Some Typical Quota Owners and Growers Say That the House Proposal

Source from:  JOURNAL RALEIGH BUREAU 08/04/2004

Some quota owners would make millions on a $9.6 billion federal buyout of tobacco quotas.But the typical quota owner - people like Blanche Pegram, Jean Veeder and Frances Choplin - would get a little more than $14,000 over five years. When their father died in the 1980s, Pegram, Veeder and Choplin each inherited one-third of his farm. And with it, each sister inherited one-third of his tobacco quota, the government-issued license to grow leaf. [img border=0 hspace="4" vspace="4" align="left" src=http://www.tobaccochina.com/english/picture/Satellite1.jpg] "He left the farm to us, and he divided it in three pieces. He asked us to leave the farm as it was - that was the only thing he asked of us," said Pegram, 74, the eldest sister. Today, all three sisters live in modest, ranch-style homes on their father's farm along Cross Creek Road in Vance County. And in 2002, each sister owned roughly the median amount of quota among 70,094 quota owners in North Carolina: 2,030 pounds. Though they are not active farmers themselves, the three sisters rent their quota to Archie Dean Collier, a neighbor who farmed with their father. Collier rents quota from at least 13 quota holders so that he has enough quota to raise 40,000 pounds of tobacco this year. The sisters recall the days long ago when every hillside on their father's farm was covered with broad, green tobacco leaves. "Every clear place, it was tobacco," said Jean Veeder. And the sisters appreciate the annual rent checks that they still get for the quota that their father, Fenner Ayscue, once owned. "He's been dead all these years - he died in the early '80s - and he's still supporting us," said Jean Veeder. Quota rents for about 35 cents a pound in Vance County. But because Collier is a longtime friend, the three sisters charge him 25 cents a pound to raise the leaf that they are licensed to grow. So each of the sisters received $507 in rent from Collier in 2002. Like thousands of quota owners in North Carolina, the three sisters say they have generally used the money from renting out their quotas to pay property taxes and insurance on their land. But as tobacco companies have cut the amount of U.S.-grown leaf they intend to buy, the sisters' annual rent checks have shrunk by more than half since 1997. "They say it pays the county taxes. I don't think it'll do that anymore," said Veeder. "People can't make it in farming anymore. "Every time you see the quota cut, it's like they're taking away your business and not compensating you for it," she said. Pegram said she and her sisters might have to raise the rent that Collier pays if they don't get money from a quota buyout next year. "We are going to have to go up on the rent if they don't pass it," she said. "We wouldn't get enough to pay the taxes on it if we don't go up." She also realizes what that could mean for Collier, the neighbor farmer. "I don't know how he can make it with what little he has," she said. "The way they're cutting it and cutting it, we aren't going to have any farmers left." As proposed in a bill that passed the U.S. House of Representatives in June, quota owners would receive $7 a pound for their leaf and farmers would receive $3 a pound over five years, based on the amount of quota they owned or grew in 2002. Pegram said she would put the $14,000 she would get from the buyout into her IRA retirement account and then give her farmland to her children. "I don't think it's going to pass, but I really wish they would. At my age, I wish they'd just go ahead and buy me out," she said. "You don't know what to do. You don't know if you're going to have tobacco next year. I want to give the children the farm, but I don't want to do it unless there's a buyout," she said. Collier, 60, said he pays an average of 32 cents a pound to rent quota each year from at least 13 owners. He owns two modern John Deere tractors and five bulk barns to cure his leaf. "I don't plant nothing but tobacco. I don't even plant a garden," Collier said. But with the cuts in quota in recent years, "I have not made a dime since '97," he said. If the House version of a quota buyout passed, Collier would get $165,649 over five years for the quota that he owns and grows. He also gets almost $10,000 a year in "Phase II" payments as part of the nationwide tobacco settlement. But he said he can't increase his operation to the size it would take to be profitable if leaf prices decline as expected after a buyout. "At my age, I don't have the equipment it's going to take," he said. "It's just get rid of what I've got and take it and walk out. That's the only choice I have." Collier said he simply wants to see the debate over a buyout resolved in Congress so he knows how to plan for his future. "I'd just like to see them do what they're going to do, so a man knows what he needs to do - whether he needs to buy a tractor or whatever," he said. "It's a world of uncertainty." Near Mayodan in Rockingham County, Patrick Gann also owns the median amount of quota in North Carolina - 2,030 pounds. Gann owns a septic-tank service and a small Angus beef-cattle farm. At 30 cents a pound, he received $550 in rent for his quota last year from Danny Sheppard, a neighbor farmer who has rented Gann's quota for years. Like the three sisters near Henderson, he says he has used the money to pay local property taxes. Gann would also get $14,210 from a quota buyout that he says he would use to build his beef operation. "If they'd buy it out, then I could spend more money on fences or buying a better bull or buying a better brood cow or something to help me with my cattle operation," he said. "I prefer that to renting it out.... I'd just as soon get rid of it." The proposed buyout would also do away with a price-support system that has paid Sheppard about $1.80 a pound for his tobacco in recent years. And Sheppard, who leases quota from 15 owners to grow 70,000 pounds of tobacco on 35 acres, doesn't like the idea of lower prices for his leaf. He sees costs climbing for fertilizer and the four Mexican laborers he hires each year to prime his leaf. "The companies are saying they want to buy it for $1.24 a pound," Sheppard said. "That's going to help the tobacco companies. That's not going to help me. I can't survive on a dollar and a quarter a pound. If they bought a million pounds, I couldn't survive on a dollar and a quarter," he said. Like some analysts, Sheppard expects that an end to the system that limits how much leaf farmers can grow will shift tobacco production out of the Piedmont to the lower-cost fields of Eastern North Carolina. "Around here, three or four acres is a huge field," he said. "If you go down east, they're going to have 30 or 40 acres in it. They're going to put us out of business up here. They're bigger farmers with bigger land..... I don't think I'd plant a plant if they bought it out." Sheppard, a fifth-generation farmer, drives a propane truck in the winter to make ends meet. And he says there's no room for his 25-year-old son, who works as a truck mechanic in Greensboro, in his farming operation. Though he said he has no debt on his farm and he would receive $216,462 over five years from a quota buyout, Sheppard has no doubt that a buyout would spell the end of his livelihood as a full-time farmer. "I'd put it in the bank. I'd go to work for (the propane company) and farm part-time. There's nothing else you can grow that'll bring what tobacco brings," Sheppard said. "I love to farm, but I don't want to do it just to say I done it. You want to make a living out of it," he said. "My family has been nothing but farmers," he said. "I don't want to quit, but If feel like I'm being forced out." Enditem