PDF _ RS20802 - Tobacco Farmer Assistance
5-Mar-2004; Jasper Womach; 6 p.

Update: March 5, 2004

Abstract: Efforts to reduce tobacco consumption in the United States, stimulated by the 1998 Master Settlement Agreement, have contributed to a sharp decline in the demand for U.S.-grown tobacco. The other major contributor to the long term decline in domestic as well as foreign demand is the federal price support program, which limits supply and raises the price of U.S. tobacco above competitive market levels. Consequently, foreign-grown tobacco is displacing U.S. tobacco in both domestic and world markets. Because of the drop in demand, farmers have asked for and received compensation and assistance from cigarette manufacturers and the federal government. Manufacturers pledged $5.15 billion in payments to farmers to be distributed over 12 years. Also, Congress has approved $328 million in tobacco loss payments to farmers for FY2000, $340 million for FY2001, another $129 million for FY2001, and $53 million for FY2003. In addition, losses on 1999-crop price support loan stocks, amounting to $625 million, were shifted to taxpayers.

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Topics: Agriculture, Economics & Trade

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