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Policy Reform in the Tobacco 

Industry: Producers Adapt to a 

Changing Market

Linda Foreman

William McBride

Economic

Information

Bulletin

Number 77

May 2011

United States 

Department of 

Agriculture

Economic

Research

Service
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Recommended citation format for this publication: 

Foreman, Linda, and William McBride. Policy Reform in the Tobacco 

Industry: Producers Adapt to a Changing Market, EIB-77, U.S. 

Department of Agriculture, Economic Research Service, May 2011.

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United States

Department

of Agriculture

www.ers.usda.gov

A Report from the Economic Research Service

Abstract

The Fair and Equitable Tobacco Reform Act of 2004 eliminated tobacco quotas and 

tobacco price supports and allowed producers to plant any amount or type of tobacco 

regardless of geographic location. The authors found that fl ue-cured tobacco producers 

made greater adjustments to their operations after the buyout than did burley tobacco 

producers. Flue-cured tobacco producers were more likely to increase tobacco acres 

per farm, pushing up the tobacco acreage per farm at a faster rate compared with 

burley tobacco producers. Flue-cured producers also were more likely to invest in their 

tobacco enterprises and invested more per farm after 2004. As a result of increased 

acreage, tobacco operations became more sensitive to changes in labor costs. With over 

75 percent of tobacco farms using hired or contract labor in 2008, the availability and 

cost of workers have become increasingly important to tobacco producers. This report 

is based on data collected from the tobacco version of the 2008 Agricultural Resource 

Management Survey (ARMS), which focused on U.S. producers of burley and fl ue-cured 

tobacco in 2008 and how their tobacco operations have changed since 2000 and 2004.

Keywords: Tobacco, structural change, farm adjustments, adaptations, Agricultural 

Resources Management Survey (ARMS)

Acknowledgments

The authors thank the following individuals for their insights and recommendations: Tom 

Capehart of USDA’s Economic Research Service and three anonymous reviewers selected 

by ERS’s Peer Review Coordinating Council. The authors also thank Angela Anderson 

for editing the manuscript and Wynnice Pointer-Napper for design assistance. 

Linda Foreman, lfarmer@ers.usda.gov

William McBride, wmcbride@ers.usda.gov

Policy Reform in the Tobacco 

Industry: Producers Adapt to a 

Changing Market

Economic 

Information 

Bulletin 

Number 77

May 2011
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Contents

Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

U.S. Tobacco Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Tobacco Acreage Per Farm Increased After the Buyout . . . . . . . . . . . . . 5

Tobacco Acreage Per Farm May Continue To Rise . . . . . . . . . . . . . . . . . 9

Labor on Tobacco Farms Is an Escalating Issue. . . . . . . . . . . . . . . . . . . 11

Tobacco-Related Investments in Post-Buyout Years. . . . . . . . . . . . . . . . 14

Tobacco Producers Rely on Marketing Contracts . . . . . . . . . . . . . . . . . 16

Conclusions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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Summary

What Is the Issue?

Prior to the 2004 tobacco buyout, burley and fl ue-cured tobacco producers 

operated under a system of quotas and price supports that kept tobacco prices 

artifi cially high by limiting tobacco production. The Fair and Equitable 

Tobacco Reform Act of 2004 (or tobacco buyout) changed the tobacco policy 

in the United States by eliminating quotas and price supports, while providing 

buyout payments to quota owners and growers. Without tobacco quotas, 

producers were freed from tobacco planting restrictions that limited the 

amounts and types of tobacco that could be marketed in a geographic region. 

While changes in tobacco policy gave producers the freedom to plant as much 

tobacco as they wished, they were also exposed to increased market and price 

risks, ultimately impacting their ability to adapt to current market conditions.

What Did the Study Find?

• Flue-cured tobacco producers made greater changes in their tobacco 

operations than burley tobacco producers in the fi rst 4 years after the 

buyout by increasing their tobacco acreage more and investing more in 

their tobacco operations.

• Producers who continued to grow tobacco after the buyout farmed more 

tobacco acreage per farm in 2008 than they did in 2004. Flue-cured 

tobacco producers increased their tobacco acreage per farm by 30 acres, 

or 50 percent, between 2004 and 2008, while burley tobacco producers 

increased their tobacco acreage per farm by 3.6 acres, or 26 percent.

• Tobacco acreage per farm is expected to rise through 2013. Producers 

who intend to plant fl ue-cured tobacco in 2013 plan to plant 115 acres 

of tobacco per farm while burley producers expect to plant 20 acres of 

tobacco per farm. Much of the expected rise in tobacco acreage per farm 

is attributed to the exit of smaller scale tobacco producers prior to 2013 

since the total tobacco acreage for burley and fl ue-cured tobacco is anticipated to remain roughly the same in 2013 as in 2008.

• Flue-cured tobacco producers were more likely than burley tobacco 

producers to have made capital investments in their tobacco operations. 

The principal reasons for investing were to improve production effi ciency, 

handle the expansion in tobacco acres, and replace machinery, equipment, 

and buildings.

• As producers increased their tobacco acreage per farm, they became 

more sensitive to fl uctuations in the availability and cost of hired labor. 

Tobacco producers reported that it takes an average of 72 labor hours per 

acre to produce fl ue-cured tobacco for market and 151 labor hours per 

acre for burley. Hired labor accounts for the majority of tobacco labor, 

with fl ue-cured tobacco producers more dependent on migrant labor than 

burley producers due to the larger size of fl ue-cured operations.

• Tobacco producers are using marketing contracts to manage the increased 

marketing risk. Without auction houses or guaranteed buyers, most 

tobacco producers are now marketing their tobacco under a marketing 
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contract. However, producers are exposed to market risk if buyers should 

choose not to renew contracts, as most contracts last for 1 year.

How Was the Study Conducted?

The authors of this report used data collected from the tobacco version of 

the 2008 Agricultural Resource Management Survey (ARMS). The ARMS 

is a detailed, annual survey of farm businesses and associated households 

conducted jointly by the U.S. Department of Agriculture’s Economic 

Research Service (ERS) and National Agricultural Statistics Service (NASS). 

The tobacco version of the survey focused only on producers of either burley 

or fl ue-cured tobacco in 2008. To track the adjustments made by the 2008 

tobacco producers, growers were asked to report on their tobacco operations in 2000, 2004, and 2008. Therefore, the ARMS data presented in this 

paper for 2000 and 2004 are not representative of all tobacco producers in 

those years, since those who exited tobacco farming before 2008 were not 

included in the survey. Tobacco producers in Kentucky, Tennessee, and North 

Carolina, where the majority of burley and fl ue-cured tobacco production 

occurs, were included in the survey.
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Introduction

Marketing quotas and price supports were longstanding features of the U.S. 

farm policy on tobacco until 2004, when they were eliminated by Congress. 

The original purpose of quotas was to limit the amount of marketable tobacco 

leaf and generate stable tobacco prices for tobacco producers. Tobacco quotas 

offered a viable system for regulating tobacco production until the 1990s 

when demand fell for U.S. tobacco. The decreased demand was due to higher 

retail prices of cigarettes, increased smoking restrictions, increased use of 

foreign tobacco in cigarettes, a reduced amount of tobacco leaf per cigarette, 

and a larger gap between U.S. and foreign tobacco leaf prices due partly 

to the price support program. Lower demand led to tobacco quota reductions that left many tobacco producers struggling to maintain viable tobacco 

farming operations during an era of rising production costs.

The quota reductions spurred calls by quota owners and growers for a 

tobacco buyout. Owners wished to be compensated for quota losses since 

quotas were considered assets. An increasing number of growers supported 

a buyout as the rental rate for tobacco quotas rose, pushing up the costs of 

tobacco production. In response, Congress enacted the Fair and Equitable 

Tobacco Reform Act of 2004, ending tobacco quotas and price supports for 

tobacco while providing compensation for quota owners and tobacco growers 

(Womach, 2004). The tobacco buyout created a market system where any 

producer, regardless of location, can grow tobacco, and the amounts and 

types of tobacco grown are not limited by quotas. The buyout, however, 

increased the market risk for tobacco producers since growers were not guaranteed a minimum price or a buyer for their tobacco.

Since the tobacco buyout was anticipated and most proposals provided additional payments to tobacco growers, many struggling producers continued 

farming tobacco despite the reduced quota levels that preceded the buyout. 

Immediately after the tobacco buyout, however, many tobacco producers 

exited the industry. Others continued to farm, but quit growing tobacco. In 

the fi rst year after the tobacco buyout, approximately 63 percent of fl uecured tobacco producers and 56 percent of the burley tobacco producers who 

farmed tobacco in 2004 stopped farming tobacco (Dohlman, Foreman, and 

Da Pra, 2009). It was not clear whether the remaining tobacco producers 

would benefi t from the policy change, what new issues they would face, 

or how they would restructure their enterprises to take advantage of the 

changing tobacco industry.

The Government’s tobacco policy implemented in 2004 provides a unique 

opportunity to assess how the remaining tobacco producers adapted their 

enterprises in response to changing markets, fewer tobacco growers, and 

greater choices in the amounts and types of tobacco grown. Structural adaptations made by the remaining fl ue-cured and burley tobacco producers 

are presented using data derived from the tobacco version of the 2008 

Agricultural Resource Management Survey (ARMS) (see box, “The 2008 

Tobacco Version of the Agricultural Resource Management Survey”). The 

results may indicate how tobacco farms adjust to future policy changes.
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The analysis was primarily based on data from the tobacco version of the 2008 

Agricultural Resource Management Survey (ARMS). This version of ARMS 

collected data from producers who planted either burley or fl ue-cured tobacco in 

2008 and focused on their characteristics, fi nancial status, and capital and labor 

usage on tobacco enterprises. The survey did not include growers who produced 

tobacco in 2000 or 2004, but stopped producing tobacco by 2008. Data for 2000, 

2004, and 2008 were collected for select questions, so comparisons could be made 

between pre- and post-buyout years. Since data for 2000 and 2004 were collected 

only from producers who grew fl ue-cured or burley tobacco in 2008, the 2000 and 

2004 data are not representative of all tobacco producers in those periods. Tobacco 

producers in the following States were surveyed: Virginia, North Carolina, South 

Carolina, Georgia, Kentucky, and Tennessee (box fi g.)

The 2008 Tobacco Version of the Agricultural 

Resource Management Survey

States surveyed in the 2008 tobacco version of ARMS

All flue-cured tobacco acres and 91 percent of burley tobacco acres were covered

by the survey

Note: Red indicates States where most burley tobacco production occurs; most 

flue-cured tobacco is produced in the States highlighted in blue.

Source: USDA’s 2008 Agricultural Resource Management Survey, conducted 

by National Agricultural Statistics Service and the Economic Research Service.

VA

KY

NC

TN

GA

SC
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U.S. Tobacco Policy

Government tobacco policy began with the Agricultural Adjustment Act 

of 1933. This act set up a payment system for producers who reduced their 

production of seven basic commodities—corn, wheat, cotton, rice, peanuts, 

tobacco, and milk. The 1933 Act was later declared unconstitutional. The 1938 

Agricultural Adjustment Act authorized tobacco marketing quotas and tobacco 

price supports based on parity. The 1938 Act was amended several times.

The quantities of major types of tobacco that could be marketed yearly 

were controlled by quotas (see box, “Introduction to Flue-Cured and Burley 

Tobacco”). Quotas were the right to sell tobacco at or above the support 

price in specifi c geographical regions, such as a county or State. Quotas 

were assigned to farms based on each farm’s history of tobacco production. 

Tobacco quotas were owned by farm landlords and tobacco producers, and 

owners could either grow their own tobacco or lease their quota to tobacco 

growers. Farm landlords acquired their tobacco quotas through retention 

or inheritance. Quotas could be transferred between farms with certain 

geographical restrictions. Quota transfer rules were generally stricter in 

the burley tobacco production region compared with rules in the fl ue-cured 

tobacco production region. These restrictions on quota transfers slowed the 

consolidation of tobacco farms into larger units, unlike what occurred in most 

other types of farming.

Before the 2004 change in tobacco policy, tobacco producers were guaranteed 

to have a purchaser for their tobacco at a minimum price through the use of 

nonrecourse loans. If tobacco was not purchased at an auction market, the price 

stabilization cooperative would buy the tobacco at the loan rate for tobacco. 

For 2004, the weighted support price was set at $1.69 per pound for fl uecured tobacco and $1.87 per pound for burley tobacco. The cooperative would 

store the tobacco and sell it later to repay the loan and interest. The change in 

tobacco policy eliminated the nonrecourse loan program for tobacco.
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Burley and fl ue-cured tobacco are the two major types of tobacco grown in the 

United States.1 These two tobacco types account for 92 percent of the U.S. tobacco 

acreage since the tobacco buyout. Burley tobacco accounts for 29 percent of U.S. 

tobacco acreage and fl ue-cured tobacco accounts for 63 percent.

Flue-cured tobacco is traditionally grown in Virginia, North Carolina, South 

Carolina, Georgia, and Florida. These locations provide sandy soil as well as 

warm weather, humidity, and light rainfall: all conditions favored by the fl uecured tobacco plant. In contrast to fl ue-cured tobacco, burley tobacco needs to be 

grown on well-drained, lime-based soils typically found in Kentucky, Tennessee, 

the southern portions of Ohio, Indiana, and Missouri, and the western regions of 

Virginia, North Carolina, and West Virginia.

U.S. burley and fl ue-cured tobacco are used primarily in cigarettes. Most cigarettes 

contain a blend of tobacco, since each tobacco type has different characteristics 

and blending ensures desirable properties and consistent taste. For example, after 

curing, the burley tobacco leaf has a low sugar content, while fl ue-cured tobacco 

leaf has a high sugar content. The most popular blend of cigarettes is the American 

blend. American blend cigarettes are composed of burley, fl ue-cured, and oriental 

tobaccos. The mix of tobacco types varies by brand to achieve desired brand 

characteristics.

1For further information on tobacco types, visit http://www.tobacco.yaia.com/types.html.

Introduction to Flue-Cured and Burley Tobacco
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Tobacco Acreage Per Farm Increased 

After the Buyout

Both fl ue-cured and burley tobacco producers increased their acres of tobacco 

after the change in tobacco policy, but fl ue-cured tobacco producers increased 

their tobacco acreages by a greater percentage than burley tobacco producers 

(see box, “Characteristics of Flue-Cured and Burley Tobacco Farms”). Fluecured tobacco producers planted an average of 92 acres of tobacco per farm 

in 2008, up 50 percent from the 61 acres per farm they planted in 2004 and 

the 58 acres they planted in 2000 (fi g. 1). About 75 percent of the 2008 fl uecured tobacco producers increased their planted acres of fl ue-cured tobacco 

after the buyout. North Carolina tobacco producers were most likely (82 

percent) to increase their fl ue-cured tobacco acres per farm, while Virginia 

producers were the least likely (55 percent) to increase their fl ue-cured acres 

per farm.

The increase in fl ue-cured acres planted per farm after the 2004 tobacco 

buyout refl ects the recovery in total fl ue-cured tobacco acres to nearly the 

prebuyout level, as well as the consolidation of tobacco acreage on fewer 

farms growing fl ue-cured. Increased demand for fl ue-cured tobacco after the 

buyout supported the recovery as total disappearance of fl ue-cured tobacco 

leaf rose from 526 million pounds in the 2004/05 marketing year to 642 

million pounds in the 2007/08 marketing year (Dohlman, Foreman, and Da 

Pra, 2009). This increased demand is refl ected in the changing number of 

harvested fl ue-cured tobacco acres after the tobacco buyout. In 2004, 228,400 

acres of fl ue-cured tobacco were harvested and, in 2005, the fi rst year after 

the buyout, harvested acres fell to 175,500 acres. By 2008, rising demand for 

fl ue-cured tobacco boosted fl ue-cured tobacco acreage to 223,000, almost on 

level with the prebuyout year (NASS, 2010). The 2008 fl ue-cured tobacco 

Figure 1

Tobacco acreage per farm for flue-cured tobacco producers1

Producers planted an average of 92 acres of flue-cured tobacco per farm in 2008,

up 50 percent in the 4 years after the buyout, while producers intending to plant 

flue-cured tobacco in 2013 expect to plant 115 acres of the crop per farm in 2013

Acres per farm

1In 2000, 2004, 2008, and 2013, an acre or less of nonflue-cured tobacco per farm was 

planted or was expected to be planted by flue-cured tobacco producers.

2Acres of tobacco planted per farm by producers who planted flue-cured tobacco in 2008.

3Acres of tobacco planted or expected to be planted per farm by producers who plan to 

plant flue-cured tobacco in 2013.

Source: USDA’s 2008 Agricultural Resource Management Survey, conducted 

by National Agricultural Statistics Service and the Economic Research Service.

2000 2004 2008 2013

0

20

40

60

80

100

120

140

2008 producers2

2013 producers3
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The characteristics of farm operations and their operators 

impact the willingness of farm operators to expand or 

restructure their farming operations. LaDue, Miller, and 

Kwiatkowski found that operators of large farm businesses 

and younger farm operators were most likely to expand their 

farm operations. Farm operators operating smaller farms 

often have lower farm incomes and, therefore, supplement 

their farm income with off-farm income more frequently 

than operators of larger farms. Operators of smaller farms 

often face greater opportunity costs to signifi cantly expand 

their farm enterprises since they may need to choose how 

to allocate their labor resources between their off-farm 

work and farm work. Older operators are less willing to 

expand or invest in their farming operations, since they 

have less time to receive suffi cient returns from investing 

in their farm operations.

The major differences between fl ue-cured and burley tobacco 

farms, besides location, include size, commodity mix, and 

ability to generate farm income. In the United States, farms 

growing burley tobacco are more numerous, but smaller 

in terms of both total farm acreage per farm and tobacco 

acreage per farm compared with farms growing fl ue-cured 

tobacco. According to the 2008 Agricultural Resource 

Management Survey (ARMS), there were roughly 11,800 

farms growing burley tobacco compared with 2,600 farms 

growing fl ue-cured tobacco in the surveyed States (see box 

table). Flue-cured tobacco farms averaged 887 total acres per 

farm with an average of 92 acres of tobacco per farm in 2008. 

In contrast, burley tobacco farms averaged 340 total acres per 

farm with just over 17 acres of tobacco per farm in 2008.

Although tobacco acreage makes up a small percentage 

of farm acreage on tobacco farms, the impact of tobacco 

enterprises on farm operations is large. The net returns to 

tobacco production are greater than those for other crops, 

even though tobacco’s cost of production per acre is relatively 

high. On average, tobacco accounts for 50 percent of the 

value of production on burley and fl ue-cured tobacco farms 

in 2008.

Household income of burley tobacco farmers averaged 

$76,413 in 2008 compared with $142,236 for fl ue-cured 

tobacco farmers. Burley tobacco producers earned an average 

of $26,465 from farming compared with $103,395 earned 

by fl ue-cured tobacco producers due to the smaller scale of 

burley tobacco farms and their farms’ commodity mixes. 

As a result, burley tobacco families relied more on off-farm 

income to meet their fi nancial needs than fl ue-cured tobacco 

families. On average, families of burley tobacco operators 

derived 65 percent of their incomes from off-farm sources 

compared with 27 percent of fl ue-cured tobacco operators 

in 2008. To supplement their farm incomes, burley tobacco 

producers more frequently worked off the farm compared 

with fl ue-cured tobacco producers. In 2008, 36 percent 

of burley tobacco producers worked at off-farm jobs or 

businesses compared with 14 percent of fl ue-cured tobacco 

producers. Expansion of the farm operation may require farm 

operators who work off the farm to make a choice in their 

allocation of labor between farm and off-farm work.

Characteristics of Flue-Cured and Burley Tobacco Farms

Characteristics of fl ue-cured tobacco 

and burley tobacco farms, 2008 

Burley tobacco operators farmed fewer acres and planted less 

tobacco acreage than fl ue-cured tobacco operators

Item Flue-cured Burley

Number of tobacco farms 2,639 11,780

Tobacco as percent of value

 of production 51 50

Operated acres per farm 887 340

Planted tobacco acres per farm 92 17

Operator worked off-farm (percent) 14 36

Operator principal occupation 

 (percent) 838 952

Farming 94 69

Nonfarm work *6 29

Operator age (mean) 52 55

Less than 50 years (percent) 40 39

65 or more (percent) 11 21

Number of farms with:

Corn 45 22

Hay 22 76

Soybeans 63 8

Cattle 20 74 

Household income/farm family 

 (dollars) 142,236 76,413

Farm income/farm family 103,395 26,465

Off-farm income/farm family 38,841 49,949

Coeffi cient of Variation (CV) = (Standard Error/Estimate) x 100.

* indicates that CV is greater than 25 and less than or equal to 50.

Source: USDA’s 2008 Agricultural Resource Management Survey, 

conducted by National Agricultural Statistics Service and the 

Economic Research Service.
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acreage, however, was spread over fewer farms since many tobacco growers 

exited the industry after the buyout.

Producers growing fl ue-cured tobacco in 2008 operated larger-than-average 

tobacco enterprises in 2004. According to 2004 ARMS data, fl ue-cured 

tobacco producers harvested 33 acres of fl ue-cured tobacco per farm in 2004, 

but producers who grew fl ue-cured tobacco in 2008 reported harvesting 

an average of 61 acres per farm in 2004. A number of factors may cause 

producers with a higher-than-average number of acres planted to a specifi c 

commodity to continue production of that commodity. Producers with more 

acres may realize cost advantages due to economies of size, which allow 

them to spread their fi xed capital costs over more acreage. Producers with 

greater acreages planted to a specifi c commodity are likely to have more 

invested in the specialized machinery and farm structures needed to grow 

and store the crop and are more likely to rely on the income generated from 

that crop.

Producers who grew fl ue-cured tobacco in 2008 typically planted only that 

tobacco type in 2004. Only 4 percent of fl ue-cured tobacco growers produced 

other tobacco types in 2004. After the geographic restrictions were removed 

by the buyout legislation, small but increasing numbers of Virginia and North 

Carolina fl ue-cured tobacco producers began experimenting with burley 

tobacco. By 2008, 10 percent of fl ue-cured tobacco producers also grew 

another type of tobacco. Flue-cured tobacco producers averaged 1 acre of 

other tobacco (burley, dark, other) per farm in 2008.

Four years after tobacco quotas were eliminated, burley tobacco producers 

averaged 12.5 acres of burley tobacco per farm, up from 10.7 acres in 2004 

(fi g. 2). Kentucky burley tobacco producers farmed an additional 1.7 acres of 

burley tobacco per farm in 2008, while Tennessee burley tobacco producers 

added less than half of an acre to their production area. Slightly less than half 

Figure 2

Tobacco acreage per farm for burley tobacco producers

Producers increased their burley acres per farm by 16 percent to 12.5 acres,

4 years after the buyout, while producers who intend to produce burley in 2013 

expect to plant 15.6 acres of the crop in 2013

Acres per farm

1Acres of tobacco planted per farm by producers who planted burley tobacco in 2008.

2 Acres of tobacco planted or expected to be planted per farm by producers who plan to plant 

burley tobacco in 2013.

Source: USDA’s 2008 Agricultural Resource Management Survey, conducted by National 

Agricultural Statistics Service and the Economic Research Service.

All tobacco

2000 2004 2008 2013

0

5

10

15

20

25

2008 burley producers1 2013 burley producers2

2008 burley producers1 2013 burley producers2

Burley tobacco acres
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of burley tobacco producers in 2008 increased their burley tobacco acreage 

from 2004.

The smaller rate of increase in per farm acres of burley tobacco compared 

with fl ue-cured tobacco partly refl ects the continued decline in demand for 

burley tobacco after the buyout even as burley tobacco prices declined. Total 

disappearance of burley tobacco fell from 328 million pounds in the 2004/05 

marketing year to 247 million pounds in the 2007/08 marketing year, while 

harvested acres of burley fell from 153,150 acres in 2004 to 97,500 acres in 

2008 (Dohlman, Foreman, and Da Pra, 2009). The changing demand will 

be refl ected in the number of pounds that tobacco companies will purchase 

through their tobacco marketing contracts. In addition, the smaller rate of 

increase in tobacco acres on burley tobacco farms may also refl ect the diffi -

culties faced by many burley tobacco producers in increasing their tobacco 

acreage. Burley tobacco is extremely labor intensive, and a large percentage of 

burley tobacco producers are not full-time farmers (see box, “Characteristics of 

Flue-Cured and Burley Tobacco Farms”). For many burley tobacco producers, 

the expansion of tobacco acreage may require them to forego off-farm income 

or postpone retirement. Over 21 percent of burley farm operators are 65 years 

or older compared with 11 percent of fl ue-cured tobacco producers.

After the tobacco buyout, burley producers increased their acreage of other 

tobacco by 1.6 acres, on top of the additional 1.7 acres of burley per farm, 

between 2004 and 2008. The share of producers growing other tobacco types 

did not change signifi cantly from 2004. About 9 percent of burley tobacco 

producers grew another type of tobacco in 2008. Hence, the elimination of 

geographic restrictions on tobacco did not result in a large number of burley 

tobacco producers diversifying into other tobacco types within the traditional 

burley tobacco production region. 
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Tobacco Acreage Per Farm 

May Continue To Rise

Since tobacco farms continually adjust to market conditions, the ARMS 

questionnaire contained two questions that covered tobacco producers’ expectations for their tobacco enterprises. The fi rst question asked producers how 

many more years they expected to produce tobacco. The second question 

asked producers how many acres of each type of tobacco they expected to 

plant in 2013.1

According to the 2008 ARMS, about 35 percent of fl ue-cured tobacco 

producers planned on increasing their acres of fl ue-cured tobacco between 

2008 and 2013, while 27 percent of burley tobacco producers expected to 

increase their burley tobacco acreage. In contrast, 28 percent of both the 

fl ue-cured and burley tobacco producers surveyed in 2008 indicated that they 

planned to exit tobacco farming by 2013.

Data from the 2008 ARMS show that the average number of fl ue-cured 

tobacco acres per farm is expected to rise to 115 acres by 2013, up from 92 

acres per farm in 2008 (see fi g. 1). More than half of the expected increase is 

due to producers with a smaller-than-average number of fl ue-cured tobacco 

acres exiting the industry, while producers with more acreage continue 

production. Producers who anticipate raising fl ue-cured tobacco in 2013 

expect to plant an additional 9 acres of the crop, up from the 106 acres in 

2008 to 115 acres in 2013.

The 2008 ARMS data indicate that the average burley tobacco acreage per 

farm is expected to rise to 15.6 acres per farm by 2013, up from 12.5 acres 

per farm in 2008 (see fi g. 2). Only 1.3 acres of the expected increase is due 

to producers expanding their burley tobacco acreage per farm, while the 

remaining portion of the increase—1.8 acres—is a consequence of producers 

with a smaller number of burley acres exiting tobacco farming.

Large changes in the aggregate acreage of fl ue-cured and burley tobacco 

between 2008 and 2013 are not anticipated by 2008 tobacco survey 

participants. The ARMS data on future tobacco acreage suggest that the 

aggregate fl ue-cured tobacco acreage may drop by 2 percent between 

2008 and 2013, while burley acreage may rise by 1 percent. Recent 

concerns over the use of fl avorings in cigarettes may change the plans 

reported by burley tobacco producers on the 2008 ARMS (see box, 

“Possible Ban on Menthol Cigarettes”). 

1The analysis of these data excludes 

new entrants in burley or fl ue-cured tobacco production, who did not produce 

either fl ue-cured or burley tobacco in 

2008. The omitted data have little effect on this analysis since most future 

entrants in fl ue-cured or burley tobacco 

production are already producing one 

of these two major tobacco types, and 

data for these producers are included in 

the analysis.
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As a result of the Family Smoking Prevention and Tobacco Control Act, enacted 

in June 2009, the U.S. Food and Drug Administration (FDA) now has the power 

to regulate the content, manufacture, and sale of tobacco products, including 

regulating ingredients. The act included a ban on cigarettes containing cloves, 

cinnamon, candy, or fruit fl avors but exempted menthol-fl avored cigarettes. The 

FDA and World Health Organization are currently reviewing the use of menthol in 

cigarettes, while Canada has already banned all fl avorings in cigarettes, including 

menthol. Flavoring and sugars are often added to burley tobacco to improve the 

fl avor and taste of cigarettes, because burley tobacco leaf can produce a harsh 

taste and its smoke can be irritating. Since a ruling against the use of menthol in 

cigarettes may reduce the demand for burley tobacco, burley tobacco producers 

are facing an uncertain future. This uncertainty reduces the incentive for burley 

tobacco producers to expand or invest in their tobacco operations.

Possible Ban on Menthol Cigarettes
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Labor on Tobacco Farms 

Is an Escalating Issue

Tobacco has always been a labor-intensive crop, and labor availability and 

costs have always been important issues for tobacco producers, especially 

as the number of tobacco acres planted per farm increased and labor’s rising 

share of production costs made controlling labor costs more critical to profitability. According to the 2008 ARMS, it takes 72 labor hours per acre to 

produce and prepare fl ue-cured tobacco for market, compared with 151 labor 

hours per acre for burley with half of tobacco labor hours needed for the 

harvest and preparation of tobacco for market (fi g. 3). In contrast, fi eld crops 

generally require less than 3 hours of labor per acre.

Most of the difference in labor hours between the two types of tobacco and 

between tobacco and fi eld crops is due to differences in production practices. 

Tobacco seeds are planted in seed beds, frames, or greenhouses. Once the 

seedlings are ready, almost all tobacco producers mechanically transplant 

them in the fi eld. Not all tobacco producers raise their own tobacco seedlings. 

Some purchase them from greenhouse growers who may or may not be tobacco 

producers. Tobacco greenhouses often cannot be used for other purposes.

Burley tobacco production differs from fl ue-cured tobacco production mainly 

in the harvest and drying process. Burley tobacco is often harvested manually 

by cutting the stalk at soil level and hanging the entire plant upside down to dry. 

Burley tobacco is air-cured, meaning that the tobacco is dried from 4 to 8 weeks 

in well-ventilated barns or other structures that have open sides and a roof. After 

drying, burley tobacco leaves are usually manually stripped from the stalk, typically in tobacco stripping rooms, and sorted into bales based on the stalk position 

of the leaf.

In contrast to burley tobacco, fl ue-cured tobacco leaves are harvested as they 

ripen. Harvesting fl ue-cured tobacco leaf requires three or four trips through 

a fi eld, often with a mechanical harvester, to pick tobacco leaves as they 

ripen. Lower leaves ripen fi rst, followed in succession by leaves higher up on 

Figure 3

Labor hours for tobacco production, by tobacco type, 2008

Harvesting and preparing the crop for market are the most labor-intensive activities 

in tobacco production

Hours per acre

Source: USDA’s 2008 Agricultural Resource Management Survey, conducted by National 

Agricultural Statistics Service and the Economic Research Service.

Plant

preparation

Planting or

transplanting

Planting to

harvest

Harvest Preparing

for marketing

Total labor

use

0

20

40

60

80

100

120

140

160

Flue-cured Burley
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the stalk. After harvest, the leaves are put in racks or boxes and placed in a 

curing barn to dry for roughly 1 week. After drying, the tobacco leaves are 

sorted by hand into large bales based on the leaf position.

The labor-intensive nature of tobacco production makes labor costs an important component of total costs. Labor—paid and unpaid—accounted for 21 

percent of the total cost of production per acre for fl ue-cured tobacco and 38 

percent for burley tobacco in 2004, the last tobacco growing season before 

the tobacco buyout became effective (Foreman, 2006).2 With the elimination 

of quotas, the costs for quota rental vanished, pushing labor’s share of total 

production costs per acre to roughly 30 percent for fl ue-cured tobacco and 50 

percent for burley tobacco immediately after the tobacco buyout.

Over the years, as the number of tobacco farms declined and the remaining 

tobacco farms increased their tobacco acreage, producers increasingly relied 

on hired labor. By 2008, 75 percent of burley tobacco farms and 95 percent 

of fl ue-cured tobacco farms used hired or contract labor. Hired and contract 

labor provided 61 percent of all labor hours needed for burley tobacco 

production and 84 percent for fl ue-cured tobacco production (fi g. 4).

Nonmigrant hired and contract labor provided 29 percent of the labor for 

burley tobacco and 23 percent of the labor needed for fl ue-cured tobacco. 

2The cost of production estimate 

includes cash and noncash items. 

Noncash items are usually valued using 

opportunity costs. For the tobacco cost 

of production estimate, the agricultural 

wage rate was used to estimate the opportunity costs of unpaid labor.

Figure 4

Sources of tobacco labor, 2008

Hired labor accounts for most of the labor on tobacco farms

Source: USDA’s 2008 Agricultural Resource Management Survey, conducted 

by National Agricultural Statistics Service and the Economic Research Service.

Operator and family labor

Migrant hired 

and contract labor

Nonmigrant hired 

and contract labor

Operator and family labor

Migrant hired and contract labor

Nonmigrant hired 

and contract labor

29%

32%

39%

Flue-cured tobacco

Burley tobacco

23%

61%

16%
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According to ARMS, 29 percent of burley tobacco producers and 52 percent 

of fl ue-cured tobacco producers reported diffi culty fi nding local workers for 

their tobacco operation in 2008. Local workers often prefer better paying offfarm jobs since tobacco work is diffi cult and seasonal.

Tobacco farmers used migrant labor to supply a large proportion of their 

labor needs for tobacco in 2008 due to diffi culties hiring local labor.3 The 

ARMS data show that migrant labor supplied 61 percent of the labor hours 

needed for fl ue-cured tobacco and 32 percent of the labor hours needed for 

burley tobacco in 2008. Migrant labor provides a higher proportion of labor 

hours per acre for fl ue-cured tobacco even though fewer labor hours are 

needed per acre. Flue-cured tobacco producers, however, plant more tobacco 

acreage. Hence, fl ue-cured tobacco producers need considerably more 

workers to supply the labor for their operations, which may explain why 75 

percent of fl ue-cured tobacco producers used migrant labor in 2008 compared 

with 38 percent of the burley tobacco producers.4

Although a higher percentage of fl ue-cured tobacco producers used migrant 

labor, a lower percentage of them, 12 percent compared with 15 percent for 

burley tobacco producers, reported diffi culty obtaining migrant labor. Fluecured tobacco producers may have had less diffi culty fi nding migrant labor 

since a higher percentage of them, 35 percent versus 6 percent of burley 

tobacco producers, reported using a Government program, such as the H-2A 

Program, to obtain workers.

The H-2A Program brings nonimmigrant foreign workers into the United 

States for temporary or seasonal work when there is a shortage of domestic 

workers. To hire migrant workers under the H-2A Program, employers must 

become certifi ed with the U.S. Department of Labor and document that they 

meet program requirements, including provisions for migrant laborers. Some 

producers have found the H-2A certifi cation process burdensome and hired 

companies to assist them with the paperwork and, in some cases, to act on 

their behalf. According to the 2008 ARMS, 37 percent of fl ue-cured tobacco 

producers and 4 percent of burley tobacco producers paid a company to 

assist them in obtaining labor under the H-2A program. The paperwork and 

detailed requirements under the H-2A Program favor its use on larger tobacco 

operations where producers can spread program participation costs over a 

large number of tobacco acres.

3 Migrant labor is defi ned as laborers 

who cannot return to their permanent 

home between work days.

4In 2008, fl ue-cured tobacco producers used 6,624 hours of labor per farm 

(92 acres x 72 hours per acre) on average for their fl ue-cured tobacco, while 

burley tobacco producers used 1,913 

hours of labor per farm on average for 

their burley tobacco (13 acres x 151 

labor hours per acre). The labor hours 

used per acre of tobacco vary slightly 

year to year depending on tobacco 

yields, changes in production and 

market preparation methods, and mix 

of tobacco types.
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Tobacco-Related Investments 

in Post-Buyout Years

Many tobacco producers in 2008 invested in tobacco-related equipment 

and buildings after the buyout. Since tobacco production is labor intensive 

and requires specialized equipment and buildings, signifi cant increases in 

tobacco acreage per farm required additional capital investments to handle 

the additional acreage effi ciently. Eighty-four percent of fl ue-cured tobacco 

producers and 42 percent of the burley tobacco producers invested in 

tobacco-related equipment or buildings since the tobacco buyout (table 1). 

A higher percentage of fl ue-cured producers than burley tobacco producers 

made capital investments in their tobacco operations since the buyout, partly 

because more of them (76 percent compared with 42 percent) increased their 

tobacco acres.

Not only were fl ue-cured tobacco producers more likely to invest in their 

tobacco operations compared with burley tobacco producers after the buyout, 

but according to data from the 2008 ARMS, fl ue-cured producers invested 

more per farm. Flue-cured tobacco producers, who invested back in their 

tobacco operations, invested an average of $85,000 per farm (see table 1). In 

contrast, burley tobacco producers invested an average of $29,000 per farm. 

Flue-cured tobacco producers invested more in their tobacco operations than 

burley tobacco producers, partly due to greater expansion of tobacco acreage 

per farm on farms producing fl ue-cured tobacco. Flue-cured producers who 

invested in their tobacco operations increased their tobacco acreage by 33 

acres or 52 percent compared with an increase of 5 acres or 25 percent for 

investing burley tobacco producers.

Buyout payments were just one possible source of funds that tobacco 

producers could use to make investments in their tobacco enterprises. Since 

buyout payments were based on the pounds of tobacco quota owned and 

pounds of tobacco grown, burley tobacco producers received less funds per 

farm from buyout payments because they planted fewer tobacco acres.5 Fluecured tobacco producers in 2008 were scheduled to receive an average of 

$378,000 per farm in tobacco buyout payments spread over a 10-year period 

starting in 2005.6 Burley tobacco producers, however, were scheduled to 

receive an average of $68,400 per farm. Both fl ue-cured and burley tobacco 

producers reported spending or investing just over 40 percent of their tobacco 

buyout payments in their tobacco enterprises.

Producers invest in their tobacco operations for many reasons. The ARMS 

survey provided producers with a list of eight possible reasons they may have 

had for making investments in tobacco equipment and buildings and asked 

producers to select which were most important to them for each type of 

investment they made after the tobacco buyout.

The top three reasons producers gave for these capital investments were to 

expand tobacco production, to increase production effi ciency, and to replace 

production items (table 1). In general, tobacco producers ranked expanding 

the tobacco operation as the main reason for capital investments in physical 

structures, while improving production effi ciency was the top reason given 

for investments in tobacco-related equipment.

5Under the buyout program, tobacco 

quota owners received $7 per pound 

while tobacco growers received $3 per 

pound.

6Tobacco producers could opt to 

receive a discounted lump sum buyout 

payment by contracting with a fi nancial 

institution rather than waiting 10 years 

to receive the full payment.
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Many producers needed to expand their physical capacity to dry, cure, or strip 

tobacco and to house farm labor they hired to handle the increased tobacco 

grown per farm after the buyout. Therefore, producers ranked expansion of 

the tobacco operation as the main reason for capital investments in physical 

structures with the exception of greenhouses (see table 1). Replacement rather 

than expansion was the top reason for investing in greenhouses. In 2008, 

approximately 60 percent of burley and fl ue-cured tobacco producers raised 

their own tobacco seedlings. The 2008 ARMS showed a small decline in the 

percentage of fl ue-cured and burley tobacco producers raising tobacco transplants after the tobacco buyout.

Increased production effi ciency was the top reason cited by tobacco producers 

in 2008 for investing in tobacco equipment for harvesting, curing, and baling. 

Since labor accounts for a large percentage of tobacco’s production costs and 

over half of this labor is needed for the harvest and preparation of tobacco for 

market, it is not surprising that tobacco producers focused on improving labor 

effi ciency. Increasing labor’s effi ciency allowed producers to more easily handle 

additional tobacco acreage and reduce the need to hire additional labor.

The additional tobacco acres per farm may have prompted some producers to 

adopt more capital-intensive production methods since the fi xed-investment 

cost of tobacco-related farm equipment would be spread over more acres. 

Data from the 2008 ARMS showed a small increase in the percentage of fl uecured tobacco producers who mechanically harvested their tobacco and who 

baled their tobacco in the 4 years after the tobacco buyout.

Table 1

Post-buyout investments made by farms planting burley and fl ue-cured tobacco, 2008 

Flue-cured tobacco producers were more likely than burley tobacco producers to invest in their tobacco operations, 

and their investments per farm were greater

Percent of farms 

investing in

Amount per farm for 

those investing Top-ranked reason for the investment 

(percent citing reason)

Burley

Fluecured BurleyFluecured

—— Percent —— — 1,000 dollars —

Purchased at least one of the 

following items: 42 84 29 85

 Greenhouses 14 21 7 30 Replacement (31 percent) 

 Planting/transplanting equipment 13 43 3 9 Replacement (48 percent) 

 Mechanical harvesting equipment 1 33 42 49 Increased production effi ciency (42 percent) 

 Barns for drying tobacco 12 59 54 56 Expand tobacco production (51 percent) 

 Field curing structures 3 5 12 17 Expand tobacco production (88 percent) 

 Other drying or curing equipment 2 11 17 29 Increased production effi ciency (32 percent) 

 Tobacco stripping rooms 6 1 14 1 Expand tobacco production (41 percent) 

 Baling equipment 16 39 4 8 Increased production effi ciency (23 percent) 

 Equipment for transporting bales 5 29 6 11 Increased production effi ciency (34 percent) 

 Housing for labor 5 13 26 14 Expand tobacco production (42 percent) 

Source: USDA’s 2008 Agricultural Resource Management Survey, conducted by National Agricultural Statistics Service and the Economic 

Research Service.
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Tobacco Producers Rely 

on Marketing Contracts

Tobacco producers faced greater market and price risks after the tobacco 

buyout. The Fair and Equitable Tobacco Reform Act of 2004 not only eliminated tobacco quotas, but also the tobacco price support system. Under the 

price support system, if a producer received an offer at or below the price 

support level or did not receive an offer, the price stabilization cooperative 

would buy the tobacco at the price support level. Without the price support 

system, tobacco producers no longer have a guaranteed purchaser for their 

crop or a guaranteed minimum price.

The use of tobacco marketing contracts began in the 1990s and became 

popular early in the decade. Tobacco marketing contracts decrease the market 

and price risks of tobacco production by ensuring buyers for tobacco and, 

frequently, specifying the amounts of tobacco to be purchased and prices for 

each tobacco grade. Since most tobacco marketing contracts are signed prior 

to planting, producers know in advance how many tobacco acres to plant.

Following the tobacco buyout, a larger share of the 2008 tobacco producers 

signed tobacco marketing contracts. Analysis of ARMS data shows that 95 

percent of burley and fl ue-cured tobacco producers sold some tobacco under 

a marketing contract in 2008, compared with the 80 percent that opted for a 

marketing contract in 2004 and 27 percent in 2000 (fi g. 5).

In 2008, most tobacco marketing contracts were agreements with cigarette 

manufacturers or leaf dealers. Ninety percent of all tobacco producers sold 

their tobacco under a 1-year tobacco marketing contract, up from 75 percent 

in 2004. Just 5 percent of producers held longer term tobacco marketing 

contracts lasting 2 or more years in 2004 and in 2008. Less than 3 percent 

of tobacco producers in Kentucky and Tennessee held marketing contracts 

of 2 or more years in 2008, compared with 12 percent of North Carolina 

tobacco producers and 9 percent of Virginia tobacco producers. Longer term 

Figure 5

Importance of marketing contracts to tobacco production 

in 2000, 2004, and 2008

Tobacco marketing has shifted toward contracts and away from auction houses

Percent of farms

Source: USDA’s 2008 Agricultural Resource Management Survey, conducted 

by National Agricultural Statistics Service and the Economic Research Service.

Marketing contracts Auction houses

2000 2004 2008

0

20

40

60

80

100
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marketing contracts provide stability, which is an important consideration in 

investments and loans.

The number of tobacco manufacturers, leaf dealers, auction markets, and 

cooperatives willing to purchase tobacco within a reasonable driving distance 

from tobacco farms declined rapidly after the shift in tobacco policy.7

Producers who grew tobacco in 2008 had an average of 4.1 marketing options 

for their tobacco in 2004 (fi g. 6). Tobacco companies and auction houses 

constituted most of the available marketing options, with slightly less than 

two choices of each available to the typical tobacco producer. By 2008, 

the typical tobacco producer had 2.6 options, with most of the decline due 

to the loss of auction houses located within a reasonable driving distance 

from the farm. Producers of fl ue-cured tobacco had an average of 2.8 

marketing options for their tobacco in 2008, slightly more than the average 

2.5 marketing options available to burley tobacco producers. Not only did 

the number of available marketing options differ between fl ue-cured tobacco 

and burley tobacco producers in 2008, but the composition of their marketing 

options differed. While fl ue-cured tobacco producers had more tobacco 

companies willing to purchase their tobacco than burley tobacco producers, 

fl ue-cured tobacco producers usually did not have auction markets available 

to them. Flue-cured tobacco producers had an average of 2.2 tobacco companies willing to purchase their tobacco in 2008 compared with 1.8 companies 

for burley tobacco producers. On the other hand, burley tobacco producers 

could more often market their tobacco in auction houses. As tobacco 

contracting increased after the buyout, tobacco marketed through auctions 

declined. With less tobacco available to sell, many auction houses could not 

afford to remain in business.

With auction houses virtually gone in several States and with limited ability 

to market tobacco through cooperatives, many tobacco producers had no 

other alternative to marketing contracts in 2008. Sixty percent of tobacco 

producers had only one or two buyers available to them in 2008 and, if one 

of the buyers left the local market, these producers either had to discontinue 

tobacco farming or, if available, sell their tobacco to the one remaining buyer. 

7Tobacco producers determined 

whether a buyer was within a reasonable driving distance from farms. 

Tobacco companies include manufacturers and leaf dealers.

Figure 6

Marketing options available to tobacco producers 

in 2000, 2004, and 2008

Marketing choices declined after the buyout

Source: USDA’s 2008 Agricultural Resource Management Survey, conducted 

by National Agricultural Statistics Service and the Economic Research Service.

Tobacco companies Auction houses Cooperatives

Options available per farm

2000

2004

2008

0 1 2 3 4 5 6
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The number of tobacco producers who only had one tobacco buyer available to them rose from 27 percent in 2004 to 37 percent in 2008. Also, fewer 

tobacco buyers per farm likely forced some tobacco farmers to drive longer 

distances to market their tobacco. The ARMS data show that producers traveled an average of 37 miles to the nearest tobacco receiving station in 2008.
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Conclusions

The Fair and Equitable Tobacco Reform Act of 2004 eliminated the restrictions on volume and location for tobacco growers and removed tobacco price 

supports. Data from the 2008 Agricultural Resource Management Survey 

(ARMS) show that, compared with burley tobacco producers, fl ue-cured 

tobacco producers made greater adaptations in their tobacco operations after 

the change in tobacco policy.

Operators with more tobacco acreage were more apt to remain tobacco 

producers after the change in tobacco policy than operators with fewer acres 

of tobacco. While farm consolidation occurred for both fl ue-cured and burley 

tobacco producers, a higher percentage of fl ue-cured tobacco producers in 

2008 increased their tobacco acreage and increased their tobacco acreage per 

farm by a greater percentage. Flue-cured tobacco producers were more likely 

to invest in tobacco-related equipment and buildings, compared with burley 

producers, and invested more per farm. Farm consolidation is expected to 

continue through 2013 with tobacco acreage per farm rising. Most of the rise 

in acreage is due to producers with fewer than average planted acres exiting 

the industry.

Since most tobacco is sold under marketing contracts to tobacco companies, 

the acreage planted to each tobacco type is determined by tobacco companies’ demand for each type. Hence, the pace of future structural changes 

made by tobacco producers are tied to long-term changes in demand for the 

type of tobacco being grown.

Labor issues have taken on greater importance for tobacco producers after the 

tobacco buyout. Increases in the average tobacco acreage per farm, combined 

with the high number of labor hours per acre required by tobacco production, 

suggest an increasing reliance on hired labor and a decreasing reliance on 

family labor. Consequently, changes in nonmigrant or migrant labor costs and 

availability have a larger impact on tobacco operations following the tobacco 

policy reform.

After the tobacco buyout, producers invested in their tobacco operations to 

expand production and increase production effi ciency. Achieving these investment goals may help them remain competitive in the post-buyout environment. Expansion of tobacco acreage usually results in lower fi xed production 

costs per unit through economies of size, while increased production effi -

ciency often lowers variable production costs per unit of output. The adoption 

of capital-intensive machinery can also improve production effi ciency by 

replacing some of the labor required for tobacco production.

Tobacco producers increasingly turned to contracting to ensure a buyer 

for their tobacco as auction houses disappeared. A signifi cant number of 

producers have two or fewer buyers available for their tobacco. The loss of 

a single buyer within a region may leave tobacco producers with no buyers 

at a reasonable driving distance from their farm or leave them with no other 

option but to accept the terms of the remaining buyer. Producers with one 

marketing option, especially those with a 1-year marketing contract, may be 

reluctant to invest further in their tobacco enterprises. 
20

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References

Dohlman, Erik, Linda Foreman, and Michelle Da Pra. The Post-Buyout 

Experience: Peanut and Tobacco Sectors Adapt to Policy Reform, 

EIB-60, U.S. Department of Agriculture, Economic Research Service, 

November 2009.

Foreman, Linda F. Tobacco Production Costs and Return in 2004, TBS-260-01, 

U.S. Department of Agriculture, Economic Research Service, August 2006, 

http://www.ers.usda.gov/publications/tbs/aug06/tbs26001/tbs26001.pdf.

LaDue, Eddy L., Lynn H. Miller, and Joseph H. Kwiatkowski. “Investment 

Behavior and Farm Business Expansion,” Review of Agricultural 

Economics Vol. 13, No.1, January 1991.

National Agricultural Statistics Service (NASS). Quick Stats, April 26, 2010, 

http://www.nass.usda.gov/Data_and_Statistics/index.asp.

Womach, Jasper. Tobacco Quota Buyout, Report to Congress Number 

EBAGR62, Congressional Research Service, October 28, 2004.