Some Farmers Receive Duplicate Tobacco Settlement Checks

Source from:  BY FLORENCE GILKESON: Senior Writer 12/29/2005

Tobacco settlement payments arrived in time for Christmas, but some recipients were startled to find their stockings overfilled - with duplicate checks. Checks began arriving in the mail last week, amounting to $152 million for 77,000 North Carolina farmers and growers, many of whom are no longer raising tobacco. Amber Waller, executive director of the Moore-Montgomery Farm Service Agency (FSA), was informed last week that about 10,000 duplicate checks had been mailed to recipients in North Carolina. She did not know whether any of the duplicate checks went to Moore County farmers. However, there was one report that a Lee County farmer received duplicate checks of $250,000 apiece. "Farmers would be wise not to cash more than one of those checks if they receive duplicates," Waller said. Neither FSA nor the Cooperative Extension Service is directly involved in administration of the settlement, a legal agreement worked out between state attorneys general and five major tobacco companies several years ago as compensation to growers for sharp decreases in quotas and prices. The deal was struck to discourage states from suing tobacco manufacturing companies for damages in recovering the cost of medical services to patients suffering from diseases thought to be caused by use of tobacco products. Womble Carlyle Sandridge & Rice Settlement Administration Service Group of Winston-Salem administers the program, but the checks are mailed out from Chase Manhattan Bank. Although the FSA is not involved in distribution of the checks, Waller said she had been given a Womble Carlyle telephone number which farmers can call for further information about the payments. The number is (919) 790-1936. When the first settlement checks were distributed five years ago, it was estimated that Moore County had about 740 eligible farmers, including quota holders and producers. It was estimated that the first payment in the Phase II settlement would total $1.2 million in Moore County. The checks were mailed annually in December or January. The 2005 checks represent the final direct payment to tobacco quota holders. Under the American Jobs Creation Act of 2004, tobacco companies are paying $10.1 billion in the next 10 years for a quota buyout in all tobacco-growing states. These payments take the place of the settlement checks going directly to farmers. In Moore County, the buyout is thought to affect 978 quota owners in Moore County, expected to receive more than $43.5 million in payments over the 10-year period. Under the buyout, tobacco growers and quota owners receive payment for the quotas under which they have operated since the days of the Great Depression. The quota system limited the acreage and poundage farmers could sell each year but also provided protection in the form of price supports. The federal government did not subsidize tobacco but did administer the program through the U.S. Department of Agriculture. As a result of the buyout, many farmers have discontinued raising tobacco. The buyout legislation does not prohibit farmers from growing and marketing tobacco, but quota and acreage limits and price supports are no longer in effect. The tobacco companies tried to withhold the 2005 settlement checks because of the buyout legislation, but the North Carolina Supreme Court overruled a ruling by Business Court Judge Ben Tennille that favored the companies. State officials say that since 1999, North Carolina farmers and quota holders have received more than $837 million in settlement payments. State Agriculture Commis-sioner Steve Troxler said that the settlement payments came in time to help farmers who are emerging from a tough year in North Carolina. "It's been a real tight year in terms of squeezing a dollar out," Troxler said in a statement to The Associated Press. Troxler said farmers need the money to pay off debts and recover from a year of high energy costs and bad weather. Enditem