By law, the choice of whether or not Federal support will be provided is determined by growers of each type of tobacco in referenda held every 3 years, when growers of each type of tobacco vote whether or not to participate in the tobacco program. For growers of those types that vote to participate, USDA sets marketing quotas and price supports. Health and anti-smoking groups have generally favored the program because it benefits growers, restricts tobacco leaf production, and, to some extent, increases the price of tobacco leaf. Marketing quotas . When producers approve Federal price support for tobacco, they become subject to marketing quotas.
Marketing quotas are a supply control mechanism that indirectly increases market prices.
The Federal Government is required to guarantee prices at least as high as the level specified in the law. The Secretary of Agriculture has the discretion to adjust the quota up or down 3 percent. Quota reductions were limited from 1986 through 1996. Currently there is no restriction limiting change in the quota. For tobaccos other than flue-cured and burley, acreage allotments are used to restrict production.