Cultivating Agricultural Safety in North Carolina
Cultivator
Number 24
August 2004
The Bulletin of the
Agricultural Safety and Health Bureau
The Great Tobacco Buyout: For Real or Just Smoke?
Many North Carolina farmers have been in the hot seat,
instead of the driver's seat, for the last 10 years. Growing
tobacco is no longer the prosperous enterprise that it once
was. What this means, in plain English, is that a grower
who grew 200 acres of tobacco in 1992 is growing under
100 acres today. Several factors have influenced this sce¬
nario: public health concerns, including lawsuits involving
tobacco companies; the U.S. government price support sys¬
tem; and a world market economy where crop production
is moving to other countries.
The settlement between the tobacco companies and 46
states was based on a public health concern that also was a
financial concern: the states' cost of treating people for
health conditions associated with smoking, especially
through the Medicaid program. The main settlement pro¬
vided $4.6 billion to North Carolina over 25 years, reaching
an annual payment of $194 million in 2002. In essence, this
was funding to subsidize the cost of medical care. But to
compensate growers for a loss in income, half of the settle¬
ment was to be distributed through the Golden Leaf
Foundation to provide economic assistance to tobacco-
impacted communities. A separate settlement, called Phase
II, was reached to make payments to farmers, allotment
holders and people engaged in tobacco-related businesses.
The federal government support program, begun in the
economic turmoil of the Great Depression in the 1930s, has
consistently kept the price of U.S. tobacco artificially high.
Federal programs currently help stabilize prices on dozens
of agricultural products, including corn, wheat, cotton,
rice, peanuts and tobacco. Now, after more than eight years
of acreage and poundage cuts, North Carolina tobacco
growers face continued uncertainty as reductions in allot¬
ment continue and the promised buyout fails to material¬
ize. Chart 1 shows this trend.
Global production also has changed the face of the
tobacco producer. After years of U.S. dominance, the crop
is now being grown in many world locations. In 2003,
China grew 51 percent of the world's flue-cured tobacco,
Brazil grew 13 percent, and the United States grew 6 per¬
cent. Many countries in the rest of the world grew the
remaining 30 percent.
Of the topics that concern Gold Star Growers in 2004,
the buyout was at the top of their list. Speakers at the 10th
Annual Gold Star Luncheon were selected based on Gold
Star Grower recommendations. Dr. Blake Brown and U.S.
Rep. Bob Etheridge consented to share their opinions and
expertise with those present at the N.C. State University's
McKimmon Center event.
In June, the U.S. House of Representatives passed tobac¬
co buyout legislation as part of the "American Jobs
Creation Act of 2004." Etheridge, along with several other
North Carolina Congress members, is currently working in
Congress to pass the tobacco buyout into law.
"We have cleared several major hurdles on the way to
passing a tobacco buyout, but we still have a tough row to
hoe," Etheridge said. "Farmers and tobacco state legislators
continued on page 2
N.C. Department of Labor
Agricultural Safety and Health Bureau
1101 Mail Sendee Center
Raleigh, NC 27699-1101
Cherie K. Berry, Commissioner of Labor
www.nclabor.com
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7/04,
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