Last evening on the Senate floor, the proposal by the chairman of the Senate Agriculture Committee, Senator Lugar, to aid tobacco farmers was added as a further modification to the "Commerce-2" modification of the tobacco bill. The Lugar proposal would end the current tobacco program and provide transition payments to tobacco growers. The plan also includes rural economic assistance for communities hit hardest by the loss of tobacco income. The Ford-Hollings "Leaf" provisions, however, remain in S. 1415. [For details on this provision, see RPC's Legislative Notice No. 67, pp. 27-29.] The cost of the Ford-Hollings proposal is $28.5 billion over 25 years. The estimated cost of the Lugar buyout program is $18 billion over five years.

Yesterday, Senator McConnell announced that he would support Senator Lugar's buyout proposal for tobacco quota owners and others who grow tobacco. Under the Lugar-McConnell plan, tobacco quota owners would receive $8 per pound, and tenant farmers and those who lease quota would receive $4 per pound. This would be paid in equal installments over the next three years.

This proposal would end the quota program in 1999. It would phase out the support for the Federal price support program for tobacco during the 1999, 2000, and 2001 crop years. To prevent excessive forfeitures of tobacco going under loan, the price support rate would be reduced by 25 percent in 1999, by 10 percent in 2000, and by 10 percent in 2001.

Under the revised Lugar-McConnell bill, all tobacco farmers will be able to grow tobacco in the free market if they choose. The amounts devoted to both transition payments and community assistance have been increased substantially from the original bill. This legislation also makes it clear that tobacco growers will not be the targets of smoking-related lawsuits, and makes certain that the Food and Drug Administration will regulate tobacco, not tobacco farms.

The rural economic assistance included in the Lugar bill could be used for a variety of purposes, as determined by the affected states. The money could be invested in education, retraining, and in providing assistance to tobacco warehouse owners and operators, among other purposes.