Compensating Farmers for the Tobacco Settlement. CRS Report for Congress

摘要

Legislative proposals designed to reduce smoking, primarily by teenagers, are211u001elikely to have negative economic consequences for tobacco growers and tobacco-211u001edependent communities. This is because reduced cigarette consumption by 211u001eAmericans, particularly young Americans, and thereby decrease domestic demand for 211u001eU.S.-grown leaf tobacco. This, in turn, likely will affect the value of tobacco 211u001emarketing quotas held by farmers, and thereby the value of their land and 211u001eholdings and their ability to obtain credit or contribute to local economies. For 211u001ethese reasons, there appears to be growing support for some kind of compensation 211u001eto farmers as part of the settlement package legislation. On the other hand, a 211u001econsistent downward trend in domestic cigarette consumption, which some contend 211u001eis likely to continue even without the tobacco settlement, argues against 211u001ecompensation. Compensation is not just an economic issue. Bill sponsors 211u001eundoubtedly would like the support of Members of Congress from tobacco states and 211u001ecommunities. Therefore, how much, if any, funds should go for compensation to 211u001egrowers is a political issue, as well. One obvious approach would be to estimate 211u001ethe likely losses to farmers under the various provisions and provide 211u001ecompensation on that basis. But, it is difficult to precisely estimate the 211u001epotential economic consequences of the tobacco settlement for growers.