PDF _ 95-129 - Tobacco Price Support: An Overview of the Program
25-Jun-2004; Jasper Womach; 6 p.

Update: September 8, 2004

Abstract: About 94% of U.S. tobacco production is flue-cured and burley (both being cigarette tobacco types). These crops are particularly important to the agriculture of North Carolina (where flue-cured is grown) and Kentucky (where burley is grown). Together, these two states produce 66% of the total U.S. tobacco crop. The federal tobacco price support program is designed to support and stabilize prices for farmers. It operates through a combination of mandatory marketing quotas and nonrecourse loans. Marketing quotas limit the amount of tobacco each farmer can sell, which indirectly raises market prices. The loan program establishes guaranteed minimum prices. The law requires that the loan program operate at no net cost to the federal government. Apart from year-to-year budget impacts, no-net-cost provisions of the law are intended to assure that all loan principal plus interest will be recovered.1 This report will be updated and revised as new data become available and legislative events transpire. [read report]

Topics: Agriculture, Legislative

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