Tobacco producers urged to sign up for transition payment program

Published 12:00 am Sunday, May 22, 2005

Staff Report

Tobacco producers and quota holders to sign up for the Tobacco Transition Payment Program (TTPP), also known as the &uot;Tobacco Buyout&uot; before June 17, said Melanie Lassiter, executive director for USDA’s Farm Service Agency in Suffolk.

&uot;It is important for quota holders and producers to enroll in the new tobacco program before June 17, 2005, or they will miss the first of ten possible payments,&uot; said Lassiter.

Email newsletter signup

&uot;I encourage all quota holders and producers in Suffolk, Virginia to contact the SuffolkUSDA Service Center to make an appointment to sign up as soon as possible.&uot;

Suffolk has approximately 25 landowners/operators who will be issued funds, said Lassiter. Also, a number of Suffolk residents own tobacco allotments in other parts of the state or North Carolina.

The TTPP makes payments to tobacco quota holders and producers beginning in 2005 and ending in 2014 to help with the transition to the free market.

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.

TTPP payments will be made between June and September 2005 for Fiscal Year (FY) 2005.

Subsequent payments in future years will be issued annually during the month of January.

A quota holder or tobacco producer may receive a lump-sum payment from a third party through a successor-in-interest contract or an assignment of payment.

The consideration received must be equal to or greater than the discounted value of the payments, based on the discount rate established by the Commodity Credit Corporation (CCC).

The discount rate is determined by adding 2 percentage points to the prime lending rate on the first business day of the month, rounded to the nearest whole number.

The calculator is available on the FSA Web site at:

By simply inputting a few numbers, the user can tell if the lump-sum offer meets statutory guidelines.

The TTPP marks the end of the federal tobacco marketing quota and price support loan programs.

Beginning with the 2005 tobacco crop, there are no planting restrictions, no marketing cards and no price support loans.

Signing up for the TTPP is the final and only opportunity to receive federal payments related to tobacco production.

Sign up for the program is voluntary.

On Oct. 22, 2004, President Bush signed the American Jobs Creation Act of 2004, which included the Fair and Equitable Tobacco Reform (the &uot;Tobacco Buyout&uot;).

USDA’s Farm Service Agency is charged with administering the program.

More information about the TTPP can be found on the Internet at or by calling 1-866-887-0140.