| Tobacco buyout lets farmers shift to other crops
Virginia Business
December 2004
After
years of promises, the federal government finally agreed
to fund a $10 billion buyout of the outdated quota system
that was strangling tobacco growers, piggybacking the
provision onto a $143 billion corporate tax measure
passed by Congress and signed by President Bush in mid-October.
Virginia’s farmers and quota holders will receive
an estimated $666 million over 10 years. The payments
also mean growers will be free to shift their farming
operations to another crop. “All the farmers wanted
it, of course, but I don’t think they really believed
it would ever happen,” says Haywood Hamlet, general
manager of the Virginia Dark-Fired Tobacco Growers Marketing
Association.
The buyout also surprised — and enraged —
many in the public health arena when it passed without
any stipulation providing the U.S. Food and Drug Administration
with regulatory authority over the manufacture, distribution,
sale and labeling of cigarettes.
Those who want to remain in tobacco will face a “totally
different world,” Hamlet says. Beginning next
year, for example, there will no longer be any geographical
constraints on tobacco farming and growers will have
to contract with distributors rather than sell their
crops at auction. For those lucky enough to get a contract,
Hamlet says, “they need to realize that companies
are going to offer a lower price than farmers have gotten
in the past, so we’re recommending that they really
put pencil to paper and make sure that they can actually
make money at the price they get offered.”
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