Agricultural Economic Report No. (AER-709) 49 pp

April 1995

Tobacco: Background for 1995 Farm Legislation

This report address considerations in the 1995 farm bill debate for tobacco, including market conditions, policy proposals, trade agreements, and the interactions between policy and markets for selected commodities. U.S. tobacco production is likely to decline by the end of the 1990s. Accelerated antismoking activity, along with an increasing number of smoking restrictions and prohibitions and proposals to increase cigarette taxes, is weakening leaf demand. Also, ample world production at lower prices is hurting U.S. export prospects. Technological advances that permit production of an acceptable-quality cigarette with cheaper leaf are curtailing demand for U.S.-grown leaf. Furthermore, stagnant cigarette demand and trade barriers hold down U.S. export prospects, although the General Agreement on Tariffs and Trade should help soften declines in exports. This report provides an overview of the U.S. tobacco industry, reviews Federal tobacco programs, and examines issues and potential program changes.

Keywords: Tobacco, price supports, poundage quotas, exports, imports, costs, returns

In this publication...