When the tobacco buyout was negotiated the money to pay farmers for eliminating the quotas which attached to their land was considered just compensation for the government taking of property. The money to pay the farmers was to come from a trust fund funded by tobacco companies, not taxes.
But now with sequester cuts set to kick in payments to farmers will suffer, but they shouldn't. Farm Bureau is exactly right, lawsuits will come of this.
Kentucky Farm Bureau is one of a number of agricultural groups calling on the Obama administration to reconsider whether the Budget Control Act of 2011 — which includes the mandatory cuts better known as the sequester — covers the buyout payments.
“No one, certainly, expected a haircut coming at the last payment,” Kentucky Farm Bureau President Mark Haney told a meeting of the Kentucky legislature’s joint agriculture committee last week.
Farm Bureau and other opponents of the cut argue that the buyout dollars are not from tax revenue, but a trust funded by tobacco companies to finance the buyout. They argue the payments are a contract with farmers and shouldn’t be included in the sequester cuts.
"I think there's no doubt that lawsuits will evolve from this" if the decision isn't reversed, said University of Kentucky agriculture economist Will Snell. And in a letter to Agriculture Secretary Tom Vilsack earlier this month, Haney said that such a radical change in the terms of the buyout "would certainly be open to legal challenge."
Congress passed the buyout in 2004 to pay $10 billion a year over 10 years to compensate tobacco farmers for repeal of a quota system that limited supply of leaf to support prices. [Courier Journal]
Is this just another example of the Obama administration trying to inflict maximum pain on certain people in order to drive up anger against republicans? He did that with park closings, monument closings and other targeted nose punches during the shutdown. Is this cut to Kentucky tobacco farmers another swipe at McConnell in his own state involving a buyout bill that he is credited with getting passed?
The buyout payment due in January is the last of a 10 year payment plan. Too many farmers are counting on that payment and if the USDA does anything to mess with it, expect that there will be hell to pay.