ADDING VALUE TO YOUR PRODUCT

Americans enjoy an incredible variety of foods year round throughout the country. With the help of researchers and new technological developments, farmers continue to increase their ability to produce a varied and inexpensive food supply. Americans spend 15 percent of their income on food, the lowest portion of any nation in the world. Farmers have been extremely innovative in adapting new production methods on their farms and maximizing their efficiency. However, the farmer's share of the American food dollar has been shrinking, from 46 percent in 1947 to 23 percent in 1996, according to USDA figures. Most of the gains in food expenditures in the past 50 years have been left to middlemen in processing and marketing.

The Tobacco Communities Project wants to assist farmers and their communities in gaining back a larger piece of the consumer's food and fiber dollar. Particularly in light of potential changes in the tobacco world, successful farmers in the next century will need to apply the same effort and ingenuity to increasing the value of their product after it is harvested as they have to their production efficiency.

The Tobacco Communities Project will host a series of forums this winter to highlight farmers who have had success in value-added production, processing, and marketing. These will be open presentations and discussions, with plenty of opportunity for questions and answers. Farmers, from North Carolina and across the country who will be sharing their experiences at these discussions have developed unique (and profitable) approaches to growing and marketing field crops, livestock, and produce.

Concern about the future of tobacco prompted North Carolina farmers Tony Jones of Wayne County and Seymour Smith of Pitt County to visit Washington, DC, in December, accompanied by Tobacco Communities Project staff. To learn about the political developments surrounding the tobacco settlement, they met with legislative directors of their Congressional Representatives, Walter Jones, Jr. (3rd District) and Eva Clayton (1st District), respectively. Everyone involved agreed upon the importance of including farmer concerns in any settlement decisions, with Tony and Seymour stressing the value of field hearings in home districts to allow grower input into the legislative process.

In addition, the farmers and project staff attended a briefing and dialogue in Washington sponsored by the Southern Tobacco Communities Project of Virginia. Attended by representatives from the Flue-Cured Stabilization Cooperative, the Kentucky Commodity Growers Cooperative and Department of Agriculture, and major public health organizations, this briefing offered an opportunity to learn about current political developments first hand and search for common ground between groups with diverse interests. Attendees heard presentations from Congressional staffers of the sponsors of the major tobacco proposals: Ford, Kennedy, Lugar, and Robb.

"Who knows what will come of it?" said Tony Jones of the visit to Washington, "but at least I got the chance to put my two cents worth in. It's good to feel like a part of the process."

Rural Development and the Tobacco Settlement - What Will It Mean For Us?

We are hearing a lot of discussion in the current settlement debates about rural development, about what should be done to help rural communities respond to potential changes brought on by the conclusion of this tobacco settlement, and about how this help needs to be targeted to those communities that need it most. Along with this interest comes a healthy dose of skepticism that this money would ever be useful to farmers trying to earn a living in a post-tobacco landscape.

Meetings amongst farm groups and rural development interests have been taking place in North Carolina, Kentucky, and Washington to formulate principles on which any settlement-related programs would be based. Drawing on the experiences from other agricultural adjustments, these discussions developed the following guidelines for tobacco settlement rural development:

1. Funding should be targeted towards agricultural development. Tobacco farming created the economic conditions which have made these settlement dollars potentially available, and agriculture needs to be recognized as a viable rural development enterprise. Accordingly, these funds should place a priority on new and supplemental agriculturally based enterprises and those complementary infrastructures that support agricultural development .
   
   
2. Those who will be most impacted by these changes should be at the center of developing the solutions, especially in the target tobacco communities. Tobacco farmers, their families, and other local businesses and organizations play a major role locally in deciding how best to use and administer any such rural development funds.
   
   
3. The solutions need to integrate economic, environmental and quality of life goals and concerns of the local communities involved to be successful. Tobacco is the lifeblood of so many NC communities, and any changes to tobacco will have a ripple effect throughout the whole community.

The outcome of settlement debates are still unclear, but the future of strong, independent and healthy agricultural communities in North Carolina hangs in the balance.

SETTLEMENT WATCH

With the 1997 tobacco season ended, a 17% quota cut in store for 1998, and farmers thinking about the future, the issue on everyone's mind is the national tobacco settlement and the impact on the tobacco program. Though a thorough explanation of the different proposals on the table would require several books, a brief summary of the current bills (and their sponsors) being considered by the U.S. Senate follows (As of 1/21/98, no bills have been introduced in the House of Representatives.):

1. Long Term Economic Assistance for Farmers (LEAF) Act. Wendell Ford (D-KY). Protects the current program. Guarantees owners and renters that they will be reimbursed for the value of any lost quota due to a settlement. Provides $12 billion for farmer training, education, and community development. Cost: $28.5 billion.
   
   
2. Tobacco Transition Act. Richard Lugar (R-IN). The "free market" approach. Buys out quota over 3 years, then ends the tobacco program. Small compensation for renters. Provides $300 million for community development. Cost: $16 billion.
   
   
3. Tobacco Market Transition Act. Charles Robb (D-VA). Privatization of the tobacco program. Buys out quota and compensates renters. Sets up Tobacco Production Control Corporation, which issues yearly licenses to active producers and sets up guidelines for all aspects of production and marketing. Establishes a new supply control program in which quota couldn't be sold, leased, or rented. Provides $250 million/year for community development for 5 years, with additional funds for 20 years. Cost: $22 billion.
   
   
4. Universal Tobacco Settlement Act. John McCain (D-AZ). Introduced the 6/23 settlement in legislative language. He says he does not support it, but it's a starting point for debate.
   
   
5. Healthy and Smokefree Children Act. Edward Kennedy (D-MA). Raises tax on a pack of cigarettes by $1.50, with the stated goal of reducing youth smoking. Affirms authority of FDA to regulate tobacco products. No protection from liability for tobacco companies. Reimburses quota owners and renters who agree to stop producing tobacco. Unspecified amount of money for community development.
   
   
6. Placing Restraints on Tobacco's Endangerment of Children and Teens Act. Orrin Hatch (R-UT). Would raise the amount cigarette-makers pay to nearly $400 billion and establish large fines for the industry if underage smoking isn't reduced. Hatch's proposal also would allow the Food and Drug Administration to regulate tobacco, although there would be certain limitations on the agency's authority to do so.

The major points of consideration in which these bills differ regarding farm community issues include:

1. Maintaining a basic supply control (quota) system for tobacco.
2. Payments to quota owners, lessees, and tenant farmers. Amounts and base years.
3. Timing and taxation status of any payments.
4. Source of funding for farmer programs: tobacco companies or taxation.
5. Rural development funds: amount and administration.

Various figures have been proposed for reimbursement or buyout of quota, ranging from $8/lb. for quota owners to $1.20-$4.00 per pound for renters and tenant farmers. However, it is important to remember that these figures are starting points in the negotiation process, subject to change and compromise. Final amounts, if any agreement is even reached, would likely be less than those originally proposed. In addition, any payout would be spread over several years, with a bite coming out for administration and taxation.

Finally, the tobacco companies insist that the $368 billion figure offered in the June settlement is their top offer. Any additional money for farmers and communities would have to come out of taxpayer funds, they claim.

The timetable on any settlement, if it does occur, is anyone's guess. Though hearings are currently occurring in a number of Senate and House committees, the complexity of the issues and the large amount of money being discussed makes a quick settlement difficult in this election year. However, the time to make your voice heard is now.The Tobacco Communities Project encourages everyone to exercise their democratic right and tell their representatives in Washington their opinions on these issues crucial to the future of rural North Carolina.

tobacco FARMER SURVEY: WHAT YOU'VE SAID

The Tobacco Communities Project's January 1997 telephone survey of 1236 North Carolina flue-cured farmers revealed some interesting characteristics of the tobacco growing community, given the political events which would occur surrounding tobacco later in the year.

Similar to the results seen in the November newsletter, flue-cured tobacco farmers are a diverse group in age and farm size. Though the average age of the farmer is increasing, there remains a significant portion of growers in all age categories:

• 5% are less than 30 years,
• 18% are 30-39,
• 27% are 40-49,
• 26% are 50-59,
• 15% are 60-69,
• and 5% are 70 and over.

In addition, though the average farm size continues to grow, there remains a wide diversity of farms in all categories:

• 25% grow less than 25 acres of tobacco,
• 24% grow 25-50 acres,
• 25% grow 50-100 acres,
• and 26% grow over 100 acres.

The attitude of farmers towards the future of the tobacco program and the possibility of quota buyouts a year ago are an important starting point in the discussion about policy options surrounding any national tobacco settlement.

• 55% of farmers support and 32% more strongly support keeping the tobacco program as is.
• Only 24% support and another 4% strongly support ending the tobacco program through a buyout in which allot ment owners and renters would be paid a lump sum of money.

As some in the national debate call for the tobacco community to speak with one voice, these survey results indicate the diversity of interests within the Eastern North Carolina Flue-Cured world. When added to the interests of quota owners and tobacco workers, flue-cured growers from other regions and states, and the same groups from the burley tobacco world, the complexity of the tobacco economy demands policy options which reflect the concerns of all those involved.

CHURCHES AND tobacco

Facing the changes in the tobacco industry is a tremendous challenge. Surely there is no bigger understatement than that in North Carolina's rural communities today. Right now, these changes feel more negative than positive. So, our responses to them can be negative as well. We react defensively, defiantly. Or, more typically, we do our best to ignore the changes, doggedly proceeding with that which is routine and familiar, lifting up our heads to look at or think about little else.

There certainly is nothing wrong with doing routine and familiar activities. They can be an anchor in an otherwise topsy-turvy world. The church is a good example of such an anchor. When we attend church and participate in its acts of worship and service with neighbors and friends, we experience a degree of comfort, because the acts are so familiar and customary to us. So, when facing tremendous challenges, church folks offer responses rooted in long-held, familiar beliefs and values.

However, with roots still embedded in traditional values such as family, work, faith and community, church folks also can initiate change rather than just respond to it. And in their role as the center and soul of rural communities, churches have the opportunity to provide creative leadership in supporting tobacco farmers. Here are a few ways I suggest that leadership can be carried out:

1. Pastoral - Tobacco families are experiencing dramatic shifts in their lives because of alterations in their livelihood. They are experiencing an immense sense of personal loss. They grieve at the thought of losing a way of life, at the idea that the familiar may soon disappear. They are anxious about what the future holds. If churches are the center and soul of tobacco communities, their farmer members are generally responsible for placing them in that important position. Now is a time when ministers and other church leaders can embrace their position's responsibility and be increasingly perceptive about the human issues underlying the new economic issues of tobacco farming.
2. Informational - Churches can be sources about what is happening in the tobacco world. This newsletter contains valuable reports about rural development, the tobacco settlement, value-added crop production, and more. It is sent to churches and ministers in the 7 counties with which the Tobacco Communities Project is working, in the hope that its purpose and contents will be beneficial to the churches' farming families.
3. Creative - Finally, pastors and churches can assist transitioning tobacco families in their congregations with innovative thinking and planning about their farming future. And they can do so with the support of the Tobacco Communities Project. The Project's Reinvestment Fund provides cost-share grants to farmers interested in trying new enterprises that will maintain and increase their marketplace viability and sustain the larger community. The Project also offers community grants to groups and individuals collaborating to develop such ventures as a start-up ag business, new marketing strategies, or production operations.

Are there farmers in your church that you can support with your shared brainstorming and energy about different activities that can be developed to add to their tobacco production and keep them farming? Are there other churches and community organizations that your church can collaborate with to create a new enterprise or improve an existing one which will promote rural development through agricultural innovations? How can your church be involved in ministering to the farm families in your own congregation who feel uneasy about the present and anxious about the future?

Facing the changes in the tobacco industry is indeed a tremendous challenge. Churches, the soul of tobacco communities, can help to meet that challenge.

Rev. Susan Rogers
Consultant to Churches
Tobacco Communities Project, RAFI-USA
PO Box 232
Durham, NC 27702
w: 919-968-9266
h: 919-220-7897
Email

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