Growers, quota holders to split fund evenly :
The $140 million settlement fund is supposed to help compensate for a drop in tobacco production
RALEIGH -- Tobacco growers and quota holders this year will evenly split $140 million placed in a settlement fund by cigarette companies, a statewide board agreed Thursday.
The so-called "Phase II" settlement with cigarette companies is intended to help farmers and allotment holders in tobacco-producing states cope with the expected drop in production resulting from a nationwide settlement between the states and companies.
The money that was divided up Thursday is in addition to the state's $4.6 billion share of the $206 billion settlement between the states and tobacco companies for smoking-related health claims.
Under the proposal approved by the settlement board, flue-cured tobacco farmers would get a 100 percent share for every pound of tobacco they raise for which they also own the quota. For leased tobacco, the per-pound share would be equally divided between the grower and the owner of the quota.
"The quota is the key to tobacco production," said John Cyrus of the North Carolina Grange, one of several farm organizations that backed an equal split between growers and quota holders. "They have the allotment [a government grant to grow tobacco with guaranteed price supports]."
But quota holders, who own the land on which tobacco is grown under the federal tobacco program, depend on the farmers to lease their tobacco-growing rights and produce income.
"They're both so tightly tied together, you cannot separate one from the other," Cyrus said.
North Carolina will get about $140 million this year, with all but about $7.6 million going to flue-cured tobacco operations. That means flue-cured quota holders will share about $66.2 million and growers the same amount.
The other $7.6 million will be used to compensate burley tobacco growers and quota holders, generally in the western part of the state.
In a separate decision, the board agreed to divide the burley funds equally between quota holders and growers. But quota holders will be compensated based on the number of pounds of tobacco they are allowed to grow. Growers will be compensated based on the number of pounds they actually sell.
"I am really pleased to see the tobacco family come together on this," said Gov. Jim Hunt, who is heads the settlement board.