Deadline looms for ’05 buyout

By: - June 13, 2005 6:47 am

 Raleigh News & Oberserver

Deadline looms for ’05 buyout
Tobacco quota holders have until Friday to sign up for their share of $4 billion this year

Nearly $4 billion soon could start flooding into North Carolina as the result of a federal tobacco buyout.

Whether all that money arrives depends on more than 70,000 people — some of them farmers, some elderly widows, some out-of-state heirs, some wealthy business owners and others humble former sharecroppers.

Each has to sign up with the Farm Service Agency to receive his or her money, and time is getting short. Signup for the 2005 payment ends Friday. Checks are to go out by the end of September.

Officials with the national Farm Service Agency said that, on June 3, just over 70 percent of eligible recipients nationwide had signed up. Those who don’t sign up will forfeit their first year’s payment to the giant tobacco companies funding the buyout.


It ends a federal program that limited the amount of tobacco grown, making American leaf far more expensive than any other in the world. Those who grew tobacco or owned quota, or federal rights to grow tobacco, are to get $10.1 billion over the next 10 years to aid in the transition to a free-market system. About 76,000 people in North Carolina are to get about $3.8 billion of that total.


Those eligible for a payment must sign up with the Farm Service Agency in their county by Friday. Checks for 2005 will go out between June and September. Checks for future years will go out in January. Those who miss the deadline for this year still can sign up for payments in future years. The deadline for 2006 is Nov. 1. Once a recipient has signed up, he or she is signed up for the duration of the buyout.


The payments are made over 10 years, and those who miss the deadline will still have a chance to sign up for the remaining nine years.

"We probably won’t get everybody," said Joseph Gregory, executive director of the Johnston County Farm Service Agency. "That’s just the way it is. But we’ve done as well as we could. We tried to wait on everybody who had a question. No one was turned away."

The tobacco buyout, which Congress passed in October, ended the federal price support program that propped up the price of American leaf since the 1930s. It also guaranteed those who farmed or owned quota, or rights to grow tobacco under the old system, $10.1 billion over 10 years to ease the transition into a free-market system.

Cigarette manufacturers and tobacco importers will foot the bill.

The buyout, which is expected to greatly reduce the price of American tobacco, was hailed as the only salvation for an American tobacco industry eroded by cheaper foreign tobacco. Farm advocates said the payments would save many farmers and landowners from bankruptcy.

Now, some say they fear that those who need the buyout most, the poor and elderly, are not going to get their share.

"We’re still getting calls saying, ‘What are we supposed to do?’ " said John Boyd, president of the National Black Farmers Association, based in Virginia. "We’re talking about people that can’t read and write, elderly people, people in wheelchairs."

Boyd said many older members are among the least likely to sign up, because they were subject to racism years ago at their county Farm Service Agency offices, where they had to go to get federal loans and crop insurance.

Others simply do not understand the new rules that govern tobacco. Tobacco quota has long been considered among the most valuable assets in rural North Carolina. Many families paid the bills by renting their quota to farmers. Now, some are reluctant to part with it.

"There are some people out there who own a quota who say they’re just not going to do it, they’re going to keep their quota," said Keith Parrish, a Harnett County tobacco farmer and head of the National Tobacco Growers Association. "They don’t understand that the quota system is gone. We have no options. It’s either sign up and get the money, or don’t sign up and don’t get anything."

Farm Service Agency officials say they have done everything possible to alert people to the signup. They took out ads in newspapers and magazines, broadcast radio spots, posted information in local gathering spots, held town hall meetings, started a toll-free hotline and created a Web site. They also sent out letters to everyone in their database of farmers and quota holders.

Farmers had to have current information on file with the agency to sell their tobacco each year, so it is almost certain that they were contacted. But some quota holders — many of whom inherited their quota and some of whom live in other states — may not have kept the agency informed about changes in ownership.

Agriculture Commissioner Steve Troxler said he learned that lesson when he served on a board that was charged with sending out tobacco settlement payments to every tobacco farmer and quota holder in the country. He said it took his board years to track down all the people who were entitled to checks. And each year brought changes as people died and heirs took ownership.

"Some of these people are hard to find," Troxler said. "Some are out of state. Some are involved in estates that might have 10 or 15 people. It was a painstaking process."

Concerned that those people will get left out of the buyout, Troxler was among several state officials who sent a letter last week to everyone in the settlement payment database, encouraging them to sign up.

Sandy McKinnon, a Robeson County farmer and quota holder, said he signed up for his money weeks ago. He said all his neighbors and friends did, too. It was a trial for some of his family members who own quota but live out of state.

But he said the promise of checks is enough to get most people to the Farm Service Agency office, no matter how long the drive.


"They’ll find a way," McKinnon said.

Staff writer Kristin Collins can be reached at 829-4881 or [email protected].


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Chris Fitzsimon

Chris Fitzsimon, Founder and Executive Director of N.C. Policy Watch, writes the Fitzsimon File, delivers a radio commentary broadcast on WRAL-FM and hosts "News and Views," a weekly radio news magazine that airs on multiple stations across North Carolina. [email protected] 919-861-2066