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The End of the Federal Tobacco Program: Economic Impacts of the Deregulation of U.S. Tobacco Production

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  • A. Blake Brown
  • Randal R. Rucker
  • Walter N. Thurman

Abstract

In 2004, Congress ended the sixty-six-year-old federal tobacco program, effectively deregulating production and prices. With deregulation came a buyout package, with cigarette manufacturers agreeing to pay more than $3 billion in present value to quota owners and farmers. While the dollar values of compensation payments are known, the effects of the historic legislation on tobacco markets are uncertain. We examine these effects and their welfare consequences. We also consider the appropriateness of the buyout payments under alternative views of economic damages due to the quota system's demise. Copyright 2007, Oxford University Press.

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  • A. Blake Brown & Randal R. Rucker & Walter N. Thurman, 2007. "The End of the Federal Tobacco Program: Economic Impacts of the Deregulation of U.S. Tobacco Production," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 29(4), pages 635-655.
    • Handle: RePEc:oup:revage:v:29:y:2007:i:4:p:635-655
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    References listed on IDEAS

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    1. Beghin, John & Chang, Ruey-er, 1992. "Differentiated products and supply controls in the analysis of agricultural policy reform: the case of tobacco," Agricultural Economics, Blackwell, vol. 7(3-4), pages 301-315, October.
    2. Brown, A. Blake & Snell, William M. & Tiller, Kelly H., 1999. "The Changing Political Environment for Tobacco—Implications for Southern Tobacco Farmers, Rural Economies, Taxpayers, and Consumers," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 31(2), pages 291-308, August.
    3. Rezitis, Anthony N. & Brown, A. Blake & Foster, William E., 1998. "Adjustment costs and dynamic factor demands for U.S. cigarette manufacturing," Agricultural Economics, Blackwell, vol. 18(3), pages 217-231, May.
    4. Fabre, Raymond & Rucker, Randal R., 1989. "Lease Rates and Sale Prices for Peanut Poundage Quota: 1978-1987," Department of Economics and Business - Archive 259569, North Carolina State University, Department of Economics.
    5. Brown, A. Blake & Snell, William M. & Tiller, Kelly, 1999. "The Changing Political Environment For Tobacco -- Implications For Southern Tobacco Farmers, Rural Economies, Taxpayers, And Consumers," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 31(2), pages 1-18, August.
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    Cited by:

    1. Orden, David & Blandford, David & Josling, Timothy E., 2009. "Determinants of Farm Policies in the United States, 1996-2008," Agricultural Distortions Working Paper Series 50297, World Bank.
    2. Sullivan, Sarah & Glantz, Stanton, 2010. "The changing role of agriculture in tobacco control policymaking: A South Carolina case study," Social Science & Medicine, Elsevier, vol. 71(8), pages 1527-1534, October.
    3. Andrew Schmitz & Dwayne J. Haynes & Troy G. Schmitz, 2016. "Alternative Approaches to Compensation and Producer Rights," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 64(3), pages 439-454, September.
    4. Dohlman, Erik & Foreman, Linda F. & Da Pra, Michelle, 2009. "The Post-Buyout Experience: Peanut and Tobacco Sectors Adapt to Policy Reform," Economic Information Bulletin 56628, United States Department of Agriculture, Economic Research Service.
    5. Dohlman, Erik & Foreman, Linda F. & Da Pra, Michelle, 2010. "Post-Buyout Structural Change in the Peanut and Tobacco Sectors," 2010 Annual Meeting, February 6-9, 2010, Orlando, Florida 56355, Southern Agricultural Economics Association.

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