Australia Buys Out Tobacco Farmers

Source from:  By Monte Sonnenberg SUN MEDIA Monday November 13, 2006 11/15/2006

Board sees parallels with situation in Canada. A sign of things to come in the tobacco belt is unfolding in an unlikely place. Growers and their representatives are following events in Australia closely now that the federal government there has agreed to buy out its tobacco farmers. The decision came in late October. The Australian newspaper reports that the national government has agreed to buy out nearly 300 growers at a total cost of $41 million. Each licensed grower is eligible for a maximum cash settlement of $150,000 Aus.. Fred Neukamm of Aylmer, chair of the Ontario Flue-Cured Tobacco Growers' Marketing Board, intends to raise the situation with federal and provincial officials when he next meets to discuss a buyout of Ontario producers. "We see quite a number of parallels with what's happening in Australia," Neukamm said. "Obviously, it's a positive signal to see a developed country take care of the issues and taking care of its growers." Neukamm noted this was only the latest phase in the wind down of the Australian industry. In the mid-1990s, the national government paid as much as $500,000 to growers who were cutting back production or exiting the industry altogether. "We've been aware of the situation in Australia for quite some time," Neukamm said. Australia is following through on the commitment it made when it signed the World Health Organization's Framework Convention on Tobacco Control five years ago. The framework, which Canada has also signed, commits participants to the eventual elimination of tobacco consumption in their jurisdictions. Signatories also pledge to compensate other legal stakeholders displaced by the new policy. Canada and Ontario intend to eliminate tobacco consumption at an unspecified point in the future. To that end, the pair have imposed punishing taxes on tobacco products and are systematically eliminating smoking in public places. The tobacco board argues this change in policy has badly hurt legal stakeholders. This includes communities that depend on the wealth tobacco farmers generate. Neukamm thought it interesting that The Australian quotes an Australian senator who admitted "it was clear growers had been financially disadvantaged by various government policies." The tobacco board is seeking compensation for 271 million pounds of quota. The board is asking $3.30 a pound as well as fair compensation for long-serving sharegrowers. The board and municipalities in south-central Ontario are also seeking grants to retool their economies. There is speculation cash for a buyout might be raised through a special tax on tobacco products. Last week, local MP Diane Finley, minister of human resources and skills development in the Harper cabinet, said the relevant officials are aware of the Australian settlement and are studying its implications for growers in Ontario. She added that the Harper government is aware of Ottawa's responsibilities as a party to the WHO framework on tobacco. "The WHO position is one I've raised here many times," Finley said. "It's one reason we're working with the province on an exit strategy." Finley is experiencing "a level of frustration" with the slow pace of negotiations. She recognizes that all concerned -- growers in particular -- need to know what is coming so they can plan for the 2007 growing season. At every opportunity, Finley said she is trying to move the process "as far as I can as fast as I can." "I recognize the sense of urgency," she added. "Obviously, it's a positive signal to see a developed country take care of the issues and taking care of its growers." Enditem