Source: PRESS RELEASE, 11/13/13

Senator Kay Hagan sent a letter to Agriculture Secretary Tom Vilsack and Director of the U.S. Office of Management and Budget (OMB) Sylvia Burwell asking them to exempt the Tobacco Transition Payment Program (TTPP) funds from sequestration in 2014. The funding for TTPP, commonly referred to as the “tobacco buy-out,” is derived from user fees assessed on all tobacco product manufacturers and importers, not general revenues of the federal government. The USDA’s role is to distribute these funds to the growers.

“Funding for TTPP payments comes from tobacco industry user fees, not general revenues of the federal government, and I am deeply troubled that OMB is requiring USDA to subject these payments to sequestration,” said Senator Hagan. “This is unfair to North Carolina’s small tobacco farmers who depend on these funds to provide for their families and make ends meet.”

The TTPP, which was established in 2004, provides $10.1 billion in direct payments between 2005 and 2014 to tobacco growers and landholders in exchange for the elimination of the tobacco quota and price support system.



Additionally, tobacco growers and landholders had the option to collect a one-time lump-sum payment or annual payment paid over ten years. Subjecting TTPP funds to sequestration places an unfair burden on farmers who elected to stretch their payments out over ten years.

“The growers that elected to trust the federal government and receive 10 annual payments will be adversely affected while growers that took the lump sum payment would be unaffected,” wrote Hagan.

Tobacco remains an important part of North Carolina’s $77 billion agriculture economy with 2,000 small tobacco farmers calling North Carolina home.