By WES WOLFE
Staff Writer
Tobacco farmers may not receive promised payments from the federal government in 2014, a galvanizing issue for both Democrat and Republican officials in Congress who are demanding action.
The Tobacco Transition Payment Program (TTPP) is a program signed into law in 2004 to help farmers adjust from a quota and price support system, which had been in place since the 1930s, to more of a free market.
The U.S. Office of Management and Budget requested the U.S. Department of Agriculture make at least a 7.2 percent cut to its budget. As a result, funds from TTPP – commonly known as the tobacco buyout – are being withheld for 2014, which is the last year of the program.
According to the North Carolina Farm Bureau, that means a possible $390 million won’t go to state farmers in January.
“It does not matter whether the U.S. government decides to hold hostage all or just a portion of the millions of non-taxpayer dollars owed to N.C. tobacco farmers, our state’s economy and its largest industry – agriculture – will be negatively impacted,” North Carolina Farm Bureau President Larry Wooten said in a statement.
He added, “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.”
However, Farm Service Agency Chief of Public Affairs Ken Politsch said in response to a request for information that “allocations have not been established for fiscal year 2014,” so an estimate can’t be made.
On direction from the office of Agriculture Secretary Tom Vilsack, the Farm Service Agency – which administers the buyout – has no official response on the buyout program, specifically.
But on Friday, the FSA sent out a news release with a comment by FSA Administrator Juan Garcia on cuts brought about by sequestration.
“These sequester percentages reflect current law estimates; however with the continuing budget uncertainty, Congress still may adjust the exact percentage reduction. Today’s announcement intends to help producers plan for the impact of sequestration cuts in (fiscal year 2014),” Garcia said in the statement.
He added, “At this time, FSA is required to implement the sequester reductions. Due to the expiration of the farm bill on Sept. 30, FSA does not have the flexibility to cover these payment reductions in the same manner as in (fiscal year 2013). FSA will provide notification as early as practicable on the specific payment reductions.”
For 2013, 2,475 Lenoir County producers were involved in the tobacco buyout program, receiving more than $10 million. In Greene County, 1,743 participants took in nearly $8.3 million and 1,259 Jones County participants received more than $3.4 million.
U.S. Rep. Mike McIntyre, D-N.C., who was the leading Democratic co-sponsor of the tobacco buyout legislation said in January the program has had a $4 billion impact in the state.
Advocates for releasing the money note the buyout funds aren’t created from general taxes, but user fees paid by tobacco manufacturers. About $1 billion was set to go to farmers nationwide next year.
McIntyre was joined by U.S. Rep. Renee Ellmers, R-N.C., U.S. Rep. Richard Hudson, R-N.C. and U.S. Rep. Robert Hurt, R-Va. in a letter to Vilsack and OMB Director Sylvia Burwell.
“TTPP was a 10-year commitment to our farmers and their families,” they wrote. “USDA has a responsibility to honor its commitment.”
U.S. Sen. Richard Burr, R-N.C., and U.S. Sen. Kay Hagan, D-N.C., also sent letters urging the OMB and USDA reverse course.
“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,” Burr wrote.
Hagan wrote she was “deeply troubled” and “the growers that elected to trust the government and receive 10 annual payments will be adversely affected while growers that took the lump sum payment would be unaffected.”
The second round of budget cuts resulting from sequestration will kick in Jan. 15 unless Congress and President Barack Obama make a budget deal in the meantime.
Wes Wolfe can be reached at 252-559-1075 and Wes.Wolfe@Kinston.com. Follow him on Twitter @WolfeReports.
Breakout box:
State and local participation in and disbursements from the Tobacco Transition Payment Program for 2013
Lenoir County
Participants: 2,475
Disbursement: $10,028,840.10
Greene County
Participants: 1,743
Disbursement: $8,299,108.90
Jones County
Participants: 1,259
Disbursement: $3,451,793.40
Statewide
Participants: 91,278
Disbursement: 290,154,916