Tobacco Transition Payment Program

The Fair and Equitable Tobacco Reform Act of 2004 repeals the federal tobacco price support/production control program, provides compensation payments to tobacco quota owners for the elimination of their government-created asset (quota), and provides transition payments to active tobacco producers.


Agency - Department of Agriculture

Established in 1862, the Department of Agriculture serves all Americans through anti-hunger efforts, stewardship of nearly 200 million acres of national forest and rangelands, and through product safety and conservation efforts. The USDA opens markets for American farmers and ranchers and provides food for needy people around the world.

Office - Farm Service Agency state offices can inform applicants of county office locations where applicants may sign up.


Program Accomplishments

None.

Uses and Use Restrictions

None.



Eligibility Requirements

Applicant Eligibility

Eligible quota holder means only a person who, as of October 22, 2004, has either a fee simple interest or life estate interest in the farm for which FSA established a farm basic marketing quota for the 2004 marketing year.

The wetlands and highly erodible land provisions of part 12 of Title 7, the controlled substance provisions of part 718 of Title 7, and the payment limitation provisions of part 1400 of Title 7 shall not be applicable to payments made under 7 CFR Part 1463 to an eligible quota holder.

Eligible tobacco producer means an owner, operator, landlord, tenant, or sharecropper who shared in the risk of producing tobacco on a farm where tobacco was produced, or considered planted, pursuant to a tobacco poundage quota or acreage allotment assigned to the farm for the 2002, 2003, or 2004 marketing years.

The wetlands and highly erodible land provisions of part 12 of Title 7 and the controlled substance provisions of part 718 of Title 7 shall be applicable to payments made under 7 CFR Part 1463 to an eligible tobacco producer.

However, the payment limitation provisions of part 1400 of Title 7 shall not be applicable to payments made under this part to an eligible tobacco producer.

Beneficiary Eligibility

Tobacco quota holders, tobacco producers, and eligible assignees.

Credentials/Documentation

Eligible quota holder means only a person who, as of October 22, 2004, has either a fee simple interest or life estate interest in the farm for which FSA established a farm basic marketing quota for the 2004 marketing year. To be eligible for TTPP, quota holders are the owners of a farm with an established 2004 basic marketing quota on their farm as of October 22, 2004, the date the President signed the bill that ends the quota system. Eligible tobacco producer means an owner, operator, landlord, tenant, or sharecropper who shared in the risk of producing tobacco on a farm where tobacco was produced, or considered planted, pursuant to a tobacco poundage quota or acreage allotment assigned to the farm for the 2002, 2003, or 2004 marketing years. For purposes of determining if an eligible tobacco producer has shared in the risk of producing a crop in the 2002, 2003, or 2004 crop years, CCC will consider evidence presented by a producer that includes, but is not limited to: written leases; contracts for the purchase of tobacco; crop insurance documents; or receipts for the purchase of items used in the production of tobacco.

Aplication and Award Process

Preapplication Coordination

There is no preapplication coordination related to this program.

This program is excluded from coverage under E.O.

12372.

Application Procedures

Applicants contact their local county Farm Service Agency Office or U.S. Department of Agriculture Service Center for sign-up information.

Award Procedures

CCC will make a payment to each eligible producer in an amount equal to 10 percent of the total amount due under a contract entered into except that in the case an application was filed after June 17, 2005, the applicant will receive only the TTPP payments that have not been made as of the date the contract is approved.

Deadlines

Please contact the program contact listed in the Information Contacts section below.

Authorization

The Fair and Equitable Tobacco Reform Act of 2004.

Range of Approval/Disapproval Time

1 to 60 days.

Appeals

A person may obtain reconsideration and review of any adverse determinations in accordance with the appeal regulations found at parts 11 and 780 of Title 7.

Renewals

None.

Assistance Considerations

Formula and Matching Requirements

Eligible tobacco quota holders will receive $7 per pound based upon their basic quota at the 2002 marketing year level. Producers of quota tobacco will receive up to $3 per pound payment based on their share of the risk in the 2002, 2003, and 2004 crops of quota tobacco. The annual payment will be calculated by multiplying the eligible producer's Base Quota Level (BQL) for each farm for crop years 2002, 2003, or 2004 by $0.10 per pound per year. For flue-cured and burley producers, the BQL will be equal to the 2002 effective quota produced on the farm. For tobacco other than flue-cured and burley, the producer's BQL will be equal to the 2002 basic allotment multiplied by the farm's 3-year average yield for the years 2001, 2002, and 2003.

Length and Time Phasing of Assistance

The Tobacco Transition Payment Program (TTPP) provides payments to tobacco quota holders and tobacco producers beginning in 2005 and ending in 2014.

Post Assistance Requirements

Reports

None.

Audits

Recipients under this program are subject to audit by the Office of the Regional Inspector General, Department of Agriculture.

Records

Tobacco quota holders or any other individual or entity receiving payment for TTPP shall maintain and retain financial books and records which will permit verification of all transactions for at least 3 years, following the end of the calendar year in which payment was received.

Financial Information

Account Identification

12-4336-0-3-351.

Obigations

(Direct Payments) FY 07 $952,000,000; FY 08 est not available; and FY 09 est not reported. (NOTE: Estimated to be $10 billion from FY 2007 through FY 2014.)

Range and Average of Financial Assistance

Not applicable.

Regulations, Guidelines, and Literature

Program is announced through news media and in letters to agricultural producers in the county. Regulations published in 7 CFR Part 1463, 2005, 2014 Tobacco Transition Program.

Information Contacts

Regional or Local Office

Farm Service Agency state offices can inform applicants of county office locations where applicants may sign up.

Headquarters Office

Department of Agriculture, Farm Service Agency, Tobacco Branch, STOP 0514, 1400 Independence Avenue, S.W., Washington, DC. 20250-0540, Telephone: (202) 720-2715.

Criteria for Selecting Proposals

All applicants meeting eligibility requirements may receive assistance subject to the national payment factor. Applications are non-competitive.



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Edited by: Michael Saunders

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