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Summary and Comparison of the Major Agricultural Provisions of the Tobacco Settlement Policy Proposals

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Publication Date: July 1998

Publisher(s): Library of Congress. Congressional Research Service

Series: 97-1042

Topic: Agriculture, forestry and fishing (Tobacco industry)


The June 1997 proposed settlement between tobacco manufacturers and states' attorneys general stimulated a range of legislative proposals intended primarily to reduce smoking and other forms of tobacco use by teenagers. Over time, this should substantially lower the consumption of cigarettes and consequently the utilization of domestically grown leaf tobacco. Tobacco growers (of which there are about 124,000 in the nation, largely concentrated in six major producing states) anticipate a sizable decline in income if Congress adopts a tobacco bill. Some of the proposals that have been introduced in Congress include remedial assistance to address these concerns.

Since the 1930s, tobacco farms have grown and sold tobacco under a federal program that limits production and guarantees a price that is substantially higher than it would be otherwise. The production limiting feature of the program is the marketing quota. A farm can market no more tobacco than its quota. The farm assistance provisions in the tobacco bills use the tobacco quotas as the avenue for compensation. The widely differing legislative proposals range from a buyout and termination of the federal tobacco quotas to direct and offsetting payments for any future reduction in quotas. Additionally, some of the bills include money for economic development efforts in tobacco dependent communities.