Officials with the Maryland Department of Agriculture said the state had sought to require that Philip Morris, R.J. Reynolds Tobacco Co. and Lorillard Tobacco Co. honor an agreement to compensate farmers for the declining sales of tobacco expected from a settlement between the tobacco industry and states over the health care costs of smoking.
"Our farmers have been done a big injustice," said Patrick McMillan, assistant agriculture secretary. "The source of income they were led to believe they were going to get has been taken away from them."
The case stemmed from a disagreement over whether the manufacturers were obligated to continue paying farmers under that agreement after Congress approved in 2004 a $10 billion buyout for tobacco farmers nationally, to be financed by taxing the cigarette industry. McMillan said farmers in Maryland and Pennsylvania, where they were due $9 million, didn't benefit from that buyout so they should have continued to receive payments.
Copyright © 2009, The Baltimore Sun
I see the main problem of this situation being the intervention of the government in the private market. The excessive tax on tobacco products has not solely affected the tobacco companies, but has also been passed down to the tobacco farmers. This in turn has caused the farmers to believe they are entitled to compensation which would warrant more government intervention into the private market. The government was as well is redistributing the costs of smoker's poor decisions onto the tobacco companies and tobacco farmers who are not directly responsible for the smoker's decision to engage in an unhealthy habit.
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