Tobacco Transition Payment Program
TOBACCO TRANSITION PAYMENT PROGRAM (or more commonly referred to as the Tobacco Buyout)
The Fair and Equitable Tobacco Reform Act of 2004 (Reform Act) was passed as part of the American Jobs Creation Act of 2004. The Reform Act terminates the tobacco price support program. In order to ease the transition, an estimated $9.6 billion will be paid to tobacco quota owners and growers in annual installments spread evenly over ten years. The buyout is funded entirely by assessments on tobacco product manufacturers and importers.
According to estimates from the USDA’s Farm Service Agency, tobacco quota owners and growers in the Atlanta region of the FDIC will be receiving $6 billion over the next ten years with North Carolina receiving a total of $3.9 billion.
The Tobacco Buoyout legislation allows financial institutions to pay a lump sum to contract holders (tobacco quota owners and growers) in exchange for the remaining payment stream.
Information is available from the United States Department of Agriculture and the Federal Deposit Insurance Corporation regarding the Tobacco Buyout and lump sum payment options.