Presidential Commission Calls for Compensating Tobacco Quota Owners and Growers, Other Economic Aid to Address Crisis in Tobacco-Growing Communities

Recommendations Unanimously Endorsed by Tobacco Growers and Public Health Advocates on Commission

May. 14 2001

Washington, DC — A Presidential Commission today called for comprehensive reform of federal tobacco policy to help tobacco farmers and communities facing "an unprecedented economic crisis." The Commission's final report, released at public meetings in Raleigh and Louisville, recommends replacing the current tobacco quota system with production permits to be held only by active growers, compensating quota owners and growers for the loss in value of their quota assets and providing other economic transition assistance.

The report also recommends steps to protect the public health, including granting the U.S. Food and Drug Administration the authority to regulate tobacco products.

The 10-member Commission, known formally as the President's Commission on Improving Economic Opportunity in Communities Dependent on Tobacco Production While Protecting Public Health, consisted of an equal number of tobacco growers and public health advocates, as well as economic development experts. Its recommendations were unanimously adopted.

"This Commission embraces the notion that the health and safety of the American people and that of tobacco farming communities are linked, however unlikely that may seem. A stable tobacco-growing industry that operates through price and quality controls and under health and safety standards is in the best economic and health interests of this country," concludes the report, entitled "Tobacco at a Crossroad: A Call for Action."

The report finds that "tobacco farmers and their communities confront a bleak future" because of declines in demand for U.S.-grown tobacco both domestically and abroad, aggressive competition from cheaper foreign-grown tobacco, high costs to modernize their facilities and price increases for their crops that are significantly outpaced by inflation. The report also finds that the federal government has an obligation to address this crisis because current federal tobacco policy, through price supports and a marketing quota system, has produced a situation in which more people are involved in tobacco production than the system can support.

The Commission's recommendations to help tobacco farmers and communities include:

The adoption of a Tobacco Equity Reduction Program (TERP) that replaces the current quota system with production permits that would be held only by active tobacco growers. Unlike quotas, the permits would not be marketable assets, which would help ensure that the new system does not foster the same economic dependence on tobacco as the current one.

Quota owners and growers would be compensated for the loss of their quota assets. Small farmers and quota owners, the bulk of those who will benefit, will receive all of their payment in the first year.

The establishment of a Center for Tobacco-Dependent Communities to provide assistance to communities making a transition from tobacco-based economies. The Center would provide technical assistance and education on supplemental crops, economic diversification in rural communities, new technologies, alternative uses for tobacco that do not harm public health and other topics.

The report also details the public health toll of tobacco use, which kills more than 400,000 Americans every year and is the leading preventable cause of death in the United States. It finds that, in tobacco-growing states, the smoking rates are higher on average and residents suffer disproportionately from smoking-caused harms.

To address these public health challenges, the report makes the following recommendations:

Congress should grant the FDA the authority to regulate the manufacture, sale, marketing, distribution and labeling of tobacco products. This authority should be comparable to the FDA's authority over other products, but it is not intended to prohibit the use of tobacco products by adults.

States should do more to fund comprehensive tobacco prevention and cessation programs, and those that meet minimum funding recommendations of the U.S. Centers for Disease Control and Prevention should be eligible for additional federal assistance.

Funding for smoking cessation should be included in basic Medicaid and Medicare coverage.

To fund the recommended programs, the Commission calls for a 17-cent increase in the federal excise tax on cigarettes. During the first five years, all of the funds would be used for the benefit of tobacco farmers and their communities. During the second five-year period, funds would be used to support state tobacco prevention and cessation programs, other public health efforts and the Center for Tobacco-Dependent Communities.

The report is the culmination of more than 15 years of growing cooperation between tobacco farmers and public health leaders dating back to the mid-1980s. The Commission was formed in September 2000 by executive order of the President. It has held several public hearings and received comment from public health organizations, agricultural interests, economists, economic development specialists, farmers and their families.

"The crisis facing farmers and their communities requires decisive action, and that's what this report calls for," said Rod Kuegel, co-chair of the Commission and president of the Burley Tobacco Growers Coop Association. "Our recommendations would reduce the economic dependence of farmers on tobacco and give them the opportunity to transition to other crops. Our plan will improve economic opportunities in our communities and protect public health, while providing stability for farmers who continue to grow tobacco. We urge federal, state and local policymakers, tobacco farmers, health and agricultural organizations and other interested parties to take positive and immediate action to carry out our recommendations."

"We cannot solve the public health crisis caused by tobacco use without solving the economic crisis facing tobacco farmers and communities," said Matthew L. Myers, co-chair of the Commission and president of the Campaign for Tobacco-Free Kids. "This report represents the comprehensive, far-reaching response needed to protect the safety and well-being of the American people and the economic well-being of the farmers. We urge the President and members of Congress to join us on this common ground and act swiftly on our recommendations."

 

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