We stopped subsidizing tobacco farming. The result? Tobacco farming’s on the rise.

When President Obama signed legislation in mid-June to bring tobacco under FDA regulation, few seemed outraged that the legislation had been co-written by Philip Morris USA (PM). The bill was designed, critics say, to stabilize the place of cigarettes in our society: to diminish the threat of health-related lawsuits, to prevent competitive yet possibly safer products from being introduced, and to lock in Philip Morris' market share. It's not just the Harvard School of Public Health leveling these charges but even Sen. Bob Bennett, Republican of Utah, a supporter of the intent of the bill who was nonetheless "convinced we would do better if we told Philip Morris to stay out of the process of writing tobacco legislation."

But the bill Obama signed is actually the second half of a legislative push, or maybe a putsch, that Philip Morris and its parent, Altria (MO), have been shepherding through Congress for more than a decade. In 2004, President Bush signed the first half of the legislation, which had to do with tobacco production rather than consumption. That bill, the Fair and Equitable Tobacco Reform Act of 2004, eliminated the quota system for tobacco farmers that had been in place since the 1930s. Similar to its other crop insurance programs, the government had created a system to guarantee a minimum price for tobacco farmers by limiting the amount that could be grown each year.

In what is a familiar refrain, the buyout was sold to Congress and anti-smoking groups as something that was necessary to help impoverished small tobacco farmers get out of the business. "Tens of thousands of farmers will struggle to survive and many, including whole communities, will not make it," testified Matthew Myers, head of the Campaign for Tobacco-Free Kids and an early supporter of the bill. (He withdrew his support once the buyout was uncoupled from the FDA legislation for that year.) In 2004 it was Ken Cook, president of the Environmental Working Group, who tried to pull back the curtain. He said at the time, "The House buyout plan is an incredible rip-off of the taxpayer, mostly to benefit a handful of large tobacco interests and tobacco companies."

Five years after the tobacco buyout, and with the second prong of tobacco legislation newly passed, it's worth checking in. As with other crops, the government had for years been paying some farmers not to grow tobacco to maintain prices for those who did. By the time 2004 rolled around, nearly 85 percent of tobacco permit holders weren't growing tobacco at all. The permits were being bought and sold for their annual cash payments, like some sort of strange tobacco bond. The quota system, which could have been used to end domestic tobacco production altogether, worked in that it kept prices high and kept small farmers in business.

Under the law, the USDA, which had paid billions to permit holders for nearly 60 years, had to end the quota system. A "user fee," or tax, of $9.6 billion was levied on tobacco companies and paid for the buyout.

One might think the impoverished tobacco farmer is still down there in Marlboro country, wandering his barren plantation, as if Sherman himself had risen only to come and burn it all over again. Or that the buyout helped reduce the use of American farmland to grow tobacco, especially given the recent price spikes in food crops, like wheat, soybeans, and corn. One would think provisions were put in place to help permanently reduce the amount of tobacco production in the United States. But one would be wrong.

In fact, while many small tobacco farmers took their buyouts and got out of family farming, many sold their land to large industrial farmers who simply took their places. And plenty weren't even farming to begin with. The Washington Post story that quoted Ken Cook noted that "holders of a quota to market tobacco—which has been bought and sold for decades—live in all 50 states."

The South, after a few years of production declines adjusting to the new market dynamics, is again growing plenty of tobacco. And tobacco acreage, after declining following the buyout, has jumped up by more than 20 percent, including in some states where tobacco hasn't been farmed in 100 years, like Ohio and Illinois.

According to one story on the buyout, some farmers have stopped growing commodity crops like corn and wheat to switch to the wildly more profitable tobacco crop. "A reasonable profit for an acre of corn is about $100. For tobacco," T.J. Vaughan said in that story, "it's $1,000 to $1,500."

But isn't domestic tobacco consumption declining? Why would there be such an increase in demand? The price supports were simply making American tobacco too expensive for the marketplace. By removing them, the tobacco companies got what they wanted: cheaper domestic tobacco. The cheaper supply, of course, lowered the cost of making their product.

As tobacco costs continued to decline, thanks to the consolidation of farms and use of industrial farming techniques, the price of American tobacco became competitive on the international market. Now, nearly 60 percent of our entire domestic crop is being exported to other regions where smoking is on the rise, mostly in Africa, the Middle East, and Asia. Philip Morris USA, which, according to Joe Nocera, came to the negotiating table chastened by its past behavior of denial and obstruction, has still managed to do a solid for its corporate cousin Philip Morris International.

By introducing competition to the supply market, the two companies have simply re-created the old slavery triangle trade route. Sell cigarettes to Africans, use the profits to buy American tobacco, and manufacture cigarettes in lightly regulated countries like Romania and China. Forget exporting carbon; we're now exporting cancer.

And the competition seems to be working exactly how the Philip Morris twins intended. In Kentucky, 85 percent of burley tobacco, the main kind of tobacco found in cigarettes, is exported. Burley tobacco has a harsh taste that has to be masked by flavors like cherry and vanilla—flavors that were just banned under the 2009 legislation. Tobacco growers, in other words, won't have much of a domestic market—but they will have a buyer trying to meet ever-growing foreign demand in Philip Morris International. That's why exports are rising and tobacco is one of the biggest export cash crops in the United States today. The whole scheme could be considered a blow to the idea that farmers need any government price supports at all.

So, five years later, the first prong of the tobacco legislation effort spearheaded by Philip Morris USA and supported by the Campaign for Tobacco-Free Kids has consolidated, boosted, and industrialized American tobacco farming and removed the price supports that made American tobacco exports unattractive on the open market. The only problem is that now that Philip Morris International is using so much American tobacco, its profits had fallen last quarter due to the stronger American dollar. But before some congressman jumps to Big Tobacco's rescue, as they seem to love to do these days, I should note that the dollar is already weakening once again.