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Uncertain Harvest Tobacco Taking Heat In Farm Debate Despite Popular Belief, The Crop Isn’t Subsidized By Government

It’s a countrified urban legend.

Tobacco growers, so the story goes, have it easy.

While Inland Northwest wheat growers watch their political power dwindle and face a multibillion-dollar hit in Congress, the powerful tobacco industry and its arch-ally Sen. Jesse Helms, as the myth continues, see to it that tobacco subsidies go untouched.

And with billions of dollars coming from tobacco taxes, the federal government sees no evil in the world’s most controversial legal crop.

As one Whitman County farmer said recently, when the government sees money to be made, “holy smoke, all of a sudden our morals have changed.”

But if wheat farmers feel under siege this spring, they should sympathize with tobacco growers.

The truth is tobacco farmers aren’t fighting with wheat farmers for a limited pot of government money. The debate over ag subsidies often shifts to controversial, unpopular programs like tobacco, peanuts and sugar, but these crops receive only a sliver of the total agriculture budget.

On the contrary, after more than 10 years of dwindling government support, tobacco farmers might provide a good example of how to cope with less government support.

They are getting hammered more than anyone.

For starters, there are no tobacco subsidies. The federal government pays about $16 million to administer a loan program funded by growers and tobacco companies, but even that program is under attack.

Meanwhile, Congress in recent years has cut all money for federal tobacco research, export assistance and marketing - the type of programs wheat farmers insist they can’t survive without.

The government has called second-hand tobacco smoke a human carcinogen and is considering regulating nicotine as a drug.

“It’s being ridiculed from all sides,” said Carl Dwaine Miller, a Kentucky farmer who shares the income off 10 acres of tobacco with his father and brother.

Miller lives in Robertson County, where tobacco accounts for more personal income - 20 percent - than in any other county in the country. Yet only about half a dozen farmers there can live entirely off their farm income, according to the local extension office. The rest drive 30 miles or more to jobs off the farm.

Investment returns vs. human costs

Tobacco farmers have a lot in common with wheat growers. They tend to be family operators, dependent on a single crop and limited in their options. Like wheat growers who earn only a few pennies from the price of a loaf of bread, tobacco growers earn about 3 cents from every dollar spent on a pack of cigarettes.

Tobacco growers differ on two fronts: the type of federal program they farm under and the storm of emotions hovering over every harvest.

The tobacco industry has been all but paying its way in the federal farm program since 1982.

Tobacco cooperatives buy tobacco with money borrowed from the U.S. Department of Agriculture’s Commodity Credit Corporation, then pay the money back with interest when the crop is sold. If the crop is sold at a loss, the difference is paid from assessments to growers and buyers.

Under this arrangement, the CCC lent nearly $800 million in 1994. Taxpayers paid $15 million in administrative costs, a pittance compared to the billions doled out in subsidies to other crops that year.

Meanwhile, the $50 billion crop contributes $13 billion in federal excise taxes.

“When you’re looking at a $15 million investment, I wish I could get a return like that on my money,” said Charlie Finch of the Tobacco Growers Information Committee in Raleigh, N.C.

Rich Hamburg, a spokesman for the Coalition on Smoking OR Health, points to other, hidden costs. Overall, tobacco costs Americans an estimated $100 billion a year in medical bills, lost worker productivity and sick time.

If Congress is considering dismantling programs for big commodities, it’s only fair it consider tobacco as well, said Hamburg.

“It may not be the biggest piece of the puzzle,” he said, “but it happens to be the one product that when used as intended by the manufacturer, kills and frankly kills over 400,000 people a year. There’s no other commodity where that’s even remotely possible.”

Unlike crops under the Farm Bill, tobacco operates under permanent legislation and does not need to be rewritten every four or five years. But a USDA Economic Research Service report released this month said tobacco laws may be reviewed as part of the Farm Bill debate.

Potential changes include a cigarette excise tax increase of 45 cents to $1.76 a pack, the loss of money to administer the loan program and a cigarette tax-based buyout of tobacco government quotas by which farmers are allowed to grow tobacco.

Possibly stalling a major review is the Republican Congress, a less aggressive White House and the sheer energy needed to fight tobacco.

In North Carolina alone, a fear of increased tobacco excise taxes helped Republicans take over four Democratic House seats in the November election. North Carolina Sen. Jesse Helms is still in power, and “as long as tobacco is a legal crop - and it still is - he’ll still be supportive of it,” said Brad Edwards, his agricultural legislative assistant.

Tobacco political action committees in 1993 and 1994 spent more than $2 million to support farm programs and fight sin taxes, while other commodities spent only $119,000, according to the Center for Responsive Politics.

Tobacco has a bigger, more powerful lobby, said Josh Goldstein, director of the center’s Open Secrets Project, but “that may well be that they have more to fight for.”

Wheat growers have a broader set of grain belt legislators to protect them.

Kansas alone has Bob Dole as Senate majority leader, Pat Roberts as House agriculture chairman and Dan Glickman as secretary of the Agriculture Department.

Garfield, Wash., farmer Judy Olson, the immediate past president of the National Association of Wheat Growers, said the tobacco states still have strong legislative representation. But she would not say wheat growers have a tougher political row to hoe.

Looking for alternatives

Tobacco may very well be on its last gasp, say its critics, as it faces a mounting tide of foreign competition.

The Coalition on Smoking OR Health noted that foreign tobacco in American cigarettes rose from 10 percent to 40 percent over the last 25 years.

Tobacco farmers should be looking into alternative crops, Hamburg said.

But the notion of alternative crops in the tobacco belt - that’s what Carl Dwaine Miller might call a real urban legend.

Overall, tobacco farmers gross about $35,000 an acre and farm on the average fewer than 7 acres. That makes it hard to find another crop that could be as lucrative on as little land.

“Nothing short of marijuana,” Miller said.



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