The Future of Tobacco The Hopes of Tobacco Farmers, Their Families, Hang in the Balance

Source from:  By Larry Wooten GUEST COLUMNIST 09/06/2004

Traveling to farms and rural communities throughout North Carolina allows me to keep my finger on the state's agricultural pulse. One crop in particular has the heartbeat of rural North Carolina skipping erratically. Tobacco has been the subject of much-needed debate recently. The state's tobacco farmers excel at their jobs and are expected to harvest a bumper crop this season. Normally, this would be good news. Ironically, an outstanding harvest may further erode the economic foundation already crumbling beneath tobacco farm families and their rural communities. A large harvest coupled with depressed markets for U.S. tobacco suggests financial disaster on the horizon. The quota system is a complex, Depression-era farm program that controls the amount of leaf farmers may grow and sell based on projected demand. While the program has worked well over the years, it was never designed to operate in today's competitive world economic environment. In the past, the program has helped sustain tobacco farm families. Now, the intense pressure of international competition, a shift from auction house sales to contract growing, and other consequences of the Master Settlement Agreement have buckled the knees of the federal program and left it on the verge of collapse. Elements of a perfect storm have propelled the tobacco-quota buyout legislation to the point at which it now rests. Further quota cuts, growing assessments, the rising cost of producing American tobacco and the reluctance of foreign buyers to continue purchasing American leaf indicate that the storm may not have moved fast enough. To understand the potential impact of the situation on North Carolina, one must have a basic knowledge of the federal tobacco-quota program, which operates at no net cost to taxpayers. Each year, the U.S. Department of Agriculture establishes a national marketing quota that is based on domestic and foreign demand for tobacco along with designated reserves held by the tobacco stabilization cooperative whose sole purpose is stabilizing the market. Because early sales indicate that between 90 million to 120 million pounds of tobacco may go under loan this year to the tobacco cooperative, we could see a 30 to 35 percent cut in the amount of tobacco allowed grown next year. Combining this drastic quota cut with the farmer's carry-over tobacco quite likely results in enough tobacco to satisfy the 2005 demand, eliminating the need to plant one acre of new tobacco next season. A natural result will be the United States no longer being considered a reliable supplier of flue-cured tobacco on the world market. Foreign buyers may be reluctant to continue in the American market, delivering a knockout punch to the program. The economic damage resulting from the federal quota program's collapse will not only be limited to tobacco farmers; it will also reach the heart of North Carolina's economy, as well as other tobacco growing states. If Congress fails to enact tobacco-program reform, bankruptcies will be declared. Farmland will lose its value and in some areas be sold for development. Small-town mom and pop stores will close their doors. And state and county budgets, which are already tight, will continue to suffer. We may avoid this looming agricultural, economic and cultural disaster by reforming the federal tobacco program. The Jobs/FSC bill pending in Congress contains provisions that provide for an orderly transition away from the tobacco program. North Carolina's congressional delegation has been working together with their colleagues from other states to move legislation to the front burner. If the buyout bill fails, President Bush, Sen. John Kerry, U.S. Rep. Richard Burr, Senate candidate Erskine Bowles, the state's members of Congress and the cigarette manufacturers will survive. Federal and state governments will continue to receive billions of dollars in tax revenues and Master Settlement payments. But tragically, the people who have spent their lives toiling in tobacco fields and invested in good faith in the federal quota program will be financially ruined. Rural communities, a way of life, and the hopes and dreams of tobacco farmers and their families hang in the balance. Next year will be too late to save a way of life and shore up an eroding rural economy. Wooten is the president of the North Carolina Farm Bureau, a nonprofit grass-roots organization. Guest Columns: The Journal welcomes guest-column submissions. Length should be about 700 words. Guest columnists should have some special authority for writing about their subject. Our address is: Letters@wsjournal.com. Fax and regular mail are also accepted. The fax number is (336) 727-7402. Our mail address is: Letters to the Journal, P.O. Box 3159, Winston-Salem, N.C. 27102. Enditem