Tobacco Commission


Executive Summary


  1. Introduction: What's the Problem the Commission was Created to Address?

    A. The Commission was created to address two problems, both of which require action

    bulletThe difficulties facing many U.S. tobacco farmers and their communities caused by the reduced demand for U.S. flue-cured and burley tobacco that has led to dramatic drops in quota and emerging changes in the tobacco market that could threaten the tobacco family farmer’s way of life;
    bulletThe harm to health and economic costs caused by tobacco and the continued large numbers of children using tobacco, a problem that faces the entire nation but burdens tobacco growing states disproportionately because of their smoking rates

    B. The Commission is in part the result of several years of work between tobacco farmers and the public health community that has demonstrated that they have many concerns in common and share an interest in addressing the problems facing tobacco farmers and the public health in ways that promote both goals at the same time. This report builds on those areas of agreement and shared values. The Commission was also created because of the possibility that the problems facing tobacco farmers today may reflect long term trends not susceptible to quick fixes and stem from many causes and not just reduced domestic consumption due to health concerns.

    C. The Commission recognizes the important role the tobacco price support program has played over the years in bringing stability to the economic well being of the tobacco farmer and preserving the well being of the small family farmer.

    D. The goal of this Commission report is to identify those steps that should be taken to assist U.S. tobacco farmers and their communities and promote the public health.


  3. What are the Trends Affecting Tobacco Framers and Their Communities Today and What are the Major Factors Influencing these Trends?

    In order to arrive at the solutions that will best assist tobacco farmers, especially family farmers, and their communities, it is necessary to better fully understand the range of factors and trends that have led to the current situation.

    Suggest the Commission look at 15 year and 5 year trend lines for various factors. The following list is tentative and illustrative. The impact of these trends and factors should cover both their direct economic impact, but also look at how they impact small family farmers as well as other farmers if the impact is different.

    1. Level of Demand for U.S. flue-cured and burley
    2. bulletamounts sold annually totally and for domestic use and export;
      bulletU.S. share of global flue-cured and burley production and sales;
      bulletannual flue-cured and burley quotas.
    3. Consumption of Manufactured Cigarettes Products
    4. bulletU.S. cigarettes consumption trends
      bulletWorldwide demand for cigarettes. Production and manufacturing are not decreasing on a global scale.
    5. U.S. demand for U.S. leaf for domestic cigarette consumption
    6. bullete.g., amounts sold/used annually for cigarettes made and consumed in U.S.;
      bulletpercentage of U.S. leaf in American-made cigarettes or in such cigarettes sold in U.S.; annual cigarette consumption in U.S.;
      bulletBreakdown on where the tobacco dollar goes as between farmers, manufacturers, etc.
      bulletChanges in US cigarette prices and the reasons for these increases.
    7. Demand for U.S. leaf for exported cigarettes
    8. bullete.g., amounts sold/used annually for cigarettes exported from U.S.;
      bulletpercentage of U.S. leaf in exported American-made cigarettes;
      bulletU.S. exports share of all U.S. brands and american-blend cigarettes sold overseas;
      bulletU.S. imports of flue-cured and burley;
      bulletOverseas manufacturing by U.S. companies or of U.S. brands.
    9. Foreign demand for U.S. flue-cured and burley
    10. bullete.g., amounts of US tobacco leaf used in cigarettes manufactured overseas by U.S. cigarette companies, by BAT, or in Japan Tobacco's RJR brands; foreign production of flue-cured and burley (total and just American-quality);
      bulletForeign exports of American-quality flue-cured and burley (total and American-quality);
      bulletAmount of foreign grown tobacco available to compete with high-quality flue-cured and burley used in american-style cigarettes;
      bulletforeign prices for burley and flue-cured (total and American-quality);
    11. Profitability of U.S. tobacco farming
    12. bullete.g., flue-cured and burley prices over time;
      bulletcosts of production; quota-leasing costs (and number of farms with leased versus owned quota);
      bulletnew costs facing tobacco farmers, i.e. baling, barn redesign to reduce nitrosamine levels, grading tobacco. [State-specific data where possible.]
    13. Character of U.S. tobacco farming
    14. bullete.g., trends re number of: tobacco farms;
      bulletbig versus small farms;
      bulletfull-time vs. part-time tobacco farmers;
      bulletminority tobacco farmers;
      bulletaverage age of U.S. tobacco farmers;
      bulletreliance on alternative crops or non-tobacco income;
      bulletnumber of non-farming quota holders. [State-specific date where possible. Some of this information could be placed in section IV, instead, as appropriate.]

    The accompanying narrative should discuss these facts and trends and their causes, and explain their relationship to the overall demand for U.S. tobacco leaf and to the economic and health problems facing tobacco farmers, communities, and states – short term and long term.


  5. Harms Caused By Smoking and Other Tobacco Use And Their Impact On Tobacco States and Tobacco-Farming Communities
    1. Discuss scientific knowledge about harms and costs caused by smoking and other tobacco use.
    2. Impact of smoking and other tobacco use on tobacco states and tobacco-farming communities
    3. bullete.g., state-specific cigarette sales; adult prevalence; youth prevalence; spit-tobacco use by adults and youth; annual deaths from tobacco use; projections of future daily smokers and tobacco-caused deaths among current children; healthcare costs from tobacco use; comparisons with non-tobacco-state averages or national data.
    4. The section should discuss the relative impact of changes in tobacco consumption due to health on the overall problems facing tobacco farmers. It should also discuss emerging international tobacco prevention efforts and their likely impact on worldwide consumption trends.


  6. Significance of Tobacco Farming to the National, Tobacco-State, and Tobacco-Farming Community Economies
  7. bulletJobs,
    bulletpercent of farm income,
    bulletetc., and related trends


  8. Role of Tobacco Program
  9. Describe the role of the tobacco program over time and today, focusing both on the economic issues and the role of the program in preserving family farms

    bulletImpact of price protection
    bulletImpact of quantity controls
    bulletHistory and Impact of leasing
    bulletImpact of Auction system
    bulletImpact on quality issues
    bulletPotential Impact of contracting.


  10. What is likely to Happen if No Changes are made or new Assistance Provided?
  11. bulletDiscuss possibility that previously presented farming and public health trends will continue and the impact of farmers and their communities if this happens.
    bulletPotential Impact on the continued viability of the price support program
    bulletPotential impact if the tobacco support program is ended by vote:
    bulletOn farmers
    bulletTheir communities
    bulletNon-growing leaseholders
    bulletOn Demand for US tobacco


  12. Options Considered by the Commission to Assist Farmers and Their Communities
    1. Which farmers and communities are most likely to need assistance

    3. Transitional assistance and supplementary income
      1. Buy Out Options for farmers
      2. Buy Out options for non-growing quota holders – to reduce costs to farmers and to eliminate the role of non-grower quota holders
      3. Initiatives to Enhance Tobacco Farmers' non-tobacco or Supplementary Income Opportunities. Address market barriers to alternative crops
      4. Promotion of In-State Grown Commodities - consider the concept of state hospitals, schools, prisons, etc being given incentives to buy state grown farm products.
      5. Tax incentives for attempting non-tobacco alternatives on their farms or for different uses of tobacco.
    4. Enhancing the economies of those counties most heavily dependent on tobacco.
    5. 1. Economic development and redevelopment options for counties that are heavily dependent on tobacco


    6. Assistance to continuing tobacco farmers
      1. Options for promotion of U.S. leaf (without increasing U.S. or foreign tobacco consumption). For example,
      2. bulletdevelopment of bioengineered tobacco for medical purposes
        bulletmake sure foreign grown tobacco is required to use same standards as American-grown leaf;
        bulletLook for ways to raise the quality of American tobacco to make American more desirable in competition with non-American tobacco;
        bulletnew markets (China);
        bulletdomestic content labeling;
      3. Keeping but reforming tobacco price support program.
  13. Ways to Reduce Tobacco Use That Are Consistent With Efforts To Assist U.S. Tobacco Farmers And Reduce Their Economic Problems

    2. Provide FDA with authority over manufactured tobacco products and their marketing along the lines proposed by Senators Frist and McCain in 1998. This could even enhance the competitive position of the American tobacco farmer.
    3. Maintaining the Tobacco Support Program to ensure that U.S. tobacco production does not expand to new areas, states, or farmers, and to help keep U.S. leaf prices higher -- thereby protecting current farmers from new competition or ruinous price declines.
    4. Consider funding the buy-out or other farming, transitional, or public-health assistance for U.S. tobacco farmers and their communities through a tobacco excise tax increase or an increase on excess tobacco-manufacturer profits. This could provide an adequate stream of revenue and reduce consumption of manufactured products, particularly among children.

  14. Conclusion: Principles to Guide Future Deliberations and Specific Recommendations


  1. Executive Order Establishing Commission & Related Press Releases
  2. Federal Register Notice Establishing Commission & Announcing Public Hearings
  3. Core Principles Statement
  4. Compilation of Public Comments
  5. Background on U.S. Tobacco Support Program (Could be a separate box in main text section on Tobacco Program, instead of an appendix.)
  6. Sources of Additional Information