LOUISVILLE, Ky. (AP) -- Tobacco farmers long on the defensive notched a victory Thursday when the U.S. Senate fended off efforts to eliminate the federal insurance program for the embattled crop.
The vote, coming as the Senate crafts a five-year farm bill, was seen crucial for farmers in Kentucky who still gamble with the weather and a contracting system to plant tobacco. The Bluegrass State remains the nation's top producer of burley tobacco, an ingredient in many cigarettes.
"It was a significant policy win for Kentucky farmers amid a very anti-tobacco Congress," University of Kentucky agricultural economist Will Snell said.
Snell said most tobacco farmers depend on crop insurance not only for risk protection, but to assist them in obtaining financing for the next crop.
"Without the crop insurance subsidy for tobacco, farmers will not take out full-cost insurance on tobacco, which would ... jeopardize future tobacco production," he said.
The Senate amendment proposed ending $33 million a year in insurance policies for tobacco farmers. It was opposed by 52 senators and supported by 44.
Senate Minority Leader Mitch McConnell, R-Ky., called the amendment's defeat a "big victory" for the state's tobacco growers. McConnell personally lobbied a number of his colleagues in leading the fight against the amendment, which he denounced as "another assault by Washington to go after" jobs in Kentucky.
Critics say federal contributions to crop insurance are too generous. Farm-state senators have argued that crop insurance for a myriad of crops should be maintained and even expanded because it protects farmers when they need it most and farmers contribute to the program.
For years, tobacco farmers have been beleaguered by smoking bans and high excise taxes as U.S. cigarette consumption declines.
Burley production has fallen sharply since the 2004 tobacco buyout, which ushered in a free-market system to replace Depression-era federal production and price controls. Now, burley is mostly grown under contracts between farmers and tobacco companies. Companies can reject tobacco that doesn't meet quality specifications.
But even as the industry shifted to the free market, many tobacco farmers still receive crop insurance.
Sen. John McCain, R-Ariz., who helped lead the push to end the federal insurance program for tobacco, had said: "It turns out Joe Camel's nose has been under the tent this whole time in terms of crop insurance subsidies." He was referring to a character that used to appear on boxes of Camel cigarettes.
In Kentucky, there were 6,138 policies last year covering 68,386 acres of tobacco, according to the Kentucky Farm Bureau. Nationally, there were 14,956 polices covering 272,254 acres of tobacco, it said.
Kentucky Farm Bureau President Mark Haney on Thursday called crop insurance "an essential program that ensures our farmers have access to the needed capital to manage their farming operation." And he noted that tobacco remains an approximately $400 million industry in Kentucky.
State Sen. Paul Hornback, a tobacco farmer from Shelby County, said more farmers would have abandoned the crop without the protection of the insurance program.
"Without crop insurance, the risk is just almost more than a lot of farmers can overcome, he said. "Without some type of crop insurance program to insure against Mother Nature, it would have been devastating to this state."
The crop would have survived if the insurance program had ended, he said, but "you would have seen the face of tobacco growing change very drastically once again."
In the post-buyout era, tobacco production has tended to consolidate among fewer farmers with much larger fields of leaf, he said.
"A lot of growers are growing 100 acres," he said. "The risk would have been too much for them."
Kentucky farmers are expected to set 78,000 acres of burley tobacco this year, up 4,000 acres from a year ago, according to the Kentucky field office of the National Agricultural Statistics Service.
- Consumer Discretionary