Tobacco Farmers Feel The Pinch Of Rising Taxes

Last week, a tax increase on cigarettes went into effect in New York state, raising the price in some places to more than $10 per pack. Hawaii also hiked its cigarette tax -- by 40 cents a pack. The news has people who grow tobacco shaking their heads.

In western Kentucky, a new crop of tobacco went into the ground in late spring. But this year, there was less tobacco -- planted by fewer farmers.

Carol Hinton, the agriculture extension agent for Breckenridge County, is from the area and has watched over a big change in tobacco growing.

"Used to be we had 3-acre patches, and now we've gone to 10 to 30 acre patches. You can raise as much as a tobacco company will buy from you," Hinton says.

That's because of a government buyout program that went into effect five years ago. The federal government decided to stop supporting the price of tobacco and took away quotas. Farmers were given a payout, to be paid over 10 years, and were essentially told they could do what they wanted.

Most of the longtime tobacco growers got out. Others decided that without quotas, they could increase their production and sell on contract to companies like Philip Morris International.

Brandon Taul, a farmer in McQuady, Ky., says his farm has been in his family for four generations. He put up new barns -- which can cost $30,000 each -- and is planting in several fields, one of them out in front of his new house.

"I built [this house] five years ago thinking tobacco was gonna be good, and we were going to be able to make a living on it. But consumption's going down. Hopefully it'll get better. There's always ups and downs," Taul says.

Taul is doing OK this year, but the real ups and downs are more drastic. Going up are federal, state and city taxes on tobacco; going down are smoking rates. According to the Centers for Disease Control and Prevention, 42 percent of American adults smoked cigarettes in 1965. In 2007, it was less than 20 percent. The line on the graph continues to slant down.

Now, some farmers who signed contracts with tobacco companies are getting paid a lot less -- if they still have a contract.

"I think the ones that are left still growing -- there's a lot of anxiety with them," says Steven Hinton, the husband of Carol Hinton. "The ones that got cut out -- they're mad."

The Hintons have a farm operation with a lot of tobacco and, so far, no cutbacks.

As the county's agriculture extension agent, Carol Hinton says she continues to help farmers grow tobacco. But she wishes she had pushed them to grow other crops.

"I wish I could have pushed them into strawberries or pepper, or something of that nature," she says. "And some people have tried those things. But I'm not going to say they were very successful at them. And it's a lot of work for a lot less money than tobacco will bring in."

She has been working to establish a farmers market in the summer. More than 20 growers have signed up, hoping to bring in extra money. The trouble is, she says, in Breckinridge County, Ky., people like to share their sweet corn and extra cucumbers -- they just want to give them away.

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