Amber Waller, executive director of the Moore-Montgomery-Lee County Farm Service Agency, says most growers and quota owners have already received checks as the first payment of the 10-year quota buyout.
Waller said the exact sum of those checks is $3,586,354.70.
By 2015, Moore County tobacco producers and quota owners should have received more than $35 million as their share of the buyout.
“They’re very happy and excited about it,” Waller said of the farmers who have called her office to report receipt of the first checks. “I’ve had very positive feedback,”
Payments are going to 978 contract holders in Moore County. Numerous farm owners hold more than one contract for buyout payments, and that total is far larger than the number of individuals benefiting from the buyout. The number of farmers and owners affected by the buyout was not immediately available.
Waller said about 20 contracts have not been completed for a variety of reasons, the most common reason being inability to provide sufficient support documentation on ownership.
Growers and owners will receive their second payment in January. In all future years, the annual payments will be made in January.
Under the American Jobs Creation Act of 2004, owners of tobacco quotas are receiving $7 per pound and growers are receiving $3 per pound. Growers who are also owners receive $10. It is part of the $10.1 billion buyout plan negotiated by the federal government with manufacturing companies last year.
As the major producer of flue-cured tobacco in the Southeast, North Carolina is expected to receive almost $4 billion of that total.
Receipt of the checks came a couple of months earlier than expected.
In initial announcements, the U.S. Department of Agriculture advised that checks should begin arriving by September. The money is coming from the tobacco companies, not from taxpayer funds. USDA is administering the buyout.
Waller said the payment schedule varies according to placement in the computer system. South Carolina farmers received their payments even earlier than did North Carolina farmers.
However, not every county in North Carolina has already received payments.
“Every county is at a different stage of getting the checks out,” Waller said.
The amount of payments also varies widely from farm to farm. In Moore County, some payments to individual farms might be close to a million dollars, while some growers are receiving considerably less.
Despite the buyout and the loss of government controls, many tobacco farmers are raising a crop as usual this year, Waller said.
Most farmers are selling tobacco under contract directly to manufacturing companies and may well continue to do so as long as companies offer to buy their leaf and offer reasonable prices.
“A lot of the same producers are producing a crop this year,” Waller said.
In the future, some farmers, especially quota owners, could use the payments to invest in other farming endeavors or to convert the money into a retirement program. Many quota owners are retired farmers or spouses of deceased farmers, and this money will be their retirement fund.
“That’s their hard decision,” Waller said.
With the buyout, quotas no longer exist, either for ownership or for production purposes. However, farmers are free to grow and sell as much tobacco as they wish. The difference now is that there are no government controls and no government protection.
Gone, along with quotas, is the system of price supports that provided a stable price level for flue-cured tobacco.
With price supports in place, farmers were assured of an average level of payment for their crop every year.
Tobacco that did not sell at least at the price support level was subject to sale to the Flue-cured Tobacco Cooperative Stabilization Corporation, the nonprofit agency that proces-sed and stored the tobacco for later sale to companies when their inventories were lower.
Farmers and companies shared the expense of operating the corporation. Tobacco growers did not receive a subsidy from the federal government.
Buyout recipients face tax issues with their payments, and farmers are being advised to check with their accountants before making plans to spent their first payments.
This was the subject of a seminar conducted by a local investment firm earlier this week.
The Farm Service Agency is the USDA agency that oversees compliance with acreage and quota limits and also administers several government loan and subsidy programs.
