North Carolina Farm Bureau: US Government May 'Hold Hostage' Final Tobacco Buyout Owed to NC Farmers

Nov 08, 2013, 15:51 ET from North Carolina Farm Bureau

RALEIGH, N.C., Nov. 8, 2013 /PRNewswire/ -- The US Government is considering withholding millions in non-taxpayer dollars owed to North Carolinians that depend on this income as part of the landmark tobacco buyout settlement. In 2004, the American Jobs Creation Act established the Tobacco Transition Payment Program (TTPP) to help tobacco producers transition to the free market. The program eliminated the tobacco quota and price support system in exchange for 10 annual payments to producers from 2005-2014. The "assets" once held by farmers and quota holders were replaced by legally binding contracts with USDA, which manages the collection and distribution of TTPP funds. Only the 2014 payment is outstanding for completion of these contracts.

Where TTPP payments differ from most other federal programs appropriate for sequestration is that these payments are not taxpayer funded; rather, they are funded through fees that are assessed to tobacco companies. USDA's only role is to pass along the fees collected from tobacco companies and distribute them to contract holders.

"It does not matter whether the US Government decides to hold hostage all or just a portion of the millions of non-taxpayer dollars owed to NC tobacco farmers, our state's economy and its largest industry – agriculture – will be negatively impacted. We understand the fiscal realities that led to the sequestration of funding for other federal programs, but North Carolina citizens, in good faith, signed these binding contracts with their own government and many have already factored these payments into their business plans for 2014. We believe the federal government is incorrect in considering sequestering and portion of the tobacco buyout payments owed to farmers in 2014," said Larry Wooten, President of North Carolina Farm Bureau.

Recognizing the impact withholding these payments could have on the state's largest economic driver, several of North Carolina's Congressional leaders have come to the aid of the state's farmers. A letter to Secretary of Agriculture Tom Vilsack and Director of Office of Management and Budget Sylvia Burwell signed by Representatives Mike McIntyre, Richard Hudson, Renee Ellmers and Virginia Congressman Robert Hurt urged USDA to uphold its end of the bargain, arguing that "TTPP was a 10-year commitment to our farmers and their families" and that "USDA has a responsibility to honor its commitment."

Senators Richard Burr and Kay Hagan also weighed in with their own letters to USDA and OMB officials. In his letter to OMB, Burr said "using sequestration as a mechanism to siphon a portion of these non-tax payments and using them for the purpose of deficit reductions runs counter to Congressional intent." Hagan's comments were straightforward and direct: "I am deeply troubled if OMB directed USDA to subject TTPP payments to sequestration" and "I strongly believe full TTPP payments should be made to growers and quota holders in FY2014."

While North Carolinians are owed the largest portion of the 2014 TTPP payments, farmers and quota holders in all 50 states are also owed money from the federal government. If paid in full, the 2014 payments would total approximately $1 billion. OMB officials have declined to confirm just how much of the payments they are considering withholding.

SOURCE North Carolina Farm Bureau