Council for a
Competitive Economy ,
410 Ftcet Sueet . S .E . •Wash!ngton . D .C . 20008 •(2oz) b4487as

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The Council for a Competitive Economy supports passage of the
- TOBACCO DEREGULBTION hMEfIDME!.T which will be offered during
debate on the 1981 Farm Bill scheduled to come to the House
. floorr in October .

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current

government

tobacco

program restricts the number

of acres which can be'planted in tobacco and also provides
for a price support scheme,-using tax dollars to buy up any
tobacco not sold in comm e rcial markets .
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The restrictions on production, through an allocation system,
create very inflated monopoly rents . While a free acre of
land for com or soybean may cost the farmers on the average
$60, the rent for a tobacco allotment acre is about $1,0001
With 1 million acres of tobacco in production, the excess ,
cost to the industry of this government franchise is
about $900 million a year .
The loan price support system is also wreaking havoc with the tobacco industry

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. The current price support level is about
twice as high as the world market . Because of this government
intervention, $1 billion of tobacco surpluses, .financed by tax
dollars, is accumulating in warehouses . Recently, tobacco groups
called for imposition of a quota on the rapidly increasing quantity
of less expensive imported tobacco . The ITC eventually recomnendedd
no quota be imposed .
.
All of these problems now being experienced by the tobacco
industry could be resolved by a free market, as the amendment
would provide for . The cost of production would be cut by
one-third, exports would increase and 'vnports would decrease .
The government would no longer have to finance large surpluses
and a savings of about $100 million would result .
The Council urges your support for the TOBACCO DEREGULATION

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AMENIDMENT .
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Richard W . Wilcke
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President

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Pubilsu af Cuapclitlou

Source: http://industrydocuments.library.ucsf.edu/tobacco/docs/gsby0132