After 76 years, tobacco farmers are no longer going to receive federal payments to maintain their financial stability. The last federal subsidies to tobacco farmers will go out this month.

While the federal movement has subsidized tobacco farmers since 1938, for the last 10 years it has been making payments out of a 10-year $10 billion federal program to wean the nation’s 10,000 tobacco farmers off of subsidies. That program ends at the end of October.

The subsidy program for tobacco initially was to provide price support and crop quota protection year to year, but in recent years the funds were more specifically set aside to help pay for crop insurance. As much as 60 percent of crop insurance payments made by tobacco farmers in the United States have been paid for by federal subsidies.

As one Winston-Salem, N.C. farmer explained to National Public Radio, “our safety net now is gone.”

But tobacco farmers will survive, thanks to a burgeoning market for tobacco products in China and Southeast Asia, which makes up for a lessening demand for tobacco in the United States and Europe.

The U. S. Agriculture Department estimates the U.S. tobacco crop brings in about $1.5 billion a year.

Most American tobacco farmers have contractual agreements with tobacco companies, which determine how much farmers get per acre of tobacco. While the price per acre has dropped, and many tobacco farmers are using less acreage for tobacco, they manage to make ends meet by growing other products on the extra acreage such as wheat, some other vegetables and fruit in warmer climates.

Tobacco growers also battle the continuing effort by health officials to reduce smoking, and a state-by-state or county-by-county effort to raise much need revenue through sin taxes on cigarettes and other tobacco products.

Source - http://millionairecorner.com/