AGES No. (AGES-8948) 66 pp

October 1989

Tobacco Background for 1990 Farm Legislation

This report address considerations in the 1990 farm bill debate for tobacco, including market conditions, policy proposals, trade agreements, and the interactions between policy and markets for selected commodities. Tobacco is grown in 21 States on about 137,000 farms. Several types and kinds are grown, but flue-cured and burley account for about 94 percent of total production. After steadily declining from 1975 to 1986, tobacco production has risen the last 3 years. Supply and demand are in balance because excess stocks have been used. After declining for several years, cigarette production rose in 1987 and 1988 because of growing exports. Legislation enacted in 1986 lowered support prices, moved loan stocks into the trade, and changed quota setting to a more market-oriented approach. Still, major problems exist. Domestic tobacco product consumption continues to decline and the United States continues to face stiff competition in world markets, even with lower prices.

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

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