THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Monday, October 2, 1995 TAG: 9509300007
SECTION: FRONT PAGE: A6 EDITION: FINAL
TYPE: Editorial
LENGTH: Medium: 54 lines
The tobacco price-support program, implanted in the U.S. economy in the Great Depression years, seemingly is impregnable to attacks by anti-smoking forces. Strategically placed Southern members of Congress protect it.
The profitability of U.S. tobacco is maintained by federal limits on production and officially prescribed ``support'' prices. Different grades of tobacco command different support prices, but the current average price is $1.59 per pound. Production is restricted by controlling tobacco allotments - of permits specifying how much tobacco may be grown. The allotments - some 350,000 averaging nine acres each - are very valuable.
Taxpayers don't pick up the tab for the support program, a point often missed by critics. Federally sanctioned loans enable cooperatives to buy tobacco that can't be immediately sold to manufacturers for the support price. The cooperatives warehouse the tobacco in expectation of higher prices. When stored tobacco is sold below support prices, growers and manufacturers collectively make up the shortfall.
The arrangement shields tobacco farmers from economic ruin during downturns in the market. It also makes U.S. tobacco measurably more costly than foreign tobacco and thus uncompetitive in price though not quality. A federal domestic-content law requiring 75 percent of U.S. cigarettes to be made of American tobacco has been ruled in violation of the international General Agreement on Tariffs and Trade. Meanwhile, the percentage of adult smokers in the United States has declined in the past 15 years from one-third to one-fourth.
Cigarette makers have long aggressively marketed U.S. cigarettes to the foreign market to offset the waning popularity of smoking at home. The federal government assists U.S. tobacco companies in overcoming foreign governments' trade barriers to American cigarettes, as it does other American manufacturers.
But the program that keeps U.S. tobacco prices artificially high undercuts the aid to cigarette exports. Add to this contradiction the absurdity that most tobacco allotments are held not by growers but but people who lease them to producers. A price-support mechanism devised decades ago to help tobacco farmers survive is now an entitlement enriching more nongrowers than growers. Still, Congress is unlikely to deep-six the system.
Too bad. Addiction to cigarettes and cigarette revenue assures tobacco's profitability indefinitely, even though the World Health Organization and many governments, including our own, deplore smoking's mammoth contribution to premature deaths. Considering tobacco's health and smoking's ravages, Washington's commitment to the weed is a conspicuously unbecoming oddity. by CNB