Study: Settlement Helps 50,000 Ky. Tobacco Farmers

Source from:  Associated Press 11/24/2008

(AP:LEXINGTON, Ky.) Kentucky has been able to invest $209 million in agriculture out of the state's share of a settlement agreement with tobacco companies, and a study concludes some 50,000 current and former growers of the crop have benefited. The glowing review by researchers at the University of Kentucky was presented Thursday at a meeting of the Agricultural Development Board, which oversees the state's investments of tobacco settlement dollars in agriculture interests. Although the 46 states that have settled with tobacco companies have broad flexibility to spend the money however they choose, Kentucky redirected nearly half of its share _ by far the most of any state _ back into farming. The goal was in part to aid the farmers who had long relied on tobacco for their livelihood. While the study didn't address whether that decision was wise, it did conclude the economic return has been substantial. Every dollar spent through the program on agriculture produced nearly two dollars in redevelopment, the researchers found. "Are tobacco farmers better off now because of the investments provided by this tobacco money? Absolutely they're better off," said Roger Thomas, executive director Governor's Office of Agriculture Policy. The state spent $138,000 on the study, which covered investments from 2001 to 2007. Its release coincided with a report Thursday by The Associated Press that found widespread questionable spending nationwide from the settlement, ranging from a golf course in New York to a museum in Alaska featuring mummified bison. Of the $61.6 billion divided among the states between 2000 and 2006, only 30 percent was spent on health care. Kentucky law directs 25 percent of the settlement toward health initiatives, another 25 percent on early childhood development and most of the rest on agriculture, Thomas said. Richard Maurer, a professor at UK's College of Agriculture who was one of the authors of the study, said Kentucky had unique challenges because of the huge economic impact of cigarette makers and tobacco growers. Although Maurer says no agricultural interest in Kentucky will be as visible as tobacco, the purpose of the study was to show how a variety of new things have helped fill in the gaps. "I don't think there's any one thing that's ever going to replace it," Maurer said. "That's why the effort of diversification is the right one." While $100 million of Kentucky's settlement spending on agriculture is controlled by the counties, the state directly spent $86 million to fund broader projects. That money has resulted in $161 million additional farm income and created 1,300 new jobs, albeit many of them temporary seasonal jobs, the study found. With the drop in tobacco acreage there has been a sizable increase in cattle production in Kentucky, but 500 new animal and crop-based products also have popped up through the settlement payouts. New markets ranged from naturally cured hams to glue made out of low-quality wheat. The study wasn't all good news, though. Researchers found that the transition from tobacco to something else was far easier in the large and medium-scale tobacco farms in west and central Kentucky than in the smaller household farms in eastern Kentucky, one of the nation's poorest areas. Maurer suggests that more money be spent there on community-wide projects rather than as payouts to individual growers. "It's just harder to find a replacement for those three acres of tobacco," he said. Enditem