North Carolina quota owners and farmers are expected to receive $4 billion.
Moore County has 300 quota owners who will be entitled to share in those payments, to be distributed over a 10-year period, according to Amber Waller, director of the Moore-Montgomery County Farm Service Agency. There are 69 farmers in Moore County who grow tobacco, either as quota owners or as farmers who rent quotas from other owners.
Buyout payments will be $7 a pound for quota holders and $3 a pound for growers. The amount will be based on their 2002 crop poundage sales.
Waller said Tuesday that it is too early to know how the buyout process will be conducted. She did not have a total figure on the amount that should come to Moore County in the next 10 years.
“I was content the way it was,” said Jimmie Ross of Carthage, the largest tobacco farmer in Moore County.
However, Ross said, the closeout of the old allotment/quota system was inevitable because of market conditions. He told of reports that quotas will be cut by more than 30 percent for the 2005 crop. If that were to have occurred, then the cut over the past five years would amount to about 80 percent.
“I think it’s a good thing, a necessary thing,” said John S. Blue Jr., who farms in the Eureka community near Whispering Pines. “Farmers have been working for it.”
In addition to the sharp cut in quotas, an increase in the per pound assessment to 15-20 cents was also expected, Blue said.
“We face a lot of changes,” he said. “We have to make such adjustments.”
Ross and Blue said they hope to continue growing tobacco but are not sure how much they can profitably raise under the buyout, which eliminates the government-established price support program.
“I’m hopeful that I can keep on growing tobacco, as much as I’ve got invested,” Ross said.
He said his investment includes a considerable amount of expensive equipment, such as harvesters and bulk curing barns, as well as land that is especially good for growing tobacco.
Ross farms with his sons, Tony and Dennie, and he would like for the family to continue to grow what has long been a traditional crop for the Rosses.
Now 67, Ross grew up on a tobacco farm and remembers following his father and grandfather around on the farm. The family also raises soybeans, but Ross said he does not know of any other crop that would bring in the income that tobacco does, especially when he considers his investment in equipment and land.
Blue faces similar issues in his own situation. He also grew up on a family tobacco farm. His family farm, known as the River Daniel Blue Farm, has been in the Blue family for more than 100 years.
“Most of us want to stay in farming,” Blue said.
Blue said Tuesday that most farmers he knows are pleased with the buyout because it gives them flexibility and it also gives older farmers some income for retirement security. He said that most farmers are planning to wait and see what the companies offer through contracts for the 2005 crop before making a decision about their future.
‘Historic Day’
President Bush is expected to sign the bill.
U.S. Sen. Elizabeth Dole, a North Carolina Republican, called Monday “a historic day” because of the bill’s passage.
“And I am absolutely delighted for our North Carolina farm families and rural communities and those in other tobacco producing states,” Dole said in a statement delivered on the floor of the Senate Monday.
Dole said that the quota system with its price supports has worked to keep producer costs artificially high in the United States. The result of these high prices has meant that U.S.-grown leaf has not been competitive with tobacco grown in such countries as Brazil and China.
“Under the current tobacco program formula, the decline in demand for American tobacco produced a cut in quota — the amount of tobacco a farmer can grow and sell,” Dole said. “In just the last five years, tobacco quota has been cut almost 60 percent. This is equivalent to cutting your paycheck by 60 percent.”
Dole said that no business in this country could take a 60 percent hit in revenue. She said the tobacco industry also faces the prospect of an additional 33 percent cut in the 2005 quota.
“By buying out these quota holders, we give families the option of retiring with dignity,” she said. “We give them the ability to pay off the bank for loans made against an ever-shrinking collateral. By getting the buyout done before the next quota cut, literally thousands of families in rural North Carolina will be saved from bankruptcy.
”Rather than having to quit the farm, this buyout gives our farmers the ability to compete in the free market. And if farmers want to continue to grow leaf, they can compete worldwide without the artificial cost increase. Many will also use this opportunity to invest in new equipment and transition to other crops.”
Once a Mainstay
The price support program was initiated during the Great Depression as a means of protecting tobacco growers from market fluctuations. Under this system, the government designated the acreage and poundage that growers could plant and market in one year.
These allotments and quotas were based on estimates provided by manufacturers as to the amounts they expected to buy in the coming year, along with other marketing factors.
Tobacco is not a crop for which the federal government pays subsidies. The government does provide the controls, but growers and manufacturers share the cost of handling the price support system, carried out through a grower-owned cooperative financed through those assessments, not by the government.
Under the buyout, growers lose that protection but will have a free hand to raise as much or as little tobacco as they wish and as the market will take. The bill passed by Congress does not require regulation by the U.S. Food and Drug Administration.
The tobacco buyout is a provision of a corporate tax bill, named the Foreign Sales Corporation-Export Trade Incentives Act. This bill repeals European tariffs on many American-made products, many of which are made in North Carolina. The legislation also cuts taxes for U.S. manufacturers.
At one time, tobacco was a mainstay of the Moore County agricultural economy. In 1998, three local warehouses sold more than 18 million pounds for $33.4 million. By 2000, the local market sold 3.9 million pounds for $7 million, and today there are no tobacco warehouses in Moore County.
Farmers have been taking their tobacco to markets in other towns or selling by contract directly to companies.
