Tobacco Farmers Await Payday

Source from:  Richmond (VA) Times-Dispatch  06/23/2004

BY KIRSTEN B. MITCHELL AND JOHN REID BLACKWELL MEDIA GENERAL NEWS SERVICE TIMES-DISPATCH STAFF WRITER The way some people in Washington see it, Randy Wood could win a lottery of sorts if the Senate passes a tobacco-quota buyout. More than $4.36 million would flow to Wood, who farms tobacco near the North Carolina-Virginia line, under a House-approved plan to end a Depression-era system for growing tobacco. Wood, of Thurmond, N.C., is No. 5 on a list of 462 "instant millionaires" compiled by a watchdog group on environmental and farm issues, the Environmental Working Group. The list of "instant millionaires" includes 32 farmers and quota owners in Virginia. Starting today, Web surfers can go to the organization's Web site, www.ewg.org, and find out how much Wood and more than 436,718 other people who own quota - the government's right to grow tobacco - would receive under the five-year buyout plan. Web surfers can type in a name, state or a ZIP code to find out who would be paid how much under the $9.6 billion plan. Tobacco-quota holders live in all 50 states, Washington and 16 foreign countries. The working group's analysis shows that 67 percent of the buyout money would go to the top 10 percent of quota holders. "This is not like a taking of property. This is a government entitlement," said Ken Cook, president of the nonpartisan, nonprofit Environmental Working Group. "We don't feel the taxpayers are under any obligation to buy out an entitlement." Wood, who has grown tobacco for 33 years, sees it differently. "They need to know how . . . hard Randy Wood worked over the years to accumulate [quota] and pay for it," said Wood, who farms 350 acres, owning 250 acres and the attached quota and renting 100 acres from other quota holders. Two of the Virginia "instant millionaires" said that a buyout would be compensation for lost assets, not a government handout. "If I got a buyout, it certainly wouldn't be a handout. I'd take the money and go hand it to my creditors," said Keith Atkinson, a Pittsylvania County farmer who would get more than $2 million from a buyout, according to the working group's analysis. Atkinson said the figures are misleading. "I have got more than that invested" in his farm, Atkinson said. "I probably don't own anywhere near that much quota. I rent a lot of quota, and I am not going to get $8 [per pound] for that." Almost 30,000 Virginia farmers and quota owners would get a total of about $679 million from the proposed buyout, but most would receive relatively small payments. The average would be $22,599, paid out over five years. More than $41 million would go to 1,908 quota owners in the Richmond-Petersburg area. The largest payment in Virginia would go to Malcolm L. "Mac" Bailey, a Lunenburg County farmer who also owns Keysville-based S&M Brands Inc., maker of Bailey's cigarettes. Bailey would receive about $3.46 million, putting him at No. 15 on the national list. "That's a lot of money, I have to agree," he said yesterday. "When I was buying [tobacco poundage] over my lifetime, I never dreamed there would be a quota buyout, and there still might not be one." Both Bailey and Atkinson said they have worked hard over the years to buy quota. Since demand for U.S.-grown tobacco started to plunge in the late 1990s, they have lost more than half of that investment. Atkinson said the federal government helped create that situation by "nurturing an environment that has been litigation-friendly" against the tobacco industry. Bailey said big cigarette companies have been able to increase their purchases of foreign-grown leaf too easily. Congress created the quota system to help struggling tobacco farmers. Quota dispersed as leaf growers died and passed the quota to their heirs, many of whom decided not to farm tobacco. Instead, they leased their land and the attached quota, adding middlemen and driving up the price of U.S. tobacco. The quota is an asset, said J.T. Davis, a Virginia crop-insurance salesman who has lobbied for a buyout on behalf of farmers. "The federal government created the program in 1938, and they made us dependent on the program. If public policy is driving this train, then I think farmers should be compensated for an asset that they purchased." The buyout proposal, long-awaited by tobacco growers, is tucked in a $155 billion corporate tax-cut bill that passed the House by a vote of 251-178 on Thursday. A showdown looms in the Senate later this year. Bailey he said he dislikes the idea of a buyout, because he thinks farmers will suffer more losses without a quota system. Still, he said he understands why most farmers want a buyout. "If something isn't done for the tobacco growers, they are going to fall on their face because they can't make it right now. You can't take away half of what you were making and still expect to stay in business." Atkinson said a buyout is needed to help the economy of rural Virginia. "It is going to help Southside Virginia because it is going to take the focus off tobacco and put it where it needs to go, on the new economy" Enditem