Etheridge Applauds Senate Passage of Tobacco Buyout Legislation

WASHINGTON - U.S. Rep. Bob Etheridge (D-Lillington) today applauded the U.S. Senate for voting 78 to 15 to 1 to pass tobacco buyout legislation. The buyout was passed as part of the Senate's version of H.R. 4520, the American Jobs Creation Act, to which the U.S. House of Representatives added a buyout last month.

"We've still got a long row to hoe, but today's vote by the Senate is a huge step toward giving our farm families and our rural communities an honest chance to survive," Etheridge said. "These are hot days for farmers in North Carolina, and the fight for the buyout is really heating up here in Washington. We still face a difficult conference committee, and farmers must keep the pressure on the Republican leadership. Now we need the President's commitment that he will sign this legislation into law."

The Senate version of the buyout legislation differs from the version passed by the House. The Senate version would cost $13 billion and would make payments of $8 for quota holders and $4 for growers based on 2002 quota levels. It would be funded by an annual assessment on tobacco companies based on their volume of domestic sales. The Senate version includes regulation of tobacco products by the Food and Drug Administration (FDA).

The version passed by the House last month would cost $9.6 billion and would make payments of $7 for quota holders and $3 for growers based on 2002. It would be funded through current tobacco excise taxes. The House version does not include FDA regulation, and it would preserve Phase II payments.

H.R. 4520 is necessary to lift European trade sanctions by repealing an export tax break that the World Trade Organization has ruled violates international trade laws. The differences in the tobacco buyout language, as well as significant differences in the underlying tax legislation, must be worked out in a conference committee. Ultimately, each chamber will have to approve the legislation that comes out of the conference committee. The legislation would then head to the President's desk.

Etheridge has written to President Bush four times urging him to support the buyout for North Carolina's farm families and rural communities. When asked about the tobacco buyout during an interview in May, Bush said, "They've got the quota system in place - the allotment system - and I don't think that needs to be changed." Days later, Senator John Kerry publicly announced his support for a tobacco buyout, bringing national attention to the issue.

Because of declining tobacco leaf purchases from tobacco companies, the federal government has reduced tobacco quotas by more than 50 percent since 1997, cutting in half the incomes of both tobacco growers and quota holders. A tobacco buyout would reform the current tobacco quota system, compensating tobacco quota holders for the elimination of quota and assisting tobacco farmers with the transition.