House of Lords
Session 1996-97

TOBACCO SUBSIDIES
A "SCANDALOUS WASTE OF MONEY"

SAYS LORDS' COMMITTEE



Saturday 12 April 1997
European Community subsidies for tobacco farming are a scandalous waste of taxpayers' money. This is the main conclusion of a report by a House of Lords' Committee, published today.

Every year the Community spends huge sums supporting the production of a product which is harmful to health and which is of such poor quality that most of it can only be sold, at rock-bottom prices, to less-developed countries.

Tobacco producers receive an average 80 per cent of their revenue for tobacco by way of subsidy. Some varieties depend for their production on a subsidy that is 99 times the purchase price.

Tobacco is grown mostly in Italy, Greece and Spain, often in poor, underdeveloped regions. Over the years tobacco subsidies have been seen as a way of propping up small farms which would not otherwise be economically viable. But the Committee concludes that this does them no favours, since producers remain trapped in a sector with no real long-term prospects. Pressures from the World Trade Organisation, and the implications of new members joining the Community, mean that subsidies cannot continue at present levels for long, so a new approach is needed.

The Committee calls for a phased reduction in subsidies, combined with financial incentives to tobacco producers to look for other livelihoods. Regional development programmes and the provision of infrastructure would also help to put the economies of tobacco-growing areas on a more sustainable footing.

Lord Reay, Chairman of the Committee, said:-

"The tobacco sector is a hole in the ground into which the Community is pouring money with no thought for the future. We recognise that, for many tobacco growers, subsidy is the main source of income, but that can't go on indefinitely. Sooner or later things must change - and the process will be less painful if it is sooner. The money would be better spent in helping to create other economic opportunities."

NOTES FOR EDITORS:

The Committee's enquiry was occasioned by EC Proposal 5217/97 (COM(96) 554) which is the Report from the Commission to the Council on the common organisation of the market in raw tobacco.

MEMBERS OF THE SUB-COMMITTEE WHO CONDUCTED THE ENQUIRY:

Lord Brain, Viscount Brookeborough, Baroness David, Lord Gallacher, Lord Gisborough, Lord Grantchester, Lord Moran, Lord Reay (Chairman), Baroness Robson of Kiddington, Lord Stodart of Leaston and Lord Wade of Chorlton.

ENQUIRIES: Miss Mary Morgan, Information Officer. Tel: 0171-219 0671.

Fax: 0171-219 6715.

ADVANCE COPIES: Mr Dominic O'Shea, Tel: 0171-219 3346.



PUBLICATION DETAILS:


THE EC TOBACCO REGIME


Report 13th Report Session 1996-97, HL Paper 73, £7.00, ISBN 010 407397 7.

Published by The Stationery Office and available fromThe Stationery Office Publications Centre, PO Box 276, London SW8 5DT; Telephone orders 0171-873 9090; General enquiries 0171­873 0011; Fax orders 0171-873 8200.



© Parliamentary copyright 1997
Prepared 12 April 1997