Comparing Quota Buyout Payments for Peanuts and Tobacco (CRS Report for Congress)
| Release Date |
Oct. 14, 2003 |
| Report Number |
RS21642 |
| Report Type |
Report |
| Authors |
Jasper Womach, Resources, Science, and Industry Division |
| Source Agency |
Congressional Research Service |
Summary:
Legislation is pending in the 108th Congress ( S. 1490 , H.R. 3160 ) to
eliminate tobacco quotas and compensate quota owners (whether they are absentee owners or active
producers) at the rate of $8 per quota pound. Active producers would lose price support, but would
receive a lump sum transition payment of $4 per pound on their production history, including the
quota they own as well as any quota they rent. A precedent for quota buyouts was established in the
2002 farm bill, which terminated peanut quotas and compensated the owners with a $0.55 per pound
payment. Active peanut producers continue to receive price support. A comparison of peanut and
tobacco quota buyout rates shows that the two are substantially comparable (relative to past quota
rental rates). However, current USDA budget projections indicate that continuing operation of the
peanut subsidy program likely provides significantly higher benefits than the proposed tobacco
transition payment (relative to the costs of production of each commodity).
