Tobacco Quotas Drop 18 Percent
Dec. 15, 1998
WASHINGTON (AP) _ Tobacco farmers learned Tuesday that the government is reducing their crop by 18 percent. A last-minute deal with cigarette companies averted a larger decrease.
``It's considerably better than it might have been,'' said Charles Hatcher, director of the tobacco and peanuts division for the Agriculture Department's Farm Service Agency.
The government each year sets quotas or the amount of tobacco farmers are allowed to sell at federally regulated auctions. The 1999 quota announced Tuesday is 666.2 million pounds, down from 807.6 million pounds this year.
Flue-cured tobacco officials in Raleigh, N.C., struck a last-minute deal Monday to sell more than half of last year's unsold tobacco, about 104 million pounds, to three cigarette companies at a 15 percent discount.
The cigarette manufacturers also agreed to purchase intentions for five years beginning in 2000.
``This is a major commitment to tobacco farmers by cigarette companies in spite of all the uncertainties pertaining to future cigarette sales,'' Bruce Flye, president of the Flue-Cured Tobacco Cooperative Stabilization Corp. said in a statement Tuesday.
The tobacco industry had been waiting anxiously to see what the government quotas would be.
The industry is already trying to deal with the $206 billion tobacco settlement between the companies and states that will dramatically raise cigarette prices and may ultimately curb tobacco consumption. As part of the settlement, the companies are considering a plan to provide growers with $5 billion over 10 years to cushion the economic blow.
Until Monday night's deal, farmers had feared a decrease of as much as 32 percent after cigarette companies indicated they plan to buy 28 percent less tobacco from growers next year.
``Without that (flue-cured) sale, there would have been a cut in the quota of 33 percent,'' Hatcher said.