QUOTA BUYOUT

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QUOTA BUYOUT !!! WHAT BUYOUT ???
Bill Givan Economist - UGA
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• A TOBACCO QUOTA BUYOUT WAS FIRST DISCUSSED IN
  1998 (OR WAS IT 1999) ?, WHEN QUOTA LEVELS
  STARTED DECLINING.
• THE FIRST FIGURE QUOTED WAS 8.00 PER LB. FOR
  QUOTA OWNERS AND 4.00 PER LB. FOR GROWERS.

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BUT TALK IS ALL THE ACTION WEVE HAD SINCE THEN
!!
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GENERAL CONSENSUS

• ANY BUYOUT WILL HAVE TO BE COUPLED WITH A BILL TO
  GIVE FDA REGULATION OF TOBACCO PRODUCTS.
• REGULATION MAY INCLUDE
• LIMIT HARMFUL INGREDIENTS IN CIGARETTES,
• STRENGTHEN HEALTH WARNINGS ON CIGARETTE PACKS,
  AND
• REGULATE THE MARKETING OF TOBACCO PRODUCTS TO
  MINORS.

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• THERE HAS BEEN TALK IN CONGRESS IN RECENT WEEKS
  ABOUT A BUYOUT, BUT LATELY THE TALK HAS BEEN
  MUTED.

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WHATS HAPPENING ?TOO MANY FOLKS WANTING A
PIECE OF THE ACTION
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• I -- CONGRESS
• FDA
• JUDD GREGG (R-N.H.) HEALTH, EDUCATION, LABOR
  PENSIONS, CHAIRMAN SAID THE ISSUE IS DEAD FOR
  THIS YEAR
• MIKE DeWINE (R-OHIO) IS TRYING TO RE-ESTABLISH
  TALKS BETWEEN TOBACCO COMPANIES AND HEALTH CARE
  GROUPS.
• IS HE GOING OVER GREGGS HEAD?
• WHO WILL GET THE CREDIT?

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• II THE TOBACCO COMPANIES
• CONCERN OVER TOO MUCH FDA CONTROL
• BROWN WILLIAMSON, RJ REYNOLDS, LORRILARD,
  LIGGET GROUP
• III ANTI SMOKING GROUPS
• CAMPAIGN FOR TOBACCO FREE KIDS
• IV THE TOBACCO GROWERS, -- STATE
  REPRESENTATIVES
• MITCH MCCONNELL (R-KY)
• WANTS 13 BIL TO HAVE GOVT. BUY OUT TOBACCO
  GROWERS

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• THE HALT CAME WHEN ANTI - SMOKING GROUPS OPPOSED
  THE BILL SENATOR GREGG WAS PROPOSING.
• FELT IT HAD LOOPHOLES THAT WOULD PERMIT TOBACCO
  MFGRS. TO CHALLENGE FDA PROPOSALS.
• SO SENATOR GREGG IS TRYING TO GET FOLKS TO TALK
  AGAIN.

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SOME THINK ANY LEGISLATION MIGHT BE ATTACHED TO
THE FINAL BILL AUTHORIZING FARM BILL
SPENDING. DONT COUNT ON IT.
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THE KIPLINGER REPORT SPECULATES IT WONT BE
PASSED UNTIL NEXT YEAR. IF SO, 2004 WILL STILL
HAVE THE CURRENT TOBACCO PROGRAM WITH LIKELY
ANOTHER QUOTA REDUCTION
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WHAT HAPPENS WITH A BUYOUT ??

• CURRENTLY PHILIP MORRIS HAS ABOUT 50 OF THE
  MARKET
• THE BUYOUT OF BROWN WILLIAMSON BY RJR WILL GIVE
  A COMPANY WITH ABOUT 30 OF THE MARKET

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THIS IS NOT DIFFERENT FROM THE MARKET STRUCTURE
OF MANY OF THE OTHER INDUSTRIES

• SOYBEAN MILLING, 4 COMPANIES CONTROL 83 OF THE
  MARKET
• COTTON BIO. SEED PROCESSING, ONE COMPANY
  CONTROLS 87 OF THE MARKET
• MEAT PACKING, CATTLE, 4 COMPANIES CONTROL 78 OF
  THE MARKET
• CORN BIO. SEED PROCESSING, 4 COMPANIES CONTROL
  70 OF THE MARKET

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WHAT HAPPENS WITHOUT A BUYOUT ?? GROWERS MUST
VOTE ON THREE MORE YEARS OF THE FEDERAL TOBACCO
PROGRAM IN JANUARY, 2004
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WITHOUT A TOBACCO PROGRAM, WE DONT KNOW HOW
THE COMPANIES WILL COMPETE TO PURCHASE LEAF.