Tobacco Farmers Receive Transition Program Payments

Randall Weiseman General, Specialty Crops

WASHINGTON, Jan. 14, 2008 – USDA will issue this year’s installment in the Tobacco Transition Payment Program with more than $950 million in payments to former quota holders and producers today. The transition payments are funded by assessments on tobacco product importers and manufacturers. Approximately $3.8 billion in payments will have been paid to former tobacco quota holders and producers when this fourth round of payments ends. These funds help tobacco farmers’ transition to the free market, due to the termination of the federal tobacco marketing program.

The Tobacco Transition Payment Program marked the end of the federal tobacco marketing quota and price support loan programs, which had been in place since the Great Depression. The Fair and Equitable Tobacco Reform Act, signed into law by President Bush in October 2004, established the payment schedule.

Payments began in 2005 and will end in 2014, to provide 10 equal annual payments to former quota holders and producers. The payments made every year on or about Jan.

15, total approximately $950 million per year.

Also, former quota holders and producers may enter into successor-in-interest contracts to receive lump-sum payments from private entities by selling their interest in the remaining six Tobacco Transition Payment Program payments. In 2007, third parties bought more than 22,000 transition contracts worth approximately $300 million.

This is in addition to the successor contracts of previous years.

For more information, visit the Tobacco Page on the USDA Farm Service Agency’s Web site,, or call the National Tobacco Processing Center at 1-800-673- 2331.