The controversial federal tobacco program, which Congress thought it had repaired once and for all in 1982, is back on Capitol Hill seeking another legislative fix.
This time, the program is in such serious trouble that some of its supporters think it is about to collapse, which could stick the government with billions of dollars' worth of surplus tobacco that may be impossible to sell without major losses to the Treasury.
And this time around, more controversy is guaranteed. Tobacco interests that are usually united are at odds; Congress is being asked to approve a program that would give cigarette companies a windfall of surplus tobacco and tobacco's usual critics are ready to pounce.
Tobacco Road legislators are promoting a company-grower plan that would sell government surplus flue-cured and burley tobacco worth more than $3 billion to the companies for about 10 cents on the dollar. In return, the companies would help pay the cost of the tobacco price support program, which is now financed by the farmers.
Under the current program, if a farmer cannot sell his leaf for a price higher than the support rate, he can post his crop as collateral and receive a loan at the support rate. If the tobacco is not sold for a profit by his marketing cooperative, he can forfeit the collateral and keep the loan.
The new plan would continue the support program, with farmers and cigarette companies sharing equally the cost of its operation. A key feature in the plan would allow the manufacturers to continue to buy as much imported tobacco as they wish and to determine the size of the U.S. crop by announcing in advance their domestic leaf needs.
Growers, company officials and local business interests from North Carolina, Kentucky and other southeastern states paraded before the Senate Agriculture Committee yesterday to urge adoption of the plan, which most witnesses described as the last best hope for saving the tobacco program.
The repair bill was introduced by Sen. Jesse Helms (R-N.C.) and nine other tobacco-state senators, including Virginia Republicans John W. Warner and Paul S. Trible Jr. Helms said the bill would "save the taxpayers billions of dollars from potential losses" while ensuring that tobacco production remains in the hands of thousands of small and medium-size farmers who rely on the leaf for most of their income.
"Frankly," Helms said, "the program has not worked as Congress intended. Much more tobacco -- both flue-cured and burley -- had gone under loan than was ever anticipated . . . . So once again we are here in hope of getting it right this time."
But a key difference this time is that tobacco's main champion in the House, Rep. Charlie Rose (D-N.C.), isn't having any part of the repair plan. Rose instead wants to earmark 2 cents of the federal excise tax on cigarettes to prop up the tobacco-support program.
Rose said in an interview that the Senate bill "would cost the taxpayers about $1.2 billion. The money will go to buy up the surplus and give it to the companies. And it would give them total control over the size of the farmers' marketing allotments. It's a company bill . . . , but I doubt if it will ever pass the House or Senate."
In one sense, however, the interests that support the bill have the government and Congress between a rock and a hard place.
Without some kind of relief from the rising costs of financing their own support program, the farmers will vote next winter to abolish the program, witnesses said yesterday. If that occurs, the cost of the huge surplus will revert to Uncle Sam.
And if there is no support program, many experts say, tobacco production will become concentrated in the hands of larger, wealthier farmers and deprive thousands of small, family farmers of vital income.
Growers agreed in 1982 to take over their program's financing by assessing themselves for every pound of tobacco they grow. Since then, however, the fees have risen from 5 cents to 25 cents for flue-cured tobacco and 30 cents for burley, with more increases expected.
Helms, Rose and others promised Congress that self-financing would solve the tobacco growers' problems and that there would be no more contentious battles over the support program. They did, however, come back in 1983 to seek minor changes.
Rose, for one, is chagrined. "I'm embarrassed that we didn't make it work right," he said. "But the Senate approach runs directly against what we promised in 1982."
On paper, the 1982 plan seemed likely to succeed. But supporters did not foresee a drought in 1983 that sent millions of pounds of unsalable, poor-quality leaf into the loan pool. Nor did they anticipate a continuing strong dollar cutting deeply into their exports and increasing imports.
According to most reports, imports account for roughly half of the tobacco used in American-made cigarettes. That, in combination with high price-support loan levels that make U.S. leaf less competitive, swelled the flow of unsold tobacco into the loan pool.
As more tobacco has moved into the surplus pool -- about 800 million pounds of flue-cured and 590 million pounds of burley -- farmers have been forced to pay higher per-pound assessments to cover the costs of loans, interest and storage.
Most argue that the rising assessments have made tobacco so unprofitable that sentiment is growing to abolish the support program, which farmers can vote to do under the law. Such a move would leave the stocks and the debt in government hands.
Under the plan offered by Helms and his allies, federal price supports would be lowered to make U.S. tobacco more competitive. The cigarette companies would buy the surplus at a 90 percent discount and then in the future pay half the costs of financing the support program.
Matthew L. Myers of the Coalition on Smoking OR Health told the committee yesterday that the proposed plan would give companies a windfall worth more than $1 billion.
Myers' remarks put him in a league with Sen. Howard M. Metzenbaum (D-Ohio), who served notice last month that he didn't like what he saw shaping up.
Metzenbaum described the company-grower proposal as "the most crass kind of government relief, being advocated by one of the most conservative members of the Senate. Jesse's the ringleader. I'm surprised that he would advocate a program that's almost socialistic."