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Tobacco payment shielded from cuts / January 08, 2014
The federal government acted yesterday to exempt tobacco buyout payments from across-the-board sequestration spending cuts, easing fears among former and current growers that their incomes would take a hit in the new year.

Agriculture Secretary Tom Vilsack announced Tuesday that the USDA would exempt the final Tobacco Transition Payment Program (TTPP) payment from the budget sequester, enacted by Congress in 2011 to lower federal spending. The initial decision to subject the program to the budget sequester brought howls from tobacco-state representatives, who pointed out that the program, established after the demise of tobacco price supports, was funded by the tobacco industry, not through taxpayer dollars.

Senator Mark Warner of Virginia yesterday hailed the decision to exempt the buyout program, saying that the proposed cuts would have been harmful to Virginia’s small farmers.

“I am pleased that, at our suggestion, USDA has decided not to cut the TTPP payment promised to nearly 31,000 Virginia tobacco growers, financial institutions, and businesses,” Sen. Warner said. “TTPP is funded by industry fees, not tax dollars, so it shouldn’t have been subject to sequestration cuts in the first place.”

TTPP installments were established in 2004 following legislation that ended federal tobacco price support loan programs. They are funded by fees paid by tobacco manufacturers and importers.

Many small tobacco farmers elected to receive their payment in annual installments, and although the program is not funded by the federal government, the final 2014 payment could have been reduced by approximately 5 percent due to sequestration cuts.

The funds to complete the buyout payments will be made available without further need for action by Congress, Vilsack wrote in a Jan. 6 letter to Senator Warner.

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