacco, " Goldstein said.
The answer, tobacco's foes say, lies in growing something else.
Most tobacco farmers raise other crops as well. Jerry West, president of the
state's Tobacco Growers Association, grows tobacco on only 85 acres of his
1,000-acre farm. The rest of his land is given over to cotton, soybean, corn
and wheat crops.
But the money is in tobacco. His sliver of land in tobacco gives him most of
his profits.
"Tobacco is the most profitable cash crop we have in North Carolina, 11 said
William Foster, an agricultural economist at North Carolina State University.
Farmers also find hope in the growing overseas market, although U.S.
tobacco's expensive price could hamper exports.
"The domestic market is shrinking at an average of 10 billion cigarettes a
year, and the international market is growing at 100 billion a year, II said
farmer Buzz Shackelford, 42, of Hookerton.
Many people who work in tobacco factories worry about job security. Attacks
on smoking make them angry.
"I just wish people would leave the tobacco industry alone, II said Debra
Dervie, 38, a 13-year employee at R.J. Reynolds Tobacco Co. 's plant in
Winston-Salem.
GRAPHIC: 2 CHARTS - 2 GRAPHS 1,2. UP IN SMOKE - U.S. cigarette consumption
continues
LOAD-DATE: October 21, 1996
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LEVEL 1 - 46 OF 50 STORIES
Copyright 1993 The New York Times Company
The New York Times
March 22, 1993, Monday, Late Edition - Final
Correction Appended
SECTION: Section A; Page 1; Column 1; National Desk
LENGTH: 1649 words
HEADLINE: Tobacco Country Is Quaking Over Cigarette Tax Proposal
BYLINE: By RONALD SMOTHERS, Special to The New York Times
DATELINE: BURGAW, N.C.
BODY:
The farmers of tobacco country wear worried expressions these days.
Their concern is not their harvest prospects or even the campaigns of
anti-smoking groups, whose efforts they have weathered for years. Instead, this
time the adversary perceived by the farmers, as well as the tobacco industry's
manufacturers and brokers, is a far more potent one: the Clinton Administration.
At issue is the big cigarette-tax increase that the Administration will
apparently propose within weeks to help finance the national health-care
overhaul undertaken by Hillary Rodham Clinton, one of whose earliest acts as
First Lady was to ban smoking in the White House.
20 Cents a Smoke
President Clinton himself has strongly suggested that he will ask Congress
for the increase, and some of his advisers have acknowledged that it might be SO
large as to bring the Federal tax on cigarettes to a total of $2 a pack, a rise
of more than 700 percent over its current level of 24 cents.
To consumers, that would mean a price well above $4 a pack in some states,
and the tobacco industry has already done the math: at 20 cigarettes a pack,
many smokers would be faced with an expense of more than 20 cents every time
they light up. And that is why tobacco people are worried as never before about
the prospect of an ever steeper decline in Americans' cigarette smoking, which
has already headed steadily downward in recent years.
Here in this southeastern North Carolina town, Larry Wooten, one of the
nation's 62,000 tobacco farmers, summed up the sentiment among growers by
saying: "It's a bit like trying to tell your troubles to people. Ninety percent
of them listen and don't care, and the other 10 percent are glad you have them.
I'm not gloom and doom yet, but I am concerned and understand that this has
serious implications. 11
Just outside Burgaw, another tobacco farmer, Gene Lanier, walked among row
after row of plastic-covered seedlings that were almost ready for spring
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The New York Times, March 22, 1993
planting. "I'm not sleeping much at night, II he said. "I've heard these threats
before, but not to this extent. "
The Politics of Tobacco
In the past, the tobacco lobby and Federal lawmakers from the
tobacco-growing states of the Southeast have always been able to fend off the
notion of imposing enormous taxes on cigarettes as a way of discouraging
smoking.
But now a new wind is blowing. First, the new tax proposal is to be tied to a
program for which the public has long been clamoring: a vast revision in the
nation's health-care system. Second, and perhaps just as important, the
tax-increase idea this time is being advanced not solely by anti-smoking groups
or a few scattered legislators but by the White House itself, where in the past
the tobacco industry could usually count on a largely sympathetic hearing.
As a result, it is far from clear that the industry and its allies in
Congress would be able to muster sufficient strength to even trim back a
proposal for a big tax increase, much less kill it, particularly if the details
of the Administration's overall health-care legislation meet with public
approval.
"When it is coming out of the White House, it's going to have a lot more
impact, 11 said Kirk Wayne, president of the Tobacco Associates, a growers' group
based in Washington. "The climate is different from in the past. It's more
serious. It has more impetus. "
Resistance by the Industry
The industry is already mobilizing. Cigarette makers, for instance, are
appealing to a network of perhaps five million "confirmed smokers" across the
country, people whose names are maintained on the industry's mailing lists.
"We have had a telephone program in the last weeks reaching out to our
customers who are interested in fighting this, said John Boltz, manager of
media affairs for the Philip Morris Companies. "We are encouraging them to
contact their Congressmen. We are setting up mechanisms to help them better
express their feelings.
Similarly, Federal lawmakers from the tobacco states have been meeting among
themselves to plot strategy, and they have appealed for help from Howard Paster,
the Administration's liaison with Congress.
But their task has not been made any easier by what many people see as the
compelling logic behind the tax-increase idea: that any new national health-care
system should be financed, at least in part, by high taxes on a product that is
almost universally seen as one of the nation's leading health menaces.
'Scaring Us to Death'
"In the past, the Reagan and Bush Administrations were pretty reasonable
about taxing tobacco, said Representative Charlie Rose, the North Carolina
Democrat who heads the House Agriculture Subcommittee on Peanuts and Tobacco.
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The New York Times, March 22, 1993
"But I think all of us who represent tobacco states knew that the growing
concern about smoking and health was going to someday lead to this type of
attitude and reaction in the White House. This talk of $2 a pack is scaring us
to death, and that's putting it mildly."
Indeed, among some of the tobacco-state lawmakers there is already a sense of
the inevitable: The hit is coming; the only question now is how badly it will
hurt.
In a recent interview, Mr. Rose, whose efforts on behalf of the industry have
earned him the nickname Mr. Tobacco, indicated that he and his Southeastern
colleagues might be prepared to offer a concession that would have been
unthinkable not long ago: a doubling of the tax, to 48 cents a pack, as
tobacco's contribution to health care.
The Stakes Rise
As a result of the Federal budget deal that President George Bush struck
with Congress in the fall of 1990, the Government's tax on cigarettes has
already risen by 50 percent in little more than two years to 20 cents on Jan.
1, 1991, from 16 cents, and to 24 cents two months ago. But that 50 percent was
only pennies; this time the stakes are far higher.
The Federal tax is in addition to the states' own cigarette taxes, which vary
widely (to a high of the 51 cents imposed by Massachusetts). And although
cigarette prices within a given state frequently fluctuate from city to city and
even from one retail shop to another, the industry's figures suggest that a $2
Federal tax would mean average prices at the counter ranging from $3.43 a pack,
in Kentucky, to $4.21, in Hawaii.
The benefit to the Government would be substantial. Even allowing for a
decline in smoking that would result from prices like those, estimates are that
annual Federal revenue from cigarette sales might approach $30 billion, a
fivefold increase over the level projected for the current fiscal year. With the
Administration's health-care strategy still being developed, it is unclear how
large a share of any new health system would be financed by such a sum.
What is clear is that farmers like Mr. Wooten and Mr. Lanier, and the
cigarette manufacturers that buy up most of the nation's annual crop of 1.3
billion pounds of tobacco, see a $2 tax as a particularly onerous threat to
hasten a trend in which the number of cigarettes smoked by Americans dropped to
510 billion in 1991, from 640 billion a decade earlier.
A Very Profitable Industry
To be sure, nobody is yet crying poverty for the tobacco industry, all but a
tiny percentage of whose $47-billion-a-year domestic market is attributable to
cigarette sales.
Partly because of a Government price-support program whose roots date from
the Depression, tobacco is by far the nation's most profitable crop, the high
cost of growing it notwithstanding. According to the United States Department of
Agriculture, farmers earned gross average income of $3,862 for every acre of
tobacco planted in 1991, compared with $691 for peanuts, $380 for cotton, $262
for feed corn and $101 for wheat. And most tobacco farmers are small farmers.
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The figures for the manufacturers, four of which now control 95 percent of
the American cigarette market, are even more impressive. David Tice, a
Dallas-based investment analyst, says that the tobacco operations of those four
highly diversified companies Philip Morris, RJR Nabisco, American Brands
and the Loews Corporation, parent of Lorillard Inc. brought a 115 percent
pre-tax return on investment in 1991. That is an operating profit of $11
billion.
Further, the manufacturers' profits have been rising even during this era of
progressively less cigarette smoking by Americans. That has been achieved by a
rapid rise in cigarette exports and by the manufacturers' domestic price
increases, which have been averaging 10 percent a year.
But a $2 Federal tax would probably change the profit picture entirely, since
the manufacturers would be severely limited in their ability to continue
imposing increases on top of prices that most consumers, even those who chose to
keep smoking, would already consider unreasonable.
In a Word, 'Ludicrous'
And if demand fell badly while retail prices stagnated, the manufacturers
would be ever more inclined to increase their imports of relatively cheap
foreign tobacco, a practice that is already a source of growing friction between
cigarette makers and American tobacco farmers. The downward pressure on prices
paid to the farmers would cut heavily into their livelihood and might overwhelm
the Federal price-support program.
All of which is why Mr. Lanier, walking his seedling-covered plots near here
the other day, had just one word for the idea of a $2 tax: "Ludicrous."
One of the last best hopes for the industry is that the details of the
Administration's health-care plan will prove SO unpopular, or so unwieldy, that
it will be unable to get through Congress, allowing cigarettes to escape
unscathed.
"It's a nice, cozy-sounding idea, II Brennan Dawson, a vice president of the
industry's Tobacco Institute, said of the linkage between cigarette taxes and
health care. "But we won't know for sure until we see a proposal.'
CORRECTION-DATE: March 24, 1993, Wednesday
CORRECTION:
A map on Monday showing state excise tax rates for cigarettes misstated the
rate in Massachusetts. It is 51 cents a pack.
GRAPHIC: Photo: "I'm not sleeping much at night, " said Gene Lanier, a tobacco
farmer near Burgaw, N.C., when asked about proposed new cigarette taxes. (The'
N. Pham for The New York Times) (pg. A1)
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The New York Times, March 22, 1993
Map/Graph: "Cigarettes: Rising Taxes, Slower Consumption" shows state-by-state
cigarette excise tax in cents per pack of 20. State cigarette tax is in addition
to the 26-cent Federal cigarette tax. Cigarette consumption in the United States
is tracked since 1920. (Sources: The Tobacco Institute, Agriculture Department)
(pg. A14)
LANGUAGE: ENGLISH
LOAD-DATE: March 22, 1993
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LEVEL 1 - 49 OF 50 STORIES
Copyright 1992 Reuters
The Reuter Library Report
April 29, 1992, Wednesday, BC cycle
LENGTH: 732 words
HEADLINE: TOBACCO GROWERS SAY SWITCH TO OTHER CROPS UNLIKELY
BYLINE: By Robert Evans
DATELINE: GENEVA, April 29
BODY:
World tobacco growers, countering a campaign by health and anti-smoking
organisations for farmers to switch to other crops, argued on Wednesday that
such a change could only add to social problems in developing countries.
And in a report based on a special study of four producer states, the
International Tobacco Growers' Association (ITGA) said there was little present
prospect of successful crop substitution anywhere in the world.
The ITGA said the study surveying Zimbabwe, Malawi, the United States and
Canada showed ''that rapid and widespread substitution of tobacco production
is neither possible nor desirable from an economic or social standpoint
The report, 'Tobacco Farming: Sustainable Alternatives?'" written by British
agricultural economist David Patchett, says alternatives were either far less
profitable or would involve large investment in new infra-structures.
Either prospect was unthinkable for most of the world's 33 million tobacco
farmers, many of them operating small family businesses that in developing
countries make a major contribution to their national economies, the report
argues.
David Walder, the Association's chief executive, told a Geneva news
conference the ITGA had commissioned the report ''to try to bring a degree of
objectivity into the debate on tobacco farming and its future.
Anti-tobacco campaigners, he said, believed that the farmers ''as if by
waving a magic wand could readily switch to other crops and thereby hasten the
dawning of a tobacco-free future.
Walder, also a Briton, rejected suggestions the Association was driven more
by the wish to maintain a tobacco market than to defend the interests of small
farmers in the developing world.
"We do not need to take defensive measures, we are in a rising market, he
said, referring to a United Nations Food and Agriculture Organisation report
projecting an annual increase of two per cent in tobacco consumption to the year
2000.
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The ITGA, founded in 1984 as the world-wide anti-smoking campaign backed by
the World Health Organisation (WHO) was well under way, links growers in
Argentina, Brazil, Canada, Malawi, the United States and Zimbabwe.
Several other African and Asian states as well as Italy, a major European
producer, are associate members.
The report argues that tobacco growing and processing in developing countries
is a vital element in the economy, spreading benefits throughout the population
by providing jobs and precious foreign exchange through exports.
For a large number of people in the developing world, tobacco farming
provides them with the means of living their lives with some dignity, I Walder
told the news conference.
The report said that in Zimbabwe, the world's fourth-largest tobacco
exporter, tobacco production occupies eight per cent of the work force and
provides 58 per cent of agricultural exports. In Malawi, it accounted for 70 per
cent of all exports.
In both countries, the only possible alternatives were fruit, vegetables and
cut flowers, it said. But these substitutes in the two land-locked states
required rapid and reliable transport, which was not available.
In contrast tobacco, as a high-value but reliatively low-volume crop, was
able to bear the high transport costs.
Even if transport facilities were improved, the report said, the initial
investment required for a switch to horticultural crops and the need to acquire
new skills would preclude all but a handful of farmers from changing.
The report said farmers in the United States, the world's major exporter and
second producer, were deterred from switching to tomatoes and similar crops that
could be more profitable by fears that the extra production could push down
prices.
'Additionally, farmers would have to write off a considerable amount of
investment in highly specialised machinery given the less labour-intensive
nature of tobacco production in North America, the report declared.
In Canada, it said, wide-scale substitution was possible driven by
declining domestic consumption of tobacco and the rising costs and climatic
disadvantages of production there.
But where farmers had dropped tobacco, they had largely replaced it with
staple field crops, and some efforts to switch to high-value alternatives had
failed because of problems linked to the creation of an infrastructure for
totally new crops.
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MEMORANDUM
TO: TOM FREEDMAN, MARY L. SMITH
FROM: DREW HANSEN
RE: ASSISTANCE FOR TOBACCO FARMERS
DATE: JULY 10, 1997
SUMMARY
There seem to be four possible policy options for the assistance of tobacco farmers: limiting
the use of foreign tobacco in US-produced cigarettes, financial compensation for tobacco
farmers, "buying out" the quotas of tobacco farmers, and providing assistance for crop
diversification.
1. LIMITING FOREIGN TOBACCO IN U.S. CIGARETTES
In 1993, Senator Wendell H. Ford and Representative Charles Rose inserted a provision into
the budget mandating that American-made cigarettes had to contain at least 75% American-
grown tobacco. Industry negotiator J. Phil Carlton has indicated that he is willing to talk
about a guarantee that cigarette makers will use a certain amount of domestic tobacco. (1993
New York Times article attached)
2. FINANCIAL COMPENSATION FOR TOBACCO FARMERS
Mr. Carlton has also suggested that the tobacco industry might be willing to consider paying
for tobacco crop insurance and the tobacco price-support program's administrative costs if
Congress cuts off the funding. (July 4, 1997 AP article attached)
3. QUOTA BUYOUTS
In 1994, Rep. Rose introduced a bill that would have paid tobacco farmers $7.50/lb to give
up their federally assigned quotas. Rep. Rose said that the price-support system should be
phased out as a way to invigorate sales of domestic tobacco and give farmers a financial
incentive to convert to other crops. (1994 News and Record (Greensboro, NC) article
attached)
4. ASSISTANCE FOR CROP DIVERSIFICATION
S.598 on 3-22-95 and S.804 on 5-15-95, both introduced by Sen. Bradley, would have
created a "Tobacco Conversion Trust Fund," supported with revenue from tobacco taxes, to
assist farmers to convert from tobacco to other crops. Both bills were referred to the Senate
Finance Committee. (Full text of S.598 attached)
it both as a cushion for farmers against higher cigarette taxes and
because it complicated the GATT world trade talks.
The Health Care Angle
At one point, Mr. Gibbons said to Mr. Rose, according to a transcript
of the meeting, 'I didn't realize this has to do with health care.'
'Well, it does,' Mr. Rose replied in the meeting.
'That may never become law, Mr. Gibbons said in the budget conference.
'But this is going to become law. Wouldn't it be more appropriate to deal
with this in the health care legislation rather than something that is not
related to health care?'
But in the vote on the tobacco provision, Mr. Gibbons was the only
Democrat in opposition.
Already, executives from R. J. Reynolds, which employs more than 11,000
people in the United States, have said they could be forced to move
several hundred production jobs overseas within a year after the
regulation takes effect. That date has not yet been determined.
Then there are the international trade officials straining to conclude
the trade talks. Like Mr. Sutherland, the GATT Director General, they view
the domestic content provision as a provocation, almost certain to be
rebuffed the way Thailand's was. Back then, one of those leading the
charge against Thailand was the Democratic Senator from Kentucky, Mr.
Ford.
Caption:
Graph: 'Imported Tobacco' tracks annual volume of tobacco imported into
the United States since 1985. (Source: Agriculture Department) (pg. D2)
Copyright (c) 1997 by UMI Company. All rights reserved.
Access No:
9300014038 ProQuest - The New York Times (R) Ondisc
Title:
PANEL SUPPORTS $1.25 INCREASE FOR CIGARETTES
Authors:
ROBERT PEAR, Special to The New York Times
Source:
The New York Times, Late Edition - Final
Date:
Wednesday Mar 23, 1994 Sec: A National Desk p: 16
Length: Long (1091 words) Illus: Photo
Subjects:
MEDICINE & HEALTH; REFORM & REORGANIZATION; HEALTH
INSURANCE; LAW & LEGISLATION; TAXATION; SMALL BUSINESS;
TAXATION i SALES TAX; UNITED STATES
Names:
STARK, PETE (REPR) ; CLINTON, BILL (PRES) i PEAR, ROBERT
Abstract:
The Health Subcommittee of the House Ways and Means
Committee voted on Mar 22, 1994 to increase the federal tax
on cigarettes by $1.25 a pack as part of a comprehensive
bill to guarantee health insurance for all Americans. The
panel also voted to impose a new payroll tax of 0.8% of
payroll on all employers. The votes came as the
subcommittee neared completion on an alternative to
President Clinton's health plan proposed by its chairman,
Rep Pete Stark (D-CA).
Copyright 1994 The New York Times Company. Data supplied by NEXIS
(R) Service.
Title:
A CURB ON IMPORTED TOBACCO AIDS FARMS AND PHILIP MORRIS
Authors:
MICHAEL JANOFSKY
Source:
The New York Times,
Late Edition - Final Correction Appended
Date:
Wednesday Sep 29, 1993 Sec: A Financial Desk p: 1
Length: Long (1711 words) Illus: Graph
Subjects:
TOBACCO; INTERNATIONAL TRADE & WORLD MARKET; SMOKING; LAW &
LEGISLATION ; MEDICINE & HEALTH; HEALTH INSURANCE;
TAXATION; NORTH CAROLINA; KENTUCKY; UNITED STATES ; UNITED
STATES
Names:
FORD, WENDELL (SEN) i ROSE, CHARLES (REPR) i CLINTON, BILL
(PRES)
Companies:
PHILIP MORRIS COMPANIES INC
Abstract:
Sens Wendell H. Ford (D-KY) and Charles Rose (D-NC) have
rolled a provision into the federal budget bill that will
require American-made cigarettes to contain at least 75%
American-grown tobacco, which is more than twice the amount
now used in some. The regulation would give a boost to
Ford's and Rose's home states, which are both big tobacco
growers.
Copyright 1993 The New York Times Company. Data supplied by NEXIS
(R) Service.
Correction: October 4, 1993, Monday
An article on Wednesday about a law that limits foreign tobacco in
American cigarettes misstated the amount to be raised by a new tariff on
imported tobacco. The tariff would raise about $29 million over five
years, not $29 billion.
Article Text:
Faced with the likelihood that taxes on cigarettes will soar as part of
the Clinton Administration's health care plan, two leading tobacco state
lawmakers, worried about declining sales, rolled a little-noticed
provision into the Federal budget bill that gives American tobacco
farmers - - and the nation's biggest cigarette maker - - a big lift.
In the final, harried days of legislative deal-making over the budget,
Senator Wendell H. Ford of Kentucky and Representative Charles Rose of
North Carolina, both Democrats from major tobacco growing states, pushed
through a regulation that American-made cigarettes must contain at least
75 percent American-grown tobacco. That is more than twice the amount now
used in some cigarettes.
As the country's first law regulating tobacco content, it instantly
lifted the fortunes of America's troubled tobacco farmers, already
squeezed by declining consumption, rising costs and competition from
imported tobacco that costs as much as 40 percent less.
It also puts additional cost pressure on cigarette manufacturers who,
facing higher excise taxes, must decide whether to pass on to smokers the
expense of using more domestic leaf.
Could Complicate Trade Talks
And by limiting imports of tobacco, it could further complicate the
troubled world trade talks under the General Agreement on Tariffs and
Trade. This is the poster child of duplicitous trade policy,' Hank Brown,
the Republican Senator from Colorado, said of the content rule. He had
argued strongly against the measure in the Senate, contending that it
would prompt the larger cigarette makers, led by the Philip Morris
Companies, to increase production in overseas plants at the expense of
jobs here.
'There will be immediate and severe job loss in the U.S. tobacco
manufacturing plants,' said Representative Stephen L. Neal, Democrat of
North Carolina, who opposed the regulation. 'There will be trade
retaliation. And over the longer term, U.S. tobacco growers will be hurt.'
The law also for the first time places a kind of tariff, in the form of
an 'assessment,' on imported tobacco to help finance the Federal tobacco
crop subsidy program. The assessment would raise an estimated $29 billion
over five years, which was the main justification for including it in the
deficit reduction package.
But critics like Representative Sam M. Gibbons, a Democrat from Florida
who is chairman of the House subcommittee on trade, suggested that the new
regulation was merely a politically motivated exchange to give lawmakers
from tobacco-growing states something for their support on the budget
measure when the Federal cigarette tax of 24 cents a pack could quadruple.
A Link Is Seen
The budget squeaked by both in the Senate and the House by one-vote
margins. Among the 34 Democrats from House districts dependent on the
tobacco industry, 30 supported the budget package. So did the five
Democratic Senators from states in which tobacco is a leading crop
Kentucky, North Carolina, South Carolina, Tennessee and Virginia.
The White House, Senator Ford and others insisted there was no deal
made. But Representative Rose, during a July 28 House-Senate conference
committee in which the content provision was approved, acknowledged a
clear link between that law and the prospect of using higher cigarette
taxes to finance health care.
'Those who are drafting the health care proposals for this country have
singled out tobacco for special treatment,' he said. 'And we are working
very closely with the White House in an effort to find a middle ground
where we can be helpful.'
Or, as Mr. Gibbons said in an interview: 'They're going to tax the hell
out of tobacco. This was a kiss-off.'
Representative Rose failed to respond to repeated attempts over a
two-week period to reach him for comment.
For years, growers have pushed for a domestic-content law to slow the
growth of imported tobacco, the bulk of which has been coming from Brazil,
Zimbabwe, Argentina, Thailand and Malawi. Imports more than doubled from
1989 to 1992, according to the Agriculture Department, while domestic
tobacco output rose only 26 percent.
Law Is Divisive
Imports have been killing us,' said Danny McKinney, chief executive
of the Burley Tobacco Growers Cooperative Association in Lexington, Ky.
'The playing field was not level. So the growers sat around and decided
what had to be done.'
Yet unlike most issues facing the tobacco industry, including attacks
by antismoking groups, which tend to unify all segments, the
domestic-content law has been divisive. Philip Morris, which made Senator
Ford and Representative Rose its No. 1 and No. 3 recipients of political
contributions in the last election campaign, supported the idea.
But the R. J. Reynolds Tobacco Company and other, smaller cigarette
makers favored an alternative plan that would have relaxed the regulation
for American-made products for export. The regulation, as written, gives
Philip Morris a decided advantage because of its ability to shift
production offshore to a worldwide network of plants in 26 countries or
territories, from where it can satisfy foreign demand. Just this week,
Philip Morris announced that it was acquiring a major interest in the
state tobacco operation in Kazakhstan, with plans to produce 20 billion
cigarettes a year from there.
Other companies either have more modest international operations or
none at all.
For that reason, many tobacco growers say that any law imposing a
content regulation on cigarettes made in America to send abroad is unfair.
The higher-cost tobacco places farmers at a competitive disadvantage in
world markets, where demand for American cigarettes is growing.
Why did the provision that only Philip Morris favored pass Congress?
'Philip Morris got a deal first, said an executive from a rival
tobacco company who spoke on the condition he not be identified. 'Once it
was penciled in, it was tough to change.'
Philip Morris declined to discuss the matter. Barry Holt, a spokesman,
said that the company would not respond to questions about its position on
the content provision or any role it might have played in helping it pass.
Like the farmer groups, the smaller companies recognize the possibility
that benefits from the regulation might be short-lived. They contend that
companies will eventually move more of their operations offshore to avoid
the law or simply reduce domestic production because of the increased
costs. Either way, it would eliminate American jobs and reduce the demand
for domestic tobacco after the rule takes effect.
Warning From One Company
James W. Johnston, the chairman and chief executive of R. J. Reynolds,
said in a letter to 3,000 growers in June that a content rule would lower
the demand for domestic tobacco in the long run and eventually cost some
farmers their jobs. He later warned that the proposal 'will do more harm
than good.
Mr. Johnston declined to be interviewed for this article.
Other objections have come from free trade advocates who view the
measure as an excuse by other countries to impose their own laws to
restrict imports. When the measure was still under debate in Congress, the
ambassadors from several tobacco-producing countries protested. Rubens
Ricupero, the former Brazilian Ambassador, recalled that the United States
had formally protested before a GATT panel several years ago when Thailand
imposed a similar import fee on tobacco.
'The U.S. was successful,' Mr. Ricupero said in an interview. 'The
panel decided against Thailand, and Thailand had to change its provision.'
Earlier this month, eight countries -- including Brazil, the leading
tobacco exporter to the United States, and Thailand -- filed a formal
protest with GATT officials in Geneva. Last week, the United States agreed
to respond.
Peter Sutherland, the Director General of GATT, said in an interview
last week that any new tariff would be 'extremely dangerous, with
negotiators trying to conclude world trade talks by Dec. 15. He added,
'Within sight of the line, you really have to recognize that if serious
disputes are breaking out on specific items, it could have a negative
effect.'
A spokeswoman for the United States trade representative, Mickey
Kantor, declined to comment.
In an interview, Senator Ford stressed that his primary motivation for
pushing the content requirement was to protect the interests of tobacco
farmers back home in the face of new cigarette taxes. He said he made his
feelings clear in a meeting with Hillary Rodham Clinton as she was
gathering information on health care changes. He said he told her, 'The
higher the tax, the greater my emotions.'
Rising tobacco imports, he said, have forced 69 percent of the tobacco
farmers in Kentucky to take other jobs.
Before the conference members voted for the tobacco content provision,
13 to 8, Mr. Gibbons, the Florida Democrat, said he and others objected to
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VA Tobacco Farmers-Goode, 450
Tobacco farmers share settlement concerns with congressman
DANVILLE, Va. (AP) After a scorching day in the fields, a group of Southside
Virginia tobacco growers met with their congressman to vent their frustrations with the
proposed tobacco. industry settlement.
`There's a saying that the road to hell is paved with good intentions, J.T. Davis
of Nathalie said Thursday. "If we don't get things turned around, this is going to be
the road to hell for the tobacco farmers.
U.S. Rep. Virgil Goode promised to work to get protections for farmers included in
the settlement as it makes its way through Congress, particularly measures that would
keep the price and supplies of tobacco from plummeting.
--Two factors have got to be market stability and price stablity, said Goode, a
Democrat from Rocky Mount whose district includes most of Virginia's tobacco farms.
``If you destroy the American tobacco grower, you're still going to have cigarettes;
people are still going to smoke, Goode said. "It would just transfer production to
countries like China and Brazil
The farmers said they are worried that the $360 billion settlement will force
cigarette companies to cut their losses by buying cheaper foreign-grown tobacco. They
also fear that Congress will reduce or eliminate programs that prop up the price and
supply of U.S. tobacco.
'We're not getting rich, said Dick Conner of Halifax County. ``It's hard work and
it's hot.
The farmers said they' also steamed that they were left out of the proposed
settlement, which would allocate millions of dollars to help people quit smoking and
compensate sporting events and teams for the loss of tobacco sponsors.
``I don't know of anybody more addicted to tobacco than tobacco growers, Davis
said.
But C.D. Bryant of Pittsylvania County said, We're not looking for some big
handout.
This year, tobacco is growing on about 8,400 Virginia farms with projected cash
receipts of nearly $200 million, making it Virginia's most important crop economically.
Gov. George Allen announced Wednesday that he had appointed a three-member task
force to work with Congress to minimize the damage the tobacco deal could do to
Virginia's S5 billion-a-year tobacco industry.
President Clinton and Congress must approve the settlement tobacco companies reached
with the 40 states that sued them to recover smoking-related health costs.
Under the agreement, all states would be reimbursed for their Medicaid expenses for
treating victims of tobacco-related illness.
The attorneys general who negotiated the deal said they wanted to protect tobacco
growers and tried to write safeguards for them into the deal, but ultimately left that
to Congress.
``If anybody in Washington has a heart or a conscience they are going to put
something in this for the growers, Davis said.
(PROFILE
Agriculture;)
(CAT: Political;)
(SRC:AP; ST:NC;)
)
AP-NY-07-04-97 0538EDT
SUBJECT: VA AGRI NC POL
Copyright (c) 1997 The Associated Press
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KY Tobacco Farmers, Bjt, 0718
(102)
Farm leaders work for relief proposals
LOUISVILLE, Ky. (AP) There are signs that farmers will come out of the legislative
process in better shape than they did under last month's $368.5 billion tobacco
settlement.
Kentucky and North Carolina farm leaders are working on a package of relief
proposals. Also, a key tobacco industry negotiator appears supportive of the farmers,
and health advocates say they want to protect the growers from sudden economic upheaval.
--I feel very strongly that farmers should not be left out of the deal, David
Kessler, former commissioner of the U.S. Food and Drug Administration, said recently.
think that's a very high priority.
These groups don't necessarily agree, however, on the form aid for farmers should
take. The options include compensation for lost income, limits on the amount of
foreign-grown tobacco in American cigarettes and a buyout program to encourage farmers
to stop growing tobacco.
Economic projections show the cutback in smoking that results from the agreement
could translate into more than a 50 million-pound reduction in the use of burley leaf,
most of which is grown in Kentucky.
With a selling price close to $2 a pound, that's a lot of lost money.
But the only thing the deal does for farmers is guarantee that the FDA's enhanced
regulatory authority won't extend to tobacco cultivation.
The settlement, however, is far from settled. The agreement must be drafted into
legislation, passed by Congress and signed by President Clinton.
A lead industry negotiator, North Carolina lawyer J. Phil Carlton, says he wants to
help the farmers.
Carlton, the son of a tobacco farmer and until recently the owner of a tobacco farm,
told The Courier-Journal last week that the farmer issue will definitely be on the table
as negotiators draft the legislation to submit to Congress.
We're willing to talk about that, Carlton said of one possibility the growers
are interested in: a guarantee that cigarette makers will commit to use a certain amount
of domestic tobacco.
The industry, according to Carlton, also is willing to consider paying for tobacco
crop insurance and the tobacco price-support program's administrative costs should
Congress cut off the funding, as some have proposed.
And public health officials want to see the farmers get help, although their main
objective is not compensation.
Instead, the health groups want to use money to entice the farmers out of the
tobacco business and out of their longstanding political alliance with the cigarette
companies.
Their idea is either to pay farmers to retire their growing quotas or give them
money to try alternative crops.
Last month, health group negotiators proposed that the settlement set aside about
$150 million a year mainly for that purpose. But Carlton said he rejected that idea, and
it was not included in the settlement. He said the proposal was not comprehensive
enough.
One of four interagency panels President Clinton set up to review the agreement will
focus on the tobacco industry, including the economic impact on the growers.
Unlike the cigarette makers, the farmers come to the legislative process seemingly
unblemished by the controversy and distrust that for decades gripped the smoking issue.
They've not been willing conspirators. They've been pawns, Indiana Attorney
General Jeff Modisett said.
Sen. Wendell Ford of Kentucky has said repeatedly that without protection for the
farmers, he won't support implementation of the bill.
Ronny Pryor, chief lobbyist for the Kentucky Farm Bureau, wants farmers compensated
for lost sales and quota reductions, and he insists there would be little interest among
burley growers in a quota buyout. Tobacco is too lucrative to give up, he said.
But Pryor indicated there is nevertheless room to please both farmers and the
anti-smoking side. He suggested the possibility of a compromise that would compensate
farmers while also helping them move into alternative crops. We don't see it as an
either-or thing, he said.
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Copyright 1994 News & Record (Greensboro, NC)
News & Record (Greensboro, NC)
October 11, 1994, Tuesday, ALL EDITIONS
SECTION: BUSINESS, Pg. B5
LENGTH: 336 words
HEADLINE: KENTUCKIAN OPPOSES QUOTA BUY-OUT PLAN
BYLINE: SCOTT SOLOMO, Staff Writer
BODY:
The question of whether to end the federal government's tobacco price support
was given a resounding ''no'' Monday by U.S. Rep. Scotty Baesler of Kentucky,
who said the program is too important to his state's rural economy.
Baesler said he opposes a proposal by U.S. Rep. Charlie Rose, a Fayetteville
Democrat, to pay growers $ 7.50 a pound to give up their federally-assigned
tobacco quotas.
Rose's buy-out proposal may be well-suited for flue-cured tobacco growers in
North Carolina, Baesler said, but it fails to take into account the many burley
farmers in Kentucky who rent quotas from someone else.
In addition, he said, it would devastate feed stores, fertilizer stores and
other businesses that support tobacco farmers.
''If you do away with the program then you're basically doing away with
tobacco production as we know it here, said Baesler, a Democrat who attended a
meeting on the issue in Charlotte last week.
think that would be a tremendous hit on our rural economy.
Support by Kentucky lawmakers is considered critical to the proposal's
success.
Burley tobacco is an $ 800-million-a-year business in Kentucky, said Baesler,
who himself will grow 150, 000 pounds this year.
Under Rose's plan, those farmers would be ''out in the cold, Baesler said.
Rose has suggested paying for the buyout, which would amount to about $
16,000 an acre, with an increase in the federal cigarette tax. In North Carolina
the estimated cost of such a plan is $ 4.1 billion, while nationwide it could
cost $ 10 billion.
Rose said he proposed phasing out the price-support system as a way to
invigorate sales of domestic tobacco and give farmers a financial incentive to
convert to other crops.
TM
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Under the price-support system, the government establishes quotas, and
co-ops, with loans from the federal government, buy tobacco that does not
receive a bid at auction.
''I don't think on its face it will accomplish what (Rose) wants it to
accomplish, Baesler said of the plan.
LOAD-DATE: October 13, 1994
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Article Text:
WASHINGTON, March 22 -- Going far beyond President Clinton's request, a
Congressional subcommittee voted today to increase the Federal tax on
cigarettes by $1.25 a pack as part of a comprehensive bill to guarantee
health insurance for all Americans.
The same panel, the Health Subcommittee of the Ways and Means
Committee, also voted to impose a new payroll tax on all employers. The
tax would be eight-tenths of 1 percent of payroll. Most of the new revenue
would be used to help low-income people and small businesses buy health
insurance.
The votes came as the subcommittee neared completion on a slimmed-down
alternative to Mr. Clinton's health plan proposed by its chairman,
Representative Pete Stark, Democrat of California. The outlook for
approval in the 11-member subcommittee is precarious, and even if it is
approved its provisions may be dropped, replaced or amended in the
legislative process.
But the vote on the tobacco tax is significant. The Ways and Means
Committee has primary authority over tax bills, and lawmakers say the
tobacco tax is likely to be increased as part of any comprehensive health
care bill. The only question, they say, is how big the increase will be.
A Tax of $1.49 a Pack
The Federal tax is now 24 cents a pack. The new Federal tax would be
$1.49 a pack. Mr. Clinton proposed raising the tax 75 cents, to 99 cents a
pack.
The vote on the tobacco tax was 6 to 5. Representative Nancy L.
Johnson, Republican of Connecticut, joined five Democrats in voting for
it. Two Democrats joined three Republicans in opposing it.
None of the four Republicans on the subcommittee are expected to vote
for the bill, however. One Democrat on the panel, Representative Sander M.
Levin of Michigan, said today that he could not vote for a bill that would
increase the payroll tax. 'There should be much greater emphasis on cost
containment,' he said.
Another Democrat on the panel, Representative Benjamin L. Cardin of
Maryland, said he was also opposed to a new payroll tax. The proposed
increase in the payroll tax would raise $24 billion a year.
The move to raise tobacco taxes follows actions by many Federal
agencies, state and local governments and private employers to tighten
restrictions on smoking. Congress is considering a separate bill that
would ban smoking in public buildings used by 10 or more people a week.
Subsidies for Small Businesses
Increasing the tobacco tax by $1.25 a pack would generate $16 billion
a year in new revenue, the subcommittee said. Of that, $4 billion would be
used for subsidies to businesses with 100 or fewer employees, to help them
buy health insurance for their workers. Some of the money would be used to
subsidize the insurance premiums of poor people. The money would also be
used for assistance to teaching hospitals, for the removal of lead paint
in private homes and public housing, for programs to help people stop
smoking and for training tobacco farmers to grow other crops.
Thomas Lauria, a spokesman for the Tobacco Institute, a trade
association, said the industry is opposed to any increase in the Federal
excise tax on tobacco. 'If new revenue is needed for health care reform,'
he said, 'we hope Congress will look for broad-based taxes and will not
single out any product.'
But Representative Michael A. Andrews, a Texas Democrat who has been
trying to raise tobacco taxes for more than a decade, said an increase was
needed 'to help pay for health care reform and to offset the costs of
tobacco-related illnesses.' He added, 'It costs $24 billion a year to take
care of people who get sick from smoking.'
Representative Dan Rostenkowski, chairman of the Ways and Means
Committee, has told Mr. Stark that the health subcommittee should not be
proposing new taxes as part of its health care bill. Mr. Rostenkowski, an
Illinois Democrat, contends that taxes should be considered only by the
full committee. But Mr. Stark insists that it would be fiscally
irresponsible for him to propose new health benefits without recommending
a way to pay for them.
Mr. Stark's bill, like President Clinton's, would require all employers
to help buy health insurance for their employees. Representative Levin
supports such a requirement but says the Government must offer subsidies
to small businesses to help them afford coverage. As originally
introduced, Mr. Stark's bill contained no such subsidies.
Today's vote on tobacco taxes came a week after the subcommittee killed
a proposal by Mr. Andrews to raise the cigarette tax to $2 a pack.
Clinton Welcomes Dissenters
At the Old Executive Office Building, next to the White House,
President Clinton gathered about a dozen small business owners and
restaurateurs who dissent from the campaigns being waged by their
professional organizations against his health care plan.
Among other small-business logos displayed on the blue-curtained
backdrop were those of the Burrito Brothers, the Vermont Teddy Bear
Company and one from a Fresno, Calif., supply company that read: 'One Call
Gets it All: WECO Welding and Paint.
The view expressed by the companies' owners was heretical within their
business organizations. The National Federation of Independent Businesses
and the National Restaurant Association have been two of the most
outspoken opponents of Mr. Clinton's plan.
Welcoming a Helping Hand
But while most of the invited guests acknowledged that the proposal
would add to their total health care bills, they said it would be
worthwhile because it would allow many to extend health care coverage to
all of their employees for the first time.
'The fact is, we will pay more, and we're willing to do that, because
we want our employees to be insured,' said Eric Skolar, the owner of the
Burrito Brothers, based in Washington.
The federation of independent businesses named the Vermont Teddy Bear
Company as its company of the year in 1993, and Mr. Clinton made reference
to that honor as its chief operating officer, Spence Putnam, challenged
the organization's position. 'I hope they don't take it away from him,'
Mr. Clinton said.
White House officials said most of the participants had paid their own
way to Washington for the occasion but that the costs of others had been
covered by their professional organizations, including the National
Association of Retail Druggists.
The association supports Mr. Clinton's plan because it would cover
prescription drugs and would help retail pharmacists get discounts like
those available to hospitals and health maintenance organizations.
Caption:
Photo: About a dozen owners of small businesses who support President
Clinton's health care plan met with him yesterday in the Old Executive
Office Building. Among them were Brian McCarthy and Mona Castillo. (Paul
Hosefros/The New York Times)
Copyright (c) 1997 by UMI Company. All rights reserved.
Access No:
9300041041 ProQuest - The New York Times (R) Ondisc
Title:
SQUARING OFF OVER CIGARETTE TAXES
Authors:
MICHAEL JANOFSKY
Source:
The New York Times, Late Edition - Final
Date:
Saturday Jun 5, 1993 Sec: 1 Financial Desk p: 37
Length: Long (1764 words) Illus: Graph, Photo
Subjects:
TAXATION; EXCISE TAXES; FEDERAL TAXES (US) ; TOBACCO;
SMOKING; PRICES; INTERNATIONAL TRADE & WORLD MARKET;
AUTOMATION; FARMERS; INTERNATIONAL TRADE & WORLD MARKET ;
LABOR; UNEMPLOYMENT & JOB MARKET; MEDICINE & HEALTH;
CIGARETTES
Names:
CLINTON, BILL (PRES)
Copyright (c) 1997 by UMI Company. All rights reserved.
Access No:
9300041041 ProQuest - The New York Times (R) Ondisc
Title:
SQUARING OFF OVER CIGARETTE TAXES
Authors:
MICHAEL JANOFSKY
Source:
The New York Times, Late Edition - Final
Date:
Saturday Jun 5, 1993 Sec: 1 Financial Desk p: 37
Length: Long (1764 words) Illus: Graph, Photo
Subjects:
TAXATION; EXCISE TAXES; FEDERAL TAXES (US) i TOBACCO;
SMOKING; PRICES; INTERNATIONAL TRADE & WORLD MARKET;
AUTOMATION; FARMERS; INTERNATIONAL TRADE & WORLD MARKET i
LABOR; UNEMPLOYMENT & JOB MARKET; MEDICINE & HEALTH;
CIGARETTES
Names:
CLINTON, BILL (PRES)
Copyright 1993 The New York Times Company. Data supplied by NEXIS
(R) Service.
Article Text:
Never friends, seldom respectful of each other, the tobacco industry
and antismoking forces have renewed their hostilities over industry claims
that a higher excise tax on tobacco products, as part of the Clinton
Administration's health-care plan, would devastate large parts of the
economy.
Braced for the current tax of 24 cents a pack to at least double, and
possibly amount to more than $2, tobacco interests predict those levels
would cut consumption enough to kill hundreds of thousands of jobs in
industries from farming to retailing, close businesses and deprive state
and local governments of millions of dollars in taxes.
Another Point of View
Yet opponents cite the industry's own behavior of the last 13 years to
dispute those arguments. Until April -- when Philip Morris announced price
cuts of up to 40 cents a pack on Marlboro, and other cigarette makers
followed suit -- the companies had raised prices 33 times, by more than
350 percent, notwithstanding a tripling of the Federal excise tax. Yet
jobs did not disappear at nearly the rate the tobacco interests are now
predicting they will.
In fact, the companies have generated higher profits during those
years largely by raising prices, importing greater amounts of less
expensive foreign tobaccos for discount brands and improving technology.
'The numbers being thrown around by the tobacco industry bear no
relation to reality whatsoever,' Matthew Myers, counsel to the Coalition
on Smoking or Health in Washington, said. 'In effect, the tobacco
manufacturers cloak themselves as white knights, fighting the evil
tobacco tax that would attack jobs. What they're not telling people is
that their own decision to raise prices, to import increasing amounts of
tobacco and to use ever more mechanized equipment has caused the loss of
more jobs than could possibly be lost with the levels of increase being
talked about.'
Black Market
In either case, making cigarettes so much more expensive would likely
expand the black market and could lead to increased crime. And such a big
increase, if applied at once, could mean that past relationships of price,
consumption and jobs no longer apply.
A study by Price Waterhouse for the Tobacco Institute, the industry
lobby in Washington, concluded that a 48-cent tax would eliminate 114,117
jobs or 5 percent of 2.28 million jobs in the growth, manufacturing and
distribution of tobacco products and $3.33 billion in payroll losses. A
$2 increase would cost 776, 056 jobs or 34 percent -- and $22.68 billion
in compensation. A survey by the Tobacco Merchants Association, an
economic information service in Lawrenceville, N.J., was even bleaker.
By comparison, the increase in the price of cigarettes over the last 13
years has caused job losses of only 1.33 percent annually.
Yet the Tobacco Institute projections, the industry points out, do not
reflect lower consumption caused by state tax increases on tobacco
products. This year alone, 28 states considered increases and three New
York, North Dakota and New Mexico enacted them, bringing the national
average of state taxes above 27 cents per pack of cigarettes.
The overall effect could easily drive the price of premium brand
cigarettes up by about a third to $3 a pack from about $2.20 to $2.25 now.
That prospect is causing all kinds of concerns for businesses that rely
heavily on tobacco sales. For example, convenience store operators, which
derive almost a quarter of their sales from cigarettes, more than any
other product, are being asked by the National Association of Convenience
Stores to put their concerns in writing in a major lobbying campaign.
Security Concerns
Ron Bane, the owner of a distribution company in South San Francisco,
Calif., that serves 12 Western states and four Canadian provinces, said he
worries over the additional security measures he would need once new taxes
make cigarettes more valuable. Already, he said, one of his trucks
delivering cigarettes was hijacked at gunpoint in Canada, where excise
taxes have pushed the price of cigarettes to more than $60 a carton, about
twice the current price in America.
Equally worried are the tobacco growing states. Twenty-five House
Democrats, mostly from Virginia, North Carolina, South Carolina and
Tennessee, wrote to President Clinton in March, saying they would 'find it
most difficult' to support a health-care plan that would harm their
constituents.
Zane Hedgecock, a 10th-generation tobacco grower in High Point, N.C.,
said farmers in the area would 'absolutely go out of business, no question
about it' if the excise tax were raised.
Farmers' profit margins have declined while the major manufacturers'
profits have risen, with Philip Morris's operating income for domestic
tobacco doubling since 1986, to nearly $5.2 billion last year. Farmers
have been squeezed by a combination of rising costs for labor, fertilizers
and chemicals, and the relatively stagnant prices of tobacco leaves,
depressed by an influx of cheap foreign imports. According to the Tobacco
Growers Information Committee in Raleigh, N.C., flue-cured tobacco leaves
generated about $1,200 an acre last year, a drop of 13 percent since 1988;
burley tobacco brought $801 an acre, a 17 percent drop since 1989.
The Tobacco Institute study predicted that excise tax increases of 24
cents, $1 and $2 would eliminate 8,140, 27,654 and 55,308 farming jobs,
respectively.
A Fine Line
'We work on such a fine line of profit, any decline would have a
dramatic effect on us,' said Mr. Hedgecock, a 34-year-old farmer who has
traced his lineage to William Hitchcock, an Englishman who began growing
tobacco in the same area in 1652. Mr. Hedgecock said his greatest fear is
that his 4-year-old son, Daniel, would become the first generation of the
family not to grow tobacco.
Plant workers in North Carolina and elsewhere are also concerned about
jobs. Ray Scannell, the director of research for the Bakery, Confectionery
and Tobacco Workers Union in Kensington, Md., predicted that to preserve
margins in the face of higher taxes, companies like Philip Morris and R.
J. Reynolds might expand operations in countries where manufacturing is
cheaper. Since 1990, for example, Philip Morris has opened or improved
plants in eastern Germany, Hungary, Russia and Lithuania.
Attrition also worries the sales and distribution sectors.
'If consumption falls by any significant degree, we would see 20 to 30
percent out of business almost overnight,' said David E. Strachan, the
executive vice president of the American Wholesale Marketers Association,
whose membership includes 1,400 distributors and 300 retailers.
Some wholesalers, he said, would grow short of funds if retailers,
their sales falling, could not pay promptly, forcing middlemen to carry
less inventory, borrow more money or both.
Many retailers, like small-store owners in Massachusetts near the state
line with New Hampshire, are already suffering. Massachusetts has a
cigarette excise tax of 51 cents a pack, the second highest in the country
after New York's, which became 56 cents on June 1; New Hampshire's excise
tax is only 25 cents.
Other Sales Affected
'Massachusetts is not only losing tobacco sales, but sales of
everything else,' said Cathy Flaherty, executive director of the New
England Convenience Store Association. 'People are not stopping to buy
cigarettes, so they're not buying bread, gum or candy, either.'
Those kinds of disparities in cigarette prices are also fueling a
growing black market, particularly in Canada, where excise taxes have
increased 600 percent since 1980. By last year one of every six packs sold
in Canada was contraband, up from one in nine the year before, according
to a recent report for the Canadian Tobacco Manufacturers Council.
An increase in excise taxes in the United States might stem some of the
smuggling, but could invite other types of crime. Robert Parker, president
of the Canadian council, said shootings, robberies, hijackings and murders
related to cigarettes have increased in Canada. 'We have not collected
statistics that are reliable,' he said, 'but police agencies describe this
as the fastest-growing type of urban crime in Canada.'
Indeed, law enforcement authorities in the United States say black
market cigarette sales have grown in high-tax states. One officer
described an emergence of 'mom-and-pop organized crime groups,' but not
yet an escalation of violence.
'The reason is simple,' said the officer, John Meenaghan, the agent in
Copyright (c) 1997 by UMI Company. All rights reserved.
Access No:
9300119604 ProQuest - The New York Times (R) Ondisc
Title:
ON TOBACCO ROAD, A GENERATION GAP; YOUNG FARMERS ARE
QUESTIONING THE FUTURE OF A LUCRATIVE CROP
Authors:
GLENN COLLINS
Source:
The New York Times, Late Edition - Final
Date:
Thursday May 30, 1996 Sec: D Financial Desk p: 1
Length: Long (1685 words) Illus: Graph, Map, Photo
Subjects:
SMOKING & TOBACCO; INTERNATIONAL TRADE & WORLD MARKET;
PRICES (FARES, FEES & RATES) INDUSTRY PROFILES; NORTH
CAROLINA
Abstract:
There are deep, generational divisions among tobacco
farmers. Younger farmers, according to a 1995 study, hold
more negative views of the industry, and are more concerned
than older farmers that their way of life is coming to an
end.
Copyright 1996 The New York Times Company. Data supplied by NEXIS
(R) Service.
Article Text:
BROWNS SUMMIT, N.C. -- Luke Lambeth eyed the neat rows of tobacco
shoots on his 150-acre farm and ventured an up-to-the-minute assessment of
job security on Tobacco Road. 'This life was a lot more stable for my
grandfather, he said. 'But now you have to think ahead. Because you just
don't know how long the tobacco is going to go.
To be sure, the rangy, 32-year-old Mr. Lambeth, a third-generation
tobacco farmer, is optimistic about 1996. Despite a late start after a
harsh winter and a wet spring, he hopes to have a good crop and fetch an
equally good price.
But 'you never know when your livelihood won't be there, he said.
'That's my worry. Because I owe everything I own to tobacco.
Tobacco farmers have often been stereotyped as a monolithic group. But
there are deep, generational divisions in tobacco country, where farmers
have recently transplanted seedlings from their greenhouse beds into rows
in the ground.
The older farmers in this tradition-rich industry seem able to shrug
off the assaults on the $45-billion-a-year domestic tobacco business
the intense regulatory scrutiny; the threat posed by cheap tobacco from
Brazil and Africa; the attacks by lawyers and health groups, Congress and
the White House.
Younger farmers, though, are more concerned than ever that their way of
life is coming to an end -- and with it the fast-vanishing family-farm
ethos that was a cornerstone of the rural South.
'There is a generation gap, said Ferrell Guillory, a fellow at MDC
Inc., a nonprofit economic development research company in Chapel Hill,
N.C. It is the younger farmers, he said, who 'are going to have to manage
the transition to the future.'
The dismissal last week of a giant class action lawsuit that threatened
the solvency of cigarette companies barely lightened the load. 'We don't
hear much good news, so that court case is an encouragement, Mr. Lambeth
said. 'But it's not going to make any difference to us growers. The
companies will still only pay us a nickel a pack for our tobacco.'
That kind of skepticism is just one of the traits that distinguishes
the younger generation. According to the first national study of tobacco
farmers, younger and older farmers hold quite different views about the
long-term uncertainties of tobacco, the need to diversify their crops, and
the trustworthiness of American cigarette manufacturers.
The generation gap is especially apparent here in the state that grows
two-thirds of the nation's flue-cured tobacco, the heat-dried, golden-hued
'bright leaf' that is the aromatic heart of American cigarettes.
Younger farmers in North Carolina 'view tobacco as a way of life that
may not continue, but they want to stay in it as long as they can,' said
Rick Apple, 38, who grows 100 acres of tobacco with his father.
But older farmers take a less fatalistic view. 'There has been some
fight or other about tobacco all my life, and I'm not about to throw in
the towel, 'said Bruce L. Flye, at 63 a third-generation farmer in
Battleboro, N.C. Mr. Flye makes half his income from 85 acres of tobacco
and the rest from 1,115 acres of cotton, corn and peanuts. 'Tobacco has
been here since the 1600's and will continue to be,' he said.
'But younger farmers are really concerned,' said Mr. Flye, president of
the Flue-Cured Tobacco Cooperative Stabilization Corporation, a
grower-supported group that helps administer the Federal quota program
that prevents boom-and-bust price swings for growers. 'The young ones have
more anxiety. Their future is at stake.'
Indeed, about two-thirds of tobacco farmers under 45 say they have
undertaken money-making ventures to supplement tobacco growing, according
to the tobacco study, conducted by the Bowman Gray School of Medicine at
Wake Forest University in Winston-Salem, and the Center for Sustainable
Systems in Berea, Ky., a nonprofit organization that studies rural
development.
The study, of 992 farmers in six states, was completed last fall. The
ages of those surveyed ranged from 20 to 70, and a quarter were under 50.
'I have learned that there is life after tobacco,' said Mr. Apple,
whose ancestors began tobacco farming in the 1700's. Breaking with
tradition in 1980, Mr. Apple began growing flowers and ornamental trees in
a single greenhouse, grossing $4,000. Now, along with his tobacco, Mr.
Apple and 20 year-round employees grow flowers and ornamentals in 30
greenhouses and on 12 acres. His thriving garden center, A & A Plants Inc.
in Browns Summit, had 1995 sales of $1.2 million.
According to the study, almost twice as many younger farmers as older
ones have increased their income from crops like flowers and ornamentals
in the last five years. Indeed, tobacco farmers are supplementing their
income with everything from alfalfa-growing to chicken-raising and
hog-farming.
But Richard Jenks, whose family has been tobacco farming 'since the
beginning of time, was one of the older farmers who insisted that
diversification was no panacea.
'We have about 10 acres of strawberries in our community,' Mr. Jenks
said of Apex, N.C., where the 59-year-old farmer grows 16 acres of
tobacco. 'But if everyone starts planting, you won't be able to give those
strawberries away.'
He added, 'Tobacco, it's the only thing pays the bills.' Farmers'
profits last year amounted to as much as $1,000 an acre for tobacco, far
more than crops like corn ($150 an acre), soybeans ($100) or peanuts
($300).
As a state, North Carolina is far ahead of its tobacco farmers: it long
ago diversified and enjoys a 4 percent unemployment rate despite the loss
of thousands of tobacco- and textile-related jobs. As recently as 1964,
tobacco was a keystone of the economy, accounting for 46 percent of the
state's cash farm income. By 1994, that had declined to 15 percent.
Despite that decline, tobacco pumps about $1 billion a year into North
Carolina's economy. Farmers here still call it the golden leaf, a single,
high-value crop that keeps them on the farm.
But 'tobacco is in a slow-motion decline,' said Mr. Guillory, the
economic development researcher. Despite near-record profits for cigarette
makers, the tobacco sector of the farm economy continues to shrink along
with domestic cigarette consumption. Nationwide, 674 million acres were
planted in 1995, down 10 percent from 1993.
'If farmers knew the international realities, they'd want to get out of
the business,' said Dr. David G. Altman, an associate professor at Bowman
Gray who helped conduct the study of farmer attitudes. 'They are living in
the past, and the floor is going to drop out beneath them.'
That prospect might cheer the growing anti-tobacco forces in a nation
where, by Food and Drug Administration estimates, smoking causes 420,000
premature deaths a year. Anti-smoking groups have excoriated them, but
tobacco farmers, young and old alike, are overwhelmingly united in wanting
to carry on their agricultural heritage.
'It is a legal crop,' said Steve Troxler, a 44-year-old farmer who
grows 110 acres of tobacco in Browns Summit. 'Yet people call us names,
they label us pushers. That upsets me more than anything else, because
tobacco was a thing of pride. The government gets a lot from tobacco
taxes, and tobacco produces plenty of employment.'
He added: 'The attacks on us are based on ignorance and hypocrisy. They
don't know who we are. They don't know how hard we work. Tobacco farmers
are the pillars of the community. This is the greatest life style in the
world for raising kids and keeping a family together.'
Still, the study found that younger farmers are more willing than their
elders to acknowledge smoking's risks: 64 percent of the farmers under 45
agreed that smoking is harmful, versus just 47 percent of the farmers over
65.
Nor is their intergenerational agreement among the farmers about the
good will of America's cigarette makers. These days, the study found,
older farmers like Mr. Flye are more likely to be sympathetic. They
'supported us, buying the surplus,' he said, referring to a crisis in
1994, when the companies agreed to buy hundreds of millions of pounds of
surplus tobacco that had accumulated under the Federal price stabilization
program, which celebrates its 50th anniversary June 1.
But 80 percent of the farmers said the purchase of foreign tobacco by
American manufacturers was a grave threat to their future, and younger
farmers are more outspoken on the subject. Mr. Apple, a former president
of the North Carolina Tobacco Growers Association, called the companies'
actions 'shameful.'
He added: 'They continually raise their wholesale prices, but they have
told the growers to lower their prices. They gave Brazil and Zimbabwe the
technological know-how to produce better tobacco because it will increase
the supply and lower the price.'
Mr. Lambeth, whose license-plate holder reads 'Tobacco Pays My Bills,'
went further: 'The companies want to keep us where we barely get by. The
only time they go down on their knees to us is when they want us to go to
Washington. And that's not right.'
The companies are used to criticism from farmers. 'Sometimes growers
are mad at us, but we are all in this thing together,' said Nat Walker, a
spokesman for the R. J. Reynolds Tobacco Company. He spoke of the growers'
and manufacturers' 'interdependence,' and cited the company's $1 billion
investment in its modern Tobaccoville plant near Winston-Salem as evidence
of the company's commitment to North Carolina. Tobacco companies, however,
'have to be competitive offshore, and price has an impact on that.'
For now, once again, as tobacco reaches toward the North Carolina sun,
the future seems only as long as a season. Mr. Troxler, when asked about
what lies ahead, is wary. 'In all probability this summer will be too
something,' he said. 'Too hot. Or too wet. Or too dry. Or too cold.
Because something always comes along.'
But Mr. Flye, when asked to prognosticate, summoned up the optimism of
his years. Tobacco 'is a weed, a golden weed,' he said, in a phrase
certain to dismay the tobacco critics, 'and weeds are hard to kill.'
Caption:
Photo: Luke Lambeth, 32, a tobacco farmer from Browns Summit, N.C.,
whose license-plate holder reads 'Tobacco Pays My Bills, worries about
his farm's future and is critical of cigarette manufacturers. (Rob
Amberg/Impact Visuals for The New York Times) (pg. D1)
Graph: 'Different Outlooks'
A study found that younger tobacco farmers hold more negative views
of their industry than do their elders. Graph outlines some of the
survey's questions and responses. (Sources: Bowman Gray School of
Medicine, Wake Forest University; Center for Sustainable Systems, Berea,
Ky.) (pg. D1)
Map/Graph: 'A Declining Industry' tracks U.S. share of worldwide tobacco
production from 1970 through 1995. Map shows areas in the U.S. where
tobacco is farmed. (Source: Department of Agriculture) (pg. D4)
Copyright (c) 1997 by UMI Company. All rights reserved.
Access No:
9300016346 ProQuest - The New York Times (R) Ondisc
Title:
TOBACCO POLITICS FALTERS EVEN IN CONGRESS
Authors:
KATHARINE Q. SEELYE, Special to The New York Times
Source:
The New York Times, Late Edition - Final
Date:
Saturday Apr 2, 1994 Sec: 1 National Desk p: 1
Length: Long (1242 words) Illus: Chart, Photo
Subjects:
SMOKING & TOBACCO; LOBBYING & LOBBYISTS; LAW & LEGISLATION;
PUBLIC OPINION; TAXATION ; EXCISE TAXES; UNITED STATES
Names:
SEELYE, KATHARINE; BROOKS, JACK (REPR) GEPHARDT, RICHARD A
(REPR) i ROSE, CHARLIE (REPR) i WAXMAN, HENRY A (REPR)
DURBIN, RICHARD J (REPR)
Companies:
CONGRESS (US)
Copyright (c) 1997 by UMI Company. All rights reserved.
Access No:
9300016346 ProQuest - The New York Times (R) Ondisc
Title:
TOBACCO POLITICS FALTERS EVEN IN CONGRESS
Authors:
KATHARINE Q. SEELYE, Special to The New York Times
Source:
The New York Times, Late Edition - Final
Date:
Saturday Apr 2, 1994 Sec: 1 National Desk p: 1
Length: Long (1242 words) Illus: Chart, Photo
Subjects:
SMOKING & TOBACCO; LOBBYING & LOBBYISTS; LAW & LEGISLATION;
PUBLIC OPINION; TAXATION ; EXCISE TAXES; UNITED STATES
Names:
SEELYE, KATHARINE; BROOKS, JACK (REPR) ; GEPHARDT, RICHARD A
(REPR) ; ROSE, CHARLIE (REPR) i WAXMAN, HENRY A (REPR)
DURBIN, RICHARD J (REPR)
Companies:
CONGRESS (US)
Copyright 1994 The New York Times Company. Data supplied by NEXIS
(R) Service.
Article Text:
WASHINGTON, April 1 -- Representative Jack Brooks, the Texas Democrat
who heads the House Judiciary Committee, ran a recent committee meeting
with expansive waves of a big cigar.
Smoking may be politically incorrect in many places, but Capitol Hill
is not one of them.
Still, while Congress seems to be the tobacco industry's last redoubt,
with millions of tobacco dollars flowing into assorted Congressional
campaigns, the industry's influence seems to be waning even there. Fewer
Americans are smoking, the total acreage on which tobacco is grown is
shrinking and the number of influential older Southern members of Congress
is dwindling, giving seniority to younger members who can't stand the
smoke. They have been able to ban smoking in most public places on the
House side; the Senate still has no policy on smoking.
'What has changed in the last several years is the ascendance into
power of younger Congressmen in key positions who are firmly on the side
of the anti-smoking lobby,' said Representative Charlie Rose, Democrat of
North Carolina, longtime friend of tobacco and one of the few remaining
Southerners who heads a committee. 'The deck chairs have shifted.'
For the first time, anti-tobacco House members, who in 1989 formed the
Congressional Task Force on Tobacco and Health, outnumber reliable
pro-tobacco colleagues. The group has 58 members; the tobacco states have
an estimated 50.
Representative Richard A. Gephardt, the House majority leader, who
received $22,000 in tobacco money in 1991-92, the second-highest amount in
the House, indicated in an interview that change was at hand. 'There is a
steady consensus that smoking is harmful and second-hand smoke is harmful,
and members are getting that from their constituents,' he said. 'I
ultimately believe that public opinion runs this place.'
Mr. Gephardt, a Missouri Democrat, said he opposed banning smoking
altogether because that would put tobacco farmers out of work, create a
black market for cigarettes and increase imports. But, he said,
'ultimately, we may be talking about how to reposition farmers.' A small
portion of a proposed $1.25-a-pack tax increase would be set aside to
retrain tobacco farmers to grow other crops.
But the fledgling anti-smoking drive in Congress has yet to translate
into major legislation. 'The public is way ahead of the Congress on this,'
said Representative Richard J. Durbin, an Illinois Democrat who has helped
lead the pack against tobacco interests.
The industry has faced tough times before and still has many friends in
Congress. A test of its allies' strength will come later this year as
Congress wrestles with health care. Tobacco-state Democrats are
threatening to hold up any health plan if it keeps the $1.25 tax increase
passed by a House Ways and Means subcommittee last week.
As 22 members wrote in a letter to Representative Dan Rostenkowski, the
chairman of the Ways and Means Committee, 'Should this tax remain in the
legislation, we will be unable to support it.' A senior Congressional aide
who is allied with the tobacco lobby said that Mr. Rostenkowski was saying
there was no way to dodge a tax but that he also indicated he would try to
spread to other products.
Reliable Tactic Fails
One of the industry's most successful tactics is to squelch
legislation at the subcommittee level. That didn't work last week with the
proposed tax increase, but it did succeed, at least temporarily, with a
bill to ban smoking in virtually every building in the country except
private homes.
Twice last week, Representative Henry A. Waxman, the California
Democrat who sponsored the legislation, had to cancel a subcommittee vote
at the last minute when the single-vote margin of support he had wrung
from recalcitrant members vanished in down-to-the-wire lobbying. Tobacco
lobbyists were aided by restaurant and bar owners fearful of losing
business if their patrons could not smoke. Mr. Waxman, chairman of the
subcommittee on health and the environment, said he would have to
compromise to pass the bill.
An examination of campaign financial reports of the 26 subcommittee
members shows that 9 of the 16 Democrats and 8 of the 10 Republicans
received money from at least one of the four major tobacco interests in
1993.
The Republicans on the subcommittee include Thomas J. Bliley Jr. of
Virginia, who received $37, 741 from tobacco interests, more than anyone
else in the House in the last campaign. As the panel's ranking Republican,
Mr. Bliley is often able to keep his party's votes in line on crucial
matters, which tobacco is in Virginia.
A Pro-Tobacco Vote
The Democrats are not in lock step in favor of the Waxman bill.
Opponents include Representative Edolphus Towns, a Brooklyn Democrat who
is known in his district as 'the Marlboro Man' for the big donations he
gets from tobacco companies.
In an interview, Mr. Towns said he had voted with the tobacco industry
because his father was a tobacco sharecropper in North Carolina and Mr.
Towns grew up picking tobacco and taking it to auction. 'If it had not
been for tobacco,' he said, 'we would not have made a living at all.'
Despite the success of the pro-tobacco forces against the Waxman bill,
few people dispute that the future for tobacco, at least in the United
States, is downhill and that the industry's power in Congress will
diminish.
Last week alone, besides the subcommittee approval of the excise tax,
Congress passed and President Clinton signed into law a bill that outlaws
smoking in schools and in Head Start and community health centers. The
Occupational Safety and Health Administration announced a regulation to
ban smoking in the workplace, a move that would apply to at least six
million job sites. In addition, the House approved a measure requiring
that all schools that receive Federal drug-prevention money teach students
the dangers of tobacco.
Even the normally assertive Tobacco Institute has little to say when
asked whether the industry's influence in Congress is waning. 'I don't
know,' said Brennan Dawson, a vice president of the Institute. 'I don't
think there's an answer to that question.'
At its peak in 1963, annual per-capita consumption of cigarettes in
America was 4,345. The Surgeon General's report linking cigarettes to
cancer came out the next year, and smoking has declined ever since. By
1993, the per-capita consumption dropped to 2,540. About one-fourth of
Americans over 18 years old smoke now, down from about 45 percent in the
mid-1950's.
For years, tobacco's friends in Congress were able to protect the
industry from important adverse legislation. As negative health reports
began accumulating 30 years ago, it was the regulatory agencies, not
Congress, that began exercising control.
The Federal Trade Commission proposed labels warning that cigarette
smoking was 'dangerous to health and may cause death from cancer and other
diseases.' Congress eventually passed a weaker label and prevented the
commission and states from any other regulation of tobacco advertising.
Not until 1971 were cigarette commercials taken off the air. The warning
labels, now more pointed, still do not mention death or addiction. In
1990, Congress banned smoking on domestic airline flights.
With President's Clinton election, the pace of anti-smoking activity
accelerated. The Clintons are nonsmokers who banned smoking in the White
House before they moved in and set a new tone in Washington.
Caption:
Photo: Representative Jack Brooks bucking the nonsmoking trend.
(Stephen Crowley/The New York Times)
Chart: 'PLAYERS: Who Received the Most'
These are the top five recipients of tobacco money in the House and
top five in the Senate from January 1991 to December 1992, the latest
complete election cycle for which figures are available from the Federal
Election Commission.
HOUSE
Thomas J. Bliley Jr., Virginia (Republican)
$37,741
Richard A. Gephardt, Missours (Democrat)
$22,098
Dan Rostenkowski, Illinois (Democrat)
$22,000
Rick Boucher, Virginia (Democrat)
$21, 350
Edolphus Towns, New York (Democrat)
$21,245
SENATE
Wendell H. Ford, Kentucky (Democrat)
$61,898
Daniel R. Coats, Indiana (Republican)
$52,000
Mitch McConnell, Kentucky (Republican)
$47,250
Jesse Helms, North Carolina (Republican)
$44,500
Bob Dole, Kansas (Republican)
$41.500
(pg. 8)
Copyright (c) 1997 by UMI Company. All rights reserved.
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9300071762 ProQuest - The New York Times (R) Ondisc