Status Update: Tobacco Buyout Payment Cuts

Wilmer Stoneman
Associate Director
Governmental Relations

Last November, we requested that you contact Virginia members of the House of Representatives, the U.S. Senate and Secretary Vilsack asking them to work with Congressman Hurt in opposing sequestration cuts to the Tobacco Transition Payment Program (TTPP) which was designed to help transition tobacco producers to the free market. USDA identified TTPP, a privately-funded, temporary, contractual program, as a direct payment program and thus subject to FY2014 federal budget sequestration.

Your efforts in responding to the Action Alert were rewarded this week when it was announced that tobacco growers and quota holders will receive the full amount of their final tobacco buyout payment, as directed by a provision within the Budget Control Act.  In a letter this week to Senator Warner, Secretary Vilsack maintained that “funding for the TTPP is sequestrable” under the Budget Control Act. However, the Office of Management and Budget, in coordination with USDA, also determined that, under the Budget Control Act and authority for the program, TTPP funds sequestered in fiscal year (FY) 2013 are available for FY2014 payments. Vilsack continues, “Similarly, funds sequestered in FY2014 will become available at the beginning of FY 2015 to complete the final payment.”

The Farm Service Agency has not yet issued official instructions to state and county FSA offices concerning new revisions to the TTPP payment schedule and procedures. We cannot state for certain the actual amounts or timing of the payments at this time.  However, it is our understanding that producers and quota holders could receive up to 95% of the scheduled TTPP payment in January or February 2014 (FY2014) and receive the balance of the final scheduled TTPP payment this fall in FY2015 (ideally as close to October 1, 2014 as possible).  Financial institutions that provided lump sum payments will be paid first, most likely in January 2014, to avoid the government accruing interest.

Again, thank you making the legislative and agency contacts necessary to address this issue.  We appreciate the efforts and support of Congressmen Hurt, Griffith, Forbes, Scott and Goodlatte, Senators Warner and Kaine and Governor McDonnell in working towards a resolution on this issue.

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