County is Losing a Majority of its Tobacco Farmers to Buyout

Source from:  By Stevie L. Daugherty 04/07/2005

While two-thirds of Marion County tobacco farmers are calling it quits and signing up for the Tobacco Transition Payment Program, Kevin Lanham has decided to keep growing the crop, which he realizes is a risk. But he's willing to take that risk. After all, tobacco has been relatively kind to him in the past. So far, he's been able to find labor and, in more than 24 years, he's only lost one crop. "We will continue raising tobacco as long as it's profitable," Lanham said. "We have the equipment. We have the barns to house it in. Thus far, I have not had any insurmountable problems getting labor. That's not to say it's easy but we do have the labor source still. It works into the rest of my farming operation. I have cattle and tobacco and they fit very nicely together." Lanham, who has raised as much as 42,000 pounds of tobacco and as little as 12,000 pounds in the past, is contracted to sell 30,000 pounds this year. According to Marion County Farm Service Agency Director Pat Spalding, Lanham is one of approximately 200 growers left in Marion County. At one time, the county had at least 600 growers but many of those farmers have grown older and many of them simply want to get out of the tobacco business. The tobacco buyout has given them that chance, Spalding said. Congressional passage late last year of the Fair and Equitable Tobacco Reform Act of 2004 ended the federal tobacco marketing quota and price support loan programs with the 2004 marketing year for all quota tobaccos. This means that, beginning with the 2005 tobacco crop, there are no planting restrictions, marketing cards and price support loans. Signing up for the Tobacco Transition Payment Program is the final and only opportunity to receive federal payments related to tobacco production. Sign-up for the Tobacco Transition Payment began March 14 and will continue through June 17 at the Marion County Farm Service Agency. If a tobacco quota holder or tobacco producer does not sign up during this period, he or she will not receive a payment for 2005. Sign-up for the program is voluntary. According to Spalding, the local Farm Service Agency office has been very steady with farmers coming in to sign up for the program. Many farmers still don't fully understand the buyout or what they will be allowed to do during the upcoming tobacco season, he said. "We had people in here recently asking if they could lease their tobacco next year but there is no leasing," Spalding said. "That doesn't exist anymore." The Tobacco Transition Payment Program will provide payments to tobacco quota owners and producers in annual installments over a 10-year period beginning in 2005 and ending September 30, 2014. Payments will be made between June and September 2005 for Fiscal Year 2005. In Fiscal Year 2006 through Fiscal Year 2014, payments will be made in January of each year. After farmers get their first payment, there will be a 60-day window where they can go to certain banks and credit institutions that might be willing to give them a lump-sum payment, Spalding said. According to the United States Department of Agriculture, if a private party enters into an agreement where an individual quota holder or tobacco producer is to receive a lump-sum payment from them in return for the individual's rights to Tobacco Transition Payment, the private party will likely request that either the contract payment be assigned to them as the payments are earned over 10 years or they will request that all rights be transferred under the contract to them by executing a successor-in-interest contract. Successor-in-interest contracts will be available beginning with the Fiscal Year 2006 payment. Assignment forms are available from local USDA Service Centers. Quota holders who will be eligible for a payment are those who owned a farm on Oct. 22, 2004, to which a tobacco basic quota was assigned. The payment rate for these quota holders is $7 per pound based on the 2002 basic quota. Producers receive $3 per pound times the 2002 effective quota produced on the farm times the producer's share of the risk incurred for 2002, 2003 or 2004 crops. If quota holders or producers have interests in farms in more than one county, contracts for each of these farms must be entered into in the appropriate USDA Service Center. Enditem