Leaf Buyout Tolls End of Era

Source from:  By KRISTIN COLLINS, Staff Writer 10/13/2004

Congress voted Monday to end the federal tobacco price support program that, for more than six decades, allowed tens of thousands of North Carolina families to pull a living from the land. In its place, those who invested in and profited from the system nationwide will get $10.1 billion and a chance to rebuild a failing industry. The U.S. Senate voted 69-17 to dismantle the program. Farmers can continue to grow tobacco, but without government supports its price will fall sharply. Those who farm tobacco in North Carolina or own rights to grow it here will get about $3.8 billion, or 40 percent of the total. A large share of the money will go to rural Eastern North Carolina, the state's poorest region. "A way of life we've known for 60 years is gone," said Keith Parrish, a Harnett County tobacco farmer and head of the National Tobacco Growers Association. "It is a happy day and a sad day. There's a lot of mixed emotions among the farmers. But we've got some jingle now in our pockets, so we have options." The buyout was passed as part of a $136 billion corporate tax bill. It was approved in the House last week and needs only the president's signature to become law, a step widely considered a formality. Its passage concludes more than two years of fierce political battle between farm advocates and legislators who saw it as a giveaway. It ends a program that limited the amount of tobacco grown, which propped up the price and made tobacco North Carolina's most lucrative crop. The quota system allowed farmers to make a secure living on as little as 10 or 20 acres. But during the past decade, the demand for pricey American tobacco dropped sharply as cigarette companies looked to countries such as Brazil and China for cheaper leaf. Since 1997, declining demand forced the federal government to cut quota -- the amount of tobacco that farmers could grow --by more than half. Now, farmers say, a buyout will allow them to pay debts, then decide whether to leave farming or try growing tobacco without price support. "What we were facing without this buyout was catastrophic," said Larry Wooten, president of the N.C. Farm Bureau. "This will allow our farmers to make decisions with dignity." [b]'Legislative miracle'[/b] Although the government originally handed out tobacco quota for free, it has become a valuable commodity that can be sold, passed to heirs or rented to farmers. Many in rural North Carolina bought quota as a retirement investment, and others are still paying off debt from buying it. Buyout legislation was hampered by disputes among key players. Health groups and Philip Morris, the nation's largest cigarette manufacturer, wanted a buyout paired with federal regulation of tobacco products. Other cigarette companies opposed regulation, because it would limit advertising and hurt their ability to compete with Philip Morris. Congress was divided over regulation and over how to pay for the buyout, and legislators from non-tobacco states called it a giveaway to farmers. For years, the buyout appeared doomed in Washington. This year, tobacco state legislators attached the buyout to the tax bill, which had broad support. "What has been accomplished is a legislative miracle and a monumental achievement," Sen. Elizabeth Dole, a Republican from Salisbury, said Monday before voting for the buyout. North Carolina's other senator, John Edwards, was campaigning for vice president and didn't vote, though he said he supported the bill. [b]Help for rural N.C.[/b] Tobacco farmers and quota owners will get $7 for every pound of quota they owned in 2002 and $3 for every pound they grew that year. Payments will be spaced evenly over 10 years. Those who quit farming or sold quota since 2002 will get partial payments. The buyout will be the second large infusion of tobacco cash to come to rural North Carolina. The 1998 tobacco settlement agreement gave North Carolina $4.6 billion over 25 years, more than half of which goes to rural economic development. Another part of the settlement gave nearly $782 million in direct payments to tobacco farmers since 1999. Now, about 76,000 people in North Carolina will get buyout checks. Two hundred sixty-nine people will get more than a million dollars, but most farmers and quota holders will get more modest amounts. The economic impact is hard to gauge. Many farmers say it will go to pay debts, and some quota holders say buyout payments will merely replace the income they once got from renting quota. Economists caution that the buyout won't be a panacea for a rural economy that has shed tens of thousands of jobs in manufacturing and farming. "It takes more than a large sum of money to turn a whole economy around," said Blake Brown, an N.C. State University tobacco economist. "But it certainly will have an impact on rural communities." Steve White, owner of White's Tractor and Truck in Wilson, is counting on it. "There will be farmers who need to reinvest in new equipment, and this will be their opportunity," White said. [b]Bittersweet news[/b] As news of the buyout's passage spread across farm country Monday, many farmers said they were relieved. "Without this buyout, half of us were just going to go broke," said Jimmy Pate, who grew 30 acres of tobacco this year in Robeson County. They were also facing an uncertain future. Most weren't sure whether they would be growing tobacco next year. It all depends on what price cigarette companies offer. David Gardner, who farms with his son in Harnett County, was worried the buyout would force him out of the profession. Tobacco made up about half his income this year. "I don't want to get out of it," said Gardner, 56. "I love to farm. That's all I've ever done." Enditem