Tobacco buyout funding restored

First Posted: 1/7/2014

WASHINGTON, D.C. — Robeson County’s two U.S. House representatives, Mike McIntyre, a Democrat, and Richard Hudson, a Republican, are praising the Obama administration’s decision to restore annual federal payments to tobacco farmers.

In November, the administration had announced that the Tobacco Transition Payment Program’s payments allocated in the 2004 tobacco buyout would be sequestered in 2014.

Both Hudson, a freshman member of the House, and McIntyre, a veteran House member, serve on the House Agriculture Committee.

“This is a great victory for our tobacco farmers, their families, and our agricultural communities. The federal government must keep the commitment it made to our farmers in the tobacco buyout 10 years ago,” McIntyre, the Agriculture Committee’s number-two ranking member, said in a statement. “I am pleased that the administration has responded to our requests to ensure that farmers in Eastern North Carolina and across the country receive the funds they were promised.”

The Associated Press this morning reported that in separate letters dated Monday to Democratic Sen. Kay Hagan and Hudson, Agriculture Secretary Tom Vilsack said that the program is still subject to automatic spending reductions. Vilsack said, however, that funds that had been held back as a result of sequestration during the federal fiscal year ending Sept. 30 are available for this year’s payments.

The money has provided an economic boost to tobacco-dependent communities and growers who relied on tobacco as their primary cash crop for generations. The payment recipients receive cash, or previously worked out a lump sum payment with a farm lender, which in turn receives the annual payment in exchange. Some farmers have used the money to buy farming equipment or diversify crops.

According to McIntyre’s statement, federal funding obligations to both the financial institutions that put up the initial lump sum payments and the tobacco producers themselves will be made in full this year.

McIntyre, a co-author of the 2004 tobacco buyout, led the fight to ensure that the U.S. Department of Agriculture fulfills the final annual financial payment that was promised to tobacco farmers.

A bipartisan delegation of 34 House members from nine states joined in writing a letter to the administration opposing the cuts to the buyout.

According to McIntyre’s statement, Agriculture Deputy Secretary Krysta Harden on Monday guaranteed that the administration will make good on its promise to deliver the final funds and that a full payment will be made to all recipients. Payments will be made to financial institutions by Jan. 15, with full payment to tobacco producers made by the end of the 2014 calendar year. As much as 95 percent of the funds are to be paid out within the next two months.

North Carolina is the nation’s No. 1 flue-cured tobacco state.

The tobacco buyout program was implemented to end a Depression-era price support program by providing annual transitional payments for 10 years to eligible tobacco quota holders and producers. Payments began in 2005 and are scheduled to continue through the end of this year. The program is funded by tobacco product manufacturers and importers at no cost to taxpayers.

“I am pleased to see the USDA and OMB come to their senses and agree with Congress that tobacco growers are entitled to the full payments that they planned for and were promised to them,” Hudson said in a statement. “Tobacco is an integral part of North Carolina’s agriculture and economy, and its growers are some of the hardest working producers in our state.”