Replies

You misunderstand the buyout. It is not the cigarette companies like Philip Morris which are being "bought out," it is the individual tobacco farmer. Right now, Farmer Brown has a tobacco quota (this program has been in effect since 1938), and he is guaranteed a certain minimum price for his tobacco in exchange for selling up to his quota amount.

The buyout program would compensate Farmer Brown for the economic value of his quota (quotas can be sold or leased by one tobacco farmer to another); in exchange, Farmer Brown can now grow and sell as much tobacco as he wants, however, the USDA will no longer guarantee a minimum price.

And that, folks, is why Philip Morris and the other cigarette companies support this buyout program. Whereas before they had to offer Farmer Brown at least the minimum price guaranteed by the USDA, they will not be in the position of telling Farmer Brown, "Here's what we'll pay you for your tobacco -- take it or leave it."

Farmer Brown will take what he can get, the cigarette companies will get their tobacco for less money, and cigarettes will fall in price.

As for the FDA regulation of tobacco products, it's a small price for the cigarette companies to pay in exchange for lower tobacco prices, and besides, it will serve to inoculate the cigarette companies against future lawsuits brought by plaintiffs who charge that cigarettes are more harmful than the companies let on.

Doh! Made a small but significant spelling error. When I wrote, Whereas before they had to offer Farmer Brown at least the minimum price guaranteed by the USDA, they will not be in the position of telling Farmer Brown, "Here's what we'll pay you for your tobacco -- take it or leave it." The "not" should read "now." Sorry about the confusion.

As for the FDA regulation of tobacco products, it's a small price for the cigarette companies to pay in exchange for lower tobacco prices, and besides, it will serve to inoculate the cigarette companies against future lawsuits brought by plaintiffs who charge that cigarettes are more harmful than the companies let on.

We all know that if cigarettes are put under the control of the FDA, they would not put their seal of approval on them. Therefore, they would have to ban cigarettes.

I appreciate your xplanation - I've always had a general idea but have never had it spelled out in such laymen terms. I also agree with everything you say with one exception:

Farmer Brown will take what he can get, the cigarette companies will get their tobacco for less money, and cigarettes will fall in price.

That will NEVER happen.

As for the FDA regulation of tobacco products, it's a small price for the cigarette companies to pay in exchange for lower tobacco prices

Why the nerve of those evil evil tobacco companies wanting to make more money on their product. Before you know it they might make as much on the sale of their product as, as , as the government!