Untitled Document

Etheridge Introduces Bipartisan, Consensus Tobacco Legislation

WASHINGTON - U.S. Reps. Bob Etheridge (D-North Carolina), Ernie Fletcher (R-Kentucky), Mike McIntyre (D-North Carolina) and Virgil Goode (R-Virginia) today introduced their consensus, bipartisan tobacco buyout bill, the Tobacco Reduction, Accountability and Community Enhancement (TRACE) Act. This bill, which represents a compromise of the major buyout bills in the House of Representatives, would terminate the current tobacco quota system, compensate tobacco quota owners for their quota, provide financial assistance to farmers during the transition and establish a safety-net for farmers seeking to continue growing tobacco.

"Farm families in North Carolina have been waiting far too long for a buyout, and they can't wait much longer," Etheridge said. "That is why my colleagues and I have put together this compromise bill. Bringing together the tobacco family in the U.S. House of Representatives on a single buyout bill shows the skeptics that we mean business. We have done our part to create a package that everyone can accept because time is running out. Every tobacco state member can support this bill because we have worked with farmers, companies and health groups. Now it is time for the Republican leadership in the House and in the Administration to put this bill on a fast track."

In the legislation, buyout payments would be based on an average of tobacco quota from 1997 through 2002. Tobacco quota owners would receive $8 per pound for quota owned after July 1, 2002. Farmers would receive $4 for their average tobacco production from 2000-2002. These payments would be made in equal amounts over a seven-year period.

This legislation ensures that each variety of tobacco would only be able to be grown in counties that already produce that kind of tobacco. A Tobacco Advisory Board for each variety of tobacco (flue-cured, burley, etc.) would establish an annual limit on pounds that could be produced, determine where those pounds could be produced, and track the production of tobacco in the United States. County, State, and Regional Pools would be established to reassign the pounds to new growers, or traditional producers who chose to grow more tobacco.

The TRACE Act would incorporate a private price insurance system that will ensure that if the domestic price of tobacco falls below a market-determined, insured price, producers get a payment for the difference. This system is primarily financed through a transaction fee assessed to both the producers and the manufacturers at the point of sale.

This legislation, which costs about $15.7 billion, is funded through an assessment on tobacco manufacturers based on market share. As the buyout does not utilize federal revenues, it will not increase the federal budget deficit.

This year, tobacco quota was cut 9.5 percent, the largest cut in a generation. Farmers were allowed to grow 526.3 million pounds, about half of what they were allowed to grow in 1997. There are over 12,000 tobacco farmers in North Carolina, and more than 250,000 jobs in the state are tied to tobacco. A tobacco buyout would inject nearly $6 billion into rural North Carolina's economy.