Tobacco Farmers Facing Questions

Source from:  BY FLORENCE GILKESON: Senior Writer 12/30/2004

Moore County has thousands of tobacco growers and quota holders eligible for a share in the multi-billion dollar quota buyout authorized by Congress. Payments are due in 2005. Congress authorized a $10.1 billion national buyout, of which North Carolina's share amounts to almost $4 billion. Farmers and quota owners face a number of questions about these payments. Among them is what to do with the money. Randy Wood, an agriculture agent with the Moore County Cooperative Extension Service, said some grants are available to help farmers decide what to do next. Farmers will have an opportunity to learn about those grants at a Jan. 5 workshop at the Moore County Agriculture Center in Carthage. The deadline to apply for grants offered by the Tobacco Communities Reinvestment Fund is Jan. 14, which doesn't leave much time for farmers to make critical decisions about their future without tobacco, Wood said. "Since the tobacco buyout was announced a few weeks ago, many tobacco farmers and farm organizations have been asking themselves, 'what now?'" Wood said. "One possible solution is to look at pursuing grants to help farmers explore other opportunities to replace their tobacco income." The Tobacco Communities Reinvestment Fund is taking proposals for grants to help farmers and farm organizations to look at alternatives to tobacco. Details of how the quota buyout will work are vague at this point and have been slow to filter down to local agencies that serve farmers. Karen Bennett of the Moore-Montgomery County Farm Service Agency staff said the local office will be responsible for signup for the buyout, and the FSA has been advised to expect the signup in early spring. Dates have not been announced, and there are no details as yet about procedures for signup. FSA records show that there are 5,700 farmers and all quota owners in Moore County eligible for the buyout. There are 171 farms with tobacco allotments in Moore County. Under legislation passed by Congress in October, quota holders will be paid $7 a pound based on their 2002 allotment and growers will receive up to $3 a pound based on production in 2002, 2003 and 2004. Farmers who are both owners and growers will be paid $10 a pound based on their 2002 allotment. FSA is the federal agency responsible for administration of allotment and quota compliance at the local level. The agency also provides assistance with some government loans and subsidies and other services to farmers. However, the federal government does not pay a subsidy for tobacco. Eligible farmers will not receive their entire payments in one year. Payments will be spread out over a 10-year span and can total as much as $7 million or as little as $14,000. The buyout does not mean that farmers must stop growing tobacco. It means that they will not have the cushion provided by the government's price-support system that was in effect for more than 60 years. Many growers might be old enough to invest their payments and use it as a retirement fund. Others could continue to grow tobacco and take a chance on the dwindling market. Still others may look to alternative farming measures. Farmers interested in alternative solutions should be interested in the grants available through the Tobacco Communities Reinvestment Fund, according to Wood. The workshop, which will begin at 10 a.m. on Jan. 5, will be a question-and-answer session. Wood said the workshop is open to everyone free of charge and advance registration is not required. Additional information is available by calling Jason Roehrig with the Tobacco Communities Reinvestment Fund at (919) 542-1396 (extension 207) or the Moore County Cooperative Extension Service at 947-3188. The federal buyout of tobacco quotas probably represents the final solution to an issue that has plagued farmers, government leaders and economists in recent years. As tobacco has fallen from grace because of health concerns, the crop has also fallen on the United States market, which faces sharp competition from overseas tobacco. North Carolina is among those states benefiting from the multi-billion dollar settlement worked out by state attorneys general with tobacco manufacturing companies in 1998. In recent years, individual farmers have been receiving yearly stipends from that settlement as compensation for financial losses. Now, however, tobacco growers face the prospect that these settlement payments might be cut out because of the federal buyout. Cigarette companies have taken the issue to federal court. An N.C Business Court judge last week ruled last week that the tobacco companies do not have to make the annual $160 million in payments, the final installment before the buyout begins next year. The judge ruled that Congress' action ended those payments immediately. The companies argue that because of the buyout, they are no longer obligated to make these payments. They have also applied for a refund on payments already made. An appeal is expected. Enditem