Tobacco Farmer Assistance (CRS Report for Congress)
| Release Date |
Revised Dec. 31, 2005 |
| Report Number |
RS20802 |
| Report Type |
Report |
| Authors |
Jasper Womach, Resources, Science, and Industry Division |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Summary:
Efforts to reduce tobacco consumption in the United States, stimulated by the 1998 Master
Settlement Agreement (MSA), 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 was the
federal price support program, which limited supply and raised the price of U.S. tobacco above
competitive market levels. Consequently, foreign-grown tobacco displaced U.S. tobacco in both
domestic and world markets. Because of the drop in demand, farmers asked for and received
compensation and assistance from cigarette manufacturers and the federal government.
Manufacturers, in conjunction with the MSA, pledged $5.15 billion in payments to farmers to be
distributed over 12 years. Also, Congress approved $328 million in tobacco loss payments to
farmers for FY2000, $340 million for FY2001, another $129 million for FY2001, and $55 million
for FY2003. In addition, losses on 1999 crop price support loan stocks, amounting to $625 million,
were shifted to taxpayers. Finally, in 2004, legislation was adopted terminating the tobacco support
program, but with compensation to quota owners and active producers of $9.6 billion (paid by
manufacturers).
This report will not be updated.
