Tobacco Price Support Program
In the United States the Tobacco Price Support Program used a combination of marketing quotas and nonrecourse loans to keep prices stable and higher than they would be otherwise. The tobacco quota limited production in order to raise prices. Nonrecourse loans allowed producers to hold tobacco stocks for long periods in order to balance supplies with market demand conditions.
Under the No Net Cost Tobacco Act of 1982, tobacco loan program operations were required to function at no net cost to taxpayers. A no net cost assessment was collected on all leaf tobacco sold to build a reserve fund that reimbursed the Commodity Credit Corporation for any losses of loan principal and interest. Adoption of the tobacco quota buyout in P.L. 108-357, Title VI, ended also the price support program for the 2005 crop and subsequent years.
