Tobacco Quotas and Buyouts

TOBACCO QUOTAS AND BUYOUTS -- (Extensions of Remarks - December 07, 2004)

Mr. GRAVES. Mr. Speaker, recently, after years of debate over the government run tobacco program, this body ended a system that limited per-acre tobacco sales to protect prices for growers and others holding quotas. As a compromise, we agreed to a buyout that provides tobacco quota holders $7 per pound on their allotment paid out in equal installments over 10 years. These installments are paid out of a Tobacco Trust Fund to quota holders and eligible producers; however, the Tobacco Trust Fund is also designated to pay for program losses incurred by USDA.

We must not let bureaucratic red tape shortchange the promise we have made to these quota holders and eligible producers. We have an obligation to ensure that they receive what they have bargained for. There are many questions that need to be resolved. We need to clarify and ensure that USDA will follow the intent of Congress. The agriculture committees in the House and Senate should hold hearings to resolve the following issues before we move forward. Issues that should be addressed include: Whether the buyouts are assignable to other parties; are there restrictions on quota holders selling their shares in the private market if they need their payments now and cannot wait 10 years; and what safeguards are in place to assure that these allotments are paid out over the next 10 years?

The projected estimates for this program are $10.1 billion over 10 years, with the program fully offset by funds from the Tobacco Trust Fund. We have made a promise to these holders and producers, and we must not let misguided direction reduce that promise.