During the Great Depression of the 1930s, the federal government adopted farm income and commodity price support policies that included mandatory supply controls for several major crops, including tobacco. The tobacco price support program exists only for the economic benefit of farmers. It was created for the purpose of supporting the income and stabilizing the price of tobacco received by farmers. By law, the choice of whether or not federal support will be provided is determined by growers in a referendum held every three years. 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.
At the same time, the federal government is required to guarantee prices at least as high as the level specified in the law. The first commodity price support legislation was the Agricultural Adjustment Act of 1933. This permanent law established a supply control and price support program for tobacco that, even as amended, remains very much the same today. The current legal authority and requirements for the federal tobacco program are contained in 7 U.S.C. 1311-1316 and 7 U.S.C. 1445. This cost covers primarily salaries for some headquarters personnel and staff time devoted to the tobacco program in about 600 county offices.