Forty-two million Americans still smoke, and there is a growing market for tobacco products in China and Southeast Asia.
It’s over. It’s finally over.
After 76 years, tobacco farmers are no longer going to receive federal payments to maintain their financial stability. The last federal subsidies to tobacco farmers will go out this month.
While the federal movement has subsidized tobacco farmers since 1938, for the last 10 years it has been making payments out of a 10-year $10 billion federal program to wean the nation’s 10,000 tobacco farmers off of subsidies. That program ends at the end of October.
The subsidy program for tobacco initially was to provide price support and crop quota protection year to year, but in recent years the funds were more specifically set aside to help pay for crop insurance. As much as 60 percent of crop insurance payments made by tobacco farmers in the United States have been paid for by federal subsidies.
As one Winston-Salem, N.C. farmer explained to National Public Radio, “our safety net now is gone.”
But tobacco farmers will survive, thanks to a burgeoning market for tobacco products in China and Southeast Asia, which makes up for a lessening demand for tobacco in the United States and Europe.
The U. S. Agriculture Department estimates the U.S. tobacco crop brings in about $1.5 billion a year.
Most American tobacco farmers have contractual agreements with tobacco companies, which determine how much farmers get per acre of tobacco. While the price per acre has dropped, and many tobacco farmers are using less acreage for tobacco, they manage to make ends meet by growing other products on the extra acreage such as wheat, some other vegetables and fruit in warmer climates.
Tobacco growers also battle the continuing effort by health officials to reduce smoking, and a state-by-state or county-by-county effort to raise much need revenue through sin taxes on cigarettes and other tobacco products.
The Centers for Disease Control and Prevention estimate there are 42 million Americans who are active cigarette smokers. The CDC is actively involved in campaigns to reduce that number with ad campaigns decrying the danger of second-hand smoke and the cancers that come from smoking cigarettes.
Theeffective tax rate on cigarettes, which includes a federal tax of just over $1 per 20-pack of cigarettes, is as high as $4.35 per pack in New York, according to the Tax Foundation.
Kent McDill is a staff writer for Millionaire Corner. McDill spent 30 years as a sports writer, working for United Press International and the Daily Herald of Arlington Heights, Ill. From 1988-1999, he covered the Chicago Bulls for the Daily Herald, traveling with them every day through the nine-month season. He also covered the Bulls for UPI from 1985-88, and currently covers the team for www.nba.com. He has written two books on the Bulls, including the new title “100 Things Bulls Fans Should Know And Do Before They Die’, published by Triumph Books. In August 2013, his new book “100 Things Bears Fans Should Know And Do Before They Die” gets published.
In 2008, he resigned from the Herald and became a freelance writer. The Herald hired him to write business features and speeches for the Daily Herald Business Conferences and Awards presentations.
McDill also writes a monthly parenting column for the Herald’s Suburban Parent magazine.
McDill is the father of four children, and an active fan of soccer, Jimmy Buffett and all things Disney.