Tobacco buyout legislation still has hurdles to clear

The tobacco buyout is in the forefront for farmers in the Southeast. Far from a done deal, the tobacco buyout is, however, the closest that it's been to reality.

As Congress recessed for the August break, the Senate and House had both passed legislation that included a tobacco buyout. The two bills differ substantially and will be resolved in conference committee. In his tobacco buyout update, North Carolina State University Extension Ag Economist Blake Brown points out that “resolution could include modification or even elimination of various provisions, including the tobacco buyout, attached to the bill.”

The buyout was part of a corporate tax bill to repeal an export tax rebate given certain businesses in earlier legislation. The export tax rebate given had been declared illegal by the World Trade Organization and tariffs are being levied against exports of certain U.S. goods. The bill contains numerous other provisions, including an earlier energy bill.

The Senate version of the buyout is $8 and $4 on 2002 paid out over 10 years. It includes limits on post-buyout production and is paid for through user fees from companies and would result in the elimination of the remainder of Phase II funds.

The House version is $7 and $3 paid out over five years. The House version has no post-buyout program or restrictions and is paid for through general revenues and would not result in elimination of Phase II funds.

The Senate bill includes Food and Drug Administration regulation of tobacco products, while the House version does not.

The Senate bill would cost $12 billion. The House version would cost $9.6 billion.

A detailed comparison by the Congressional Research Service of the two bills is posted on Brown's Web site at

Negotiations about the bill were expected to be substantial before Congress returned from its recess.

Some Republican conservatives objected to the price tag. Others warned that granting FDA regulation would put “the government on the farm.”

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