Tobacco buyout could end jobs of USDA employees

Lawmakers favoring the $10 billion buyout for tobacco growers contend the agreement will save jobs in farming communities. But Agriculture Department officials say the buyout probably spells the end of their jobs overseeing the program.

The industry-funded buyout is part of the corporate tax package that is awaiting President Bush's signature. Agriculture officials are still assessing the impact of the 10-year buyout, although they say it likely will lead to the dismantling of the Tobacco Division once there is no tobacco quota system to administer.

USDA also has an office in each of the 22 tobacco-growing states and county offices sprinkled around the region, although those offices handle crops in addition to tobacco. Most of the affected workers will be re-assigned, a senior tobacco division official said.

"I think there will be a lot of reassignments, but there could be some layoffs," he said.

The legislation would end the tobacco quota system established in 1938 guaranteeing a price per pound of tobacco that each farmer is permitted to grow. In recent years, the value of those quotas had declined, leaving farmers with dwindling income and building pressure on Congress for a buyout.

Agriculture Department officials say the buyout was a boon to struggling tobacco farmers, and worth the restructuring. "We want to do what's best for our farmers," the official said.

In making their case for the buyout, lawmakers liked to point out that the tobacco quota system was created in an age of teletype and swing music. "The current federal tobacco price support system is the last Depression-era farm program in America," said Rep. Mike McIntyre, D-N.C., told his colleagues during floor debate. "Indeed, it is time to get out of the 1930s."

That may be easier for farmers than for regulators -- as farmers rejoice over the end of the system, government regulators are pondering how to dissolve the longstanding program. It will take a while for the government to exit tobacco regulation, the official said, since it will have to administer the buyout that pays farmers $7 a pound for each quota they hold.

But some observers predict the government will not stay out of the tobacco business. Since the government has a long history of supporting farmers, the idea of subsidizing tobacco may be revived if the remaining tobacco farmers face more hardships, said Keith Ashdown, vice president for policy and communications for the watchdog group Taxpayers for Common Sense.

"The idea that you're going to get the government out of any agriculture subsidy is bizarrely naive," Ashdown said.

And although the buyout spells the end of the quota system, it does not sound the death knell for tobacco farming. According to North Carolina state agricultural economist Blake Brown, some farmers will continue growing tobacco. Many older growers likely will use the buyout to pay their debts and finance their retirements, he said, and others will use the buyout money to transition to growing other crops. Some will continue to grow tobacco, just without the government price guarantees.

"You'll see some consolidation among tobacco farmers into larger farms and fewer farms," Brown said.