Jack

There is a list of subsidized products. If you can believe it, from 1995 to 2023, we have spent over $100 million buying tobacco. Tobacco is still on the subsidy list. So, take a look at the subsidies and you can see what we’re buying.

Bill B

Jack, let me just ask the basic question. So, the government is buying tobacco. What does that mean? Does it mean they buy the tobacco and put it in a shed somewhere? Or what does it mean when you buy tobacco or buy corn or anything else? Is the government buying it and giving it away? Is that the wonderful way in which we benefit people by giving them tobacco at no cost?

Jack

Some of the subsidies are purchased and stockpiled. Corn, wheat, rice, beans, and soybeans are stockpiled. The U.S. has lots of stockpiles of wheat. This is what we use for USAID. When we give government aid, we send bags of wheat and corn and rice and soybeans to other countries that are having hunger problems. Some of it is just outright purchased, stockpiled, bagged and given away.

Other times, there are price props where the farmer is guaranteed a price for a product. So for many of the products, such as fruit and tobacco, a price is guaranteed for their product rather than letting the free market determine the price. So, R.J. Reynolds is willing to pay $2 a pound for tobacco. That’s not a livable wage for a tobacco farmer. The government assures that the farmer gets $4 a pound for their tobacco. It’s a price prop and it props up a price so that R.J. Reynolds still gets the tobacco. The farmer gets a better price for it than R.J. Reynolds was willing to pay for it.

Bill B

Does that mean R.J. Reynolds is likely to buy more tobacco?

Jack

Yes. And then just even set it aside.

Bill

It’s like when I worked in the Soviet Union. The Soviet Union produced cans in which to put the food. They didn’t have any food in the cans, but they were still producing the cans. As a result, when you went to a grocery store in one of the Soviet Union countries, there would be beautiful displays of canned vegetables and fruits. However, when you picked up the cans you would find that they are empty.  So, are we saying that R. J. Reynolds might be producing tobacco even though the tobacco is never sold?

Jack

Yes. Some of the products are bought and dumped. These crops are all rotting. You may remember Woody Guthry’s “Plane Wreck at Los Gatos”. “The crops are all rotting . . .in their creosote dump.” That’s a great California Bay Area protest song.