ONE BY ONE, over the last few weeks, the House
has taken on the once sacrosanct farm support programs--peanut allotments, sugar "loans," dairy price supports--and voted for needed reforms. But yesterday when it came to tobacco, smoke got in its eyes. Following the Senate's lead, it voted to keep the tobacco price and production control system intact.
It's easy to create confusion about tobacco subsidies. Unlike other government-subsidized crops, tobacco hasn't cost the taxpayer very much--probably less than $1 billion over its history, and most of that was for interest subsidies that have been terminated. This is because rigid production controls have kept farmers from producing costly surpluses for government stockpiles.
Production is limited, however, through a ridiculously feudal system of allotments that conferred on owners of tobacco-producing land in the 1930s the exclusive right to grow flue-cured tobacco, the tobacco most used in cigarettes. These allotments can be inherited, bought or, as is now the predominant case, leased for a substantial fee to the farmers who actually grow the tobacco. The system has worked to the extent that large stockpiles have been avoided, but the cost of leasing growing privileges adds almost $300 million annually to tobacco prices--while unfairly enriching a bunch of absentee landlords.
In recent years, moreover, surplus stocks have been growing despite production controls, as foreign imports of cheaper tobacco grades have undercut government- supported tobacco price levels. The tobacco lobby's response to this has been to call for more government market interference in the form of higher tariffs.
The tobacco issue is further clouded by the fact that any move toward a freer market is likely to reduce tobacco prices and increase supply--and thus, presumably, encourage more smoking. This has enabled the tobacco lobby to turn the health issue to its own advantage in arguing for the retention of price and production controls. Congressmen were thus offered a convenient justification for perpetuating a government-created monopoly for tobacco while voting earlier to end a similar allotment system for peanuts.
The clear-eyed reader will note, however, that there are other and better ways to control tobacco production than through an anachronistic and inequitable allotment system. Nor should the claims of a few thousand farmers who might be adversely affected by a freer market be given any greater weight than, for example, those of the hundreds of thousands of auto, steel and government workers whose jobs have been lost through economic change. If tobacco stockpiles keep growing and pressure for higher tariffs continues, the tobacco support system may find itself again under attack. By that time, perhaps, the smoke will have cleared.