Tobacco buyout money safe from sequester
Posted January 7, 2014
Raleigh, N.C. — Federal payments to tobacco farmers won't be affected by any across-the-board federal budget cuts, U.S. Agriculture Secretary Tom Vilsack told members of North Carolina's congressional delegation on Monday.
The second round of sequestration is set to take effect Jan. 15 unless Congress can reach a new budget deal.
Several members of North Carolina's delegation have lobbied the USDA for months to exclude the Tobacco Transition Payment Program from the process, arguing that it is funded by fees paid by tobacco companies and not tax revenue.
The TTPP is part of a settlement the government reached with tobacco farmers in 2004, when the tobacco quota and price support system was eliminated. The government promised to provide farmers with annual payments through 2014 to ease the transition to the free market.
Vilsack informed the delegation members that, although the payments are considered a "budgetary resource" under the sequester, the USDA and the Office of Management and Budget have agreed that funds sequestered last year will be made available to tobacco farmers this year and that a final payment will be made in the 2014-15 fiscal year, which starts in October.
"I am so pleased that, after hearing from me and my colleagues about the damage subjecting these payments to sequestration would do, USDA and OMB have agreed to prevent reductions to TTPP payments for small tobacco farmers in North Carolina and across the country that depend on these payments to provide for their families and make ends meet," U.S. Sen. Kay Hagan said in a statement.