Sunday, July 25, 2004

Senators fight tobacco buyout

By Nancy Zuckerbrod
The Associated Press

WASHINGTON - Tobacco farmers are closer than ever to securing billions of dollars for giving up a federal farm program, but some influential voices in the nation's capital are questioning why they should get anything at all.

"I think they've had a nice privilege for decades," said Senate Budget Committee Chairman Don Nickles, R-Okla. "I don't know that we have to pay them to stop receiving the benefit."

Nickles is among a handful of senators who oppose the buyout and who sit on the negotiating committee tasked with producing a compromise tax bill with the House that may include a buyout.

Separate tax bills recently passed in the House and Senate would pay farmers billions of dollars to give up allotments dictating how much tobacco they can sell under the federal program begun during the Depression.

In recent years, the government has been reducing farmers' tobacco quotas to reflect rising imports of cheaper foreign leaf and a steady decline in smoking. Many say the quotas now are too small to make much of a profit.

The farmers would just as soon take their chances on a free market with no production limits, but they also want to be compensated for giving up their allotments, describing them as assets that can and have been bought, sold and leased.

"You've got farmers and quota holders who have been going along with this program for 60 years," said Keith Parrish, a North Carolina farmer and executive director of the National Tobacco Growers Association. "It's just not right to take away the quota value and leave these people stranded."

Tobacco farmers who want to stay in the leaf-growing business would be able to do so under both the House and Senate proposals. An estimated 400,000 people own quotas giving them the right to grow the crop, but only about 100,000 are active growers.

Instead of the government paying for the buyout, the Senate would have tobacco companies do it, presumably through higher prices for cigarettes. Tobacco farmers would be paid a total of $12 billion over 10 years under the Senate plan but would still enjoy government limits on how much acreage could be devoted to the crop.

The House bill would use taxpayer dollars to pay tobacco growers and quota owners $9.6 billion over five years, while placing no ceiling on total acreage. Except for Philip Morris USA, all the major tobacco companies prefer the House's plan to the Senate's.

Nickles says he will try to get the tax bill passed without a buyout. At the least, he says, the plan should be scaled back and caps imposed to limit how much individuals could receive.

Among the other lawmakers who voted against the Senate buyout and are on the committee negotiating a final bill are former Senate Majority Leader Trent Lott, R-Miss.; Health, Education and Labor Committee Chairman Judd Gregg, R-N.H., and Pennsylvania Sen. Rick Santorum, the Senate's third highest-ranking Republican.

Unlike the House version, the Senate legislation would not create a free-market approach. Acreage and geographic limits would still be imposed on tobacco growing.

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