Tobacco farmers face uncertain future - East Valley Tribune: Business

Tobacco farmers face uncertain future

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Posted: Sunday, December 7, 2003 2:23 am | Updated: 2:01 pm, Thu Oct 6, 2011.

WHITAKERS, N.C. - When Dwight Watson drove his tractor into a pond near the Washington Monument last spring to publicize the tobacco farmer’s plight, angry commuters snarled in rushhour traffic saw him as little more than a nut case.

Fellow leaf growers wondered whether Watson, who flew the American flag upside down in a gesture of distress, was a shadow of things to come.

‘‘Nine out of 10 are as low as Mr. Watson,’’ said his neighbor, Kay Fisher. ‘‘Nine out of 10 farmers are sitting right on the brink.’’

Like tobacco farmers across the South, Watson was hanging on to his struggling livelihood, hoping Congress would approve a buyout of his quota, or the amount of tobacco he’s entitled to grow under a federal Depressionera price support system.

But those hopes died again this year when Congress headed home for the holidays without a deal. And many farmers say they have grown weary of waiting for the relief that always seems to be just around the corner.

‘‘This was their last hope and their last salvage,’’ Fisher said.

Kentucky grower Bruce Cline said the anticipation surrounding the buyout has already kept many farmers in tobacco years longer than their better business sense would have dictated.

‘‘There’s this carrot hanging out in front of you, and they’re saying, ‘Maybe one more year,’ " said Cline, a third-generation tobacco farmer who grows 300,000 pounds of burley in western Kentucky’s Christian County. ‘‘They could have left in ’98 with some dignity and some assets. . . . But we’ve been chasing this carrot to the point where people will be left with nothing.’’

Declines in the number of U.S. smokers and a steady increase in the amount of imported leaf from countries such as Brazil and Zimbabwe have sent U.S. tobacco production plunging from nearly 1.5 billion pounds in 1998 to an estimated 831 million pounds this year. Farmers have also seen the government cut their quotas by half over the past five years, and are anticipating another 25 percent cut later this year.

The idea behind the buyout was that by taking away quotas, the cost of production would drop and farmers would be free to grow as much tobacco as their land could support. Quotas are tied to individual farms; in many cases, quota owners don’t grow the tobacco themselves, but instead charge farmers up to 75 cents a pound to lease their growing rights.

Eliminating the lease costs wouldn’t make the farmers more money, but their tobacco would be more competitive on the global market. And compensation for the quotas would enable some farmers to leave the business.

Early versions of the buyout legislation totaled nearly $16 billion, to be paid by cigarette companies.

In a grand compromise with lawmakers from nontobacco states, that plan was tied to some form of Food and Drug Administration regulation of tobacco products, something cigarette makers had fought for years. But those efforts foundered over disagreements on the FDA provisions. Last-ditch proposals to push through a $7 billion buyout also failed.

The failure of a buyout won’t keep 36-year-old Fred Wetherington from continuing to grow tobacco on his farm near Hahira in southcentral Georgia. But he thinks people who’ve invested their futures in tobacco and want to get out should be helped along.

‘‘I’m young enough if I had to, I could do something else," he said. ‘‘But these folks who have done it all their lives should have an opportunity to get out with some dignity. They’ve played by the rules. What’s happened is out of their control.

‘‘I feel it’s un-American to take this quota.’’

But critics argue that peanut farmers gave up their quotas last year, and tobacco farmers need to join the free market, too.

‘‘What other American farmer has ever received such unjustified largess from Congress — billions of dollars for a so-called ‘buyout’ while keeping a federal government tobacco program in place?’’ No. 1 cigarette maker Philip Morris asked in a recent memo to Congress.

In late October, several hundred farmers gathered at the Brightleaf Riverside Warehouse in Smithfield, N.C., to hear an update on the negotiations in Washington. It been plastered with red signs is one of the few warehouses declaring: ‘‘Keep the FDA off the Farm.’’

But this day, farmers everywhere were carrying signs and sporting stickers on their bib overalls exhorting directly with the cigarette their fellows to ‘‘Support companies. tobacco legislation’’ — legislation that would have given the FDA limited regulation over cigarette production and advertisement.

‘‘I would say that FDA is in many ways your lifesaver,’’ said Scott Ballin, a former lobbyist and attorney for the American Heart Association who would have been as unwelcome there in past years as the FDA.

Chris Hyman drove three and a half hours from Conway, S.C., to find out whether reports of the buyout’s demise were true.

The fifth-generation grower has lost $50,000 on his last two tobacco crops waiting for a buyout. His quota has been cut from 132,000 pounds in 1997 to about 85,000 pounds this past year.

Hyman said he’s dipped into his savings to keep his farm going and has made his two college student sons swear they won’t take up tobacco farming.

‘‘I’m probably out (of tobacco) anyway,’’ he said, dragging ruefully on a Marlboro Light. ‘‘I’m already looking for a job. I’ve got to have something. . . . But who wants to give a 48-year-old man with no experience but farming a job?’’

Across tobacco country, cuts in the quota have been accompanied by a decline in farming of the leaf. According to U.S. Department of Agriculture figures, the government counted nearly 50,000 fewer quota holders and 17,000 fewer growers last year than in 1998.

While lawmakers in Washington were arguing over Medicare spending and threatening filibusters, Jimmy Lee, of Zebulon, N.C., was auctioning off most of his tobacco equipment. He managed to raise enough from the sale of 11 curing barns, a transplanter and a harvester to put himself about back to square one.

‘‘Basically, I didn’t see no future, period, in growing tobacco,’’ said Lee, who has been farming 33 of his 50 years. ‘‘Maybe I’ll look back and in four or five years from now I’ll think this was the right thing to do.’’

Back in Whitakers, Fisher became infuriated after learning of the buyout’s failure. She was counting on an infusion of cash to pay debts and position herself to grow leaf more cheaply.

She and her family planted 600,000 pounds this year, but Fisher’s not sure she’ll be growing tobacco next year.

‘‘I guess the damn tobacco companies will have to grow it themselves,’’ Fisher said. ‘‘They want it from overseas, so I guess they’ll have to get it from there. Because there are so many broke farmers that can’t go back and get financing for next year.’’

Dwight Watson, meanwhile, has been convicted of making a false threat to detonate explosives and destruction of federal property. He faces sentencing on Dec. 16.

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