The initial impact of the tobacco buyout program.

THE INITIAL IMPACT OF THE TOBACCO BUYOUT PROGRAM (*) The Tobacco Transition Impact Program, better known as "the tobacco buyout program," which started in 2005, is changing the geography of tobacco production in the United States (Snell 2005). Its initiation was neatly sandwiched between two agricultural censuses. The recent publication of the 2007 Census of Agriculture, which reports on changes between 2002 and 2007, provides the data for a first look at the impact of this program and a chance to speculate about the ways in which it may transform the geography of tobacco production in the South. The tobacco buyout program abolished government price supports and production controls for tobacco and pays farmers to stop growing the crop. Some people may assume that its goal is to terminate tobacco production once and for all (Rucker 2007), but it probably will eliminate only the smallest and least competitive growers, and it will encourage those farmers who wish to continue growing the crop to grow more of it. The removal of production controls allows them to increase their acreage of the familiar types of tobacco and to experiment with new types. The removal of the government safety net of price supports places them at the mercy of the free market--or enables them to take full advantage of it. The buyout program has encouraged many small farmers to stop growing tobacco, but the number of large tobacco farms actually increased after the program ended production controls (Table 1). Since 2005 all farmers have been free to grow as much tobacco of any type as they wish, to grow it wherever they wish, and to sell it wherever they wish to anyone they wish, but the government no longer guarantees the price (Tiller, Snell, and Brown 2007). Of course, tew people actually know how to grow tobacco, and, in addition to die requisite technical competence, tobacco growers who wish to increase their acreage must have enough suitable land, the right kinds of structures for curing the crop, knowledgeable workers, access to adequate capital, and the entrepreneurial flair to accept considerable risk with equanimity. Tobacco farmers who wish to continue growing the crop must also be able to market it. Traditionally farmers sold their tobacco at public auction in cavernous sales warehouses, but in recent years the tobacco-processing companies have preferred to contract with individual growers to ensure the quality they need, and many old warehouses are now closed, the processing companies have also impacted the geography of tobacco production by encouraging their contraefees to grow the crop in new areas from which production controls hitherto excluded them, in order to spread the risk of weather, insects, and diseases (Bickers 2006). All Flue-cured tobacco farmers now grow the crop under contract (Brown and Snell 2010,8), and three-quarters of Burley tobacco growers also contract their crop (Dohlman, Foreman, and Da Pra 2009), because a few Burley auction warehouses are still active. Nevertheless, most Burley producers question the wisdom of growing uncontracted tobacco (Bickers 2009), and the buy our program has been especially attractive to small farmers who no longer have a convenient place to sell their crop. TABLE I--NUMBER OF FARMS IN THE UNITED STATES,BY ACRES OF TOBACCO,2002 AND 2007 ACRES OF TOBACCO 2002 2007 0.1-0.9 9.519 235 1.0-1.9 14.323 1,493 2.0-9.9 24,014 8,058 10.0- 49.9 7,300 4,472 50.0 or more 1,821 1,976 All farms 56,977 16,234 Source: NASS 2009b, table 33. PRODUCTION CONTROL The Agricultural Adjustment Acts of 1933 and 1938 created a price-support and production-control program for tobacco that Persisted for more than half a century (Womach 2004, 3). The government supported the price of tobacco, but to forestall overproduction it restricted the number of pounds a farmer could sell. …