IS CONTRACTING COMING?

Unfortunately, even after the national settlement, North Carolina's tobacco farmers are facing an even more uncertain future. With Phase II money still riding on a handshake only, the driest spring in many years, and commodity prices showing no signs of life, rumors of bigger changes in the tobacco system are in the air. Mike Pheil, director of communications for Philip Morris, stated in the April issue of the Tobacco Reporter that "we are exploring new concepts, including partnerships with farmers and warehousemen for the direct purchase of tobacco."

A mid-April meeting between Philip Morris and tobacco grower leadership has brought the issue of direct contracts with growers out on the table. Philip Morris leadership expressed dissatisfaction with the quality of tobacco that the auction system is currently providing. They complained that growers either strip all of their tobacco in one or two primings, or else they bring one grade together in a pile to the market. Therefore, companies have to buy a larger quantity of tobacco to get the amount of top grade leaf that they want. Philip Morris proposed a pilot program of contracting directly with farmers for leaf, which was met with strong opposition from both the flue-cured and burley belts.

Philip Morris agreed to delay contracting for this year, in exchange for grower leadership working on changes in the grading and auction system. Primary among these is bringing tobacco to market separated into four different stalk positions.

Nonetheless, the dominant U.S. manufacturer is making no promises about future plans. Direct purchases from growers would allow the company to arrange with farmers exactly what grades of leaf would be acceptable. Some farmers fear that contracts would favor large producers over small ones; in addition, warehouses would become merely transport facilities for storing leaf, rather than the traditional centers for the tobacco business that they are now.

"Contracting seems inevitable at this point," said one grower leader. "And once contracting gets to any significant level, the end of the tobacco program can't be too far off. It will be hard to keep any non-contract tobacco from going to Stabilization. We've got to move on this now to find a way to keep the program working for everyone."

SUPPORTING JOHNSTON & WAYNE FARMING COMMUNITIES

Churches of Johnston and Wayne Counties, being concerned about the crisis in agriculture and our rural family life heritage, are cooperating with RAFI to host a community-wide forum, "Supporting Johnston & Wayne Farming Communities." The forum will be held on Monday, May 24 from 7:30-9:00 p.m. at the Wayne Center in Goldsboro, NC. The Center is located at 208 West Chestnut St. at the corner of Chestnut & George Streets.

The many issues facing the farming and agribusiness interests of our communities should be a concern for all of us. The decline in the number of family owned and operated farms in the last two decades as well as the available land for farming is an alarming statistic. This once familiar way of life in the State and in Eastern North Carolina is quickly passing. Our communities need to be in conversation about these trends and what effect they will have upon the economy and the environment of our neighborhoods.

Privileged to be the Pastor of a rural church that is becoming more urban and having been raised on a Tobacco farm in Eastern North Carolina, I can sense that now is the time for our communities to be in conversation. Change has been taking place and will continue to do so. We must choose now whether we are to help shape the change that is to come, or just allow the political and economic forces that are already in place to make those choices for us. We need to share our concerns and begin to educate ourselves how we as communities can support our local farmers and agribusinesses in sustainable agriculture that will benefit our communities and provide a wholesome environment.

I was at the Harnett County community forum on February 16th and felt that the voices of the farm families, agribusiness interests, health, church and government leaders and others were expressed well and were heard in such a way that a positive outcome for future planning and support of agriculture will be assured. I trust that the people of Johnston and Wayne Counties will experience a similar outcome from our forum.


W. Arthur Warren, Jr., Pastor
Providence United Methodist Church
Dudley, NC

SETTLEMENT WATCH:

Phase I
In March, the General Assembly approved a plan to divide North Carolina's 4.6 billion dollar share of the national tobacco settlement. Debate about the settlement was highlighted by extremely active participation by farmers, as well as statements of mutual support from farming and health interests.

The bill divides Phase I money into three parts:

• 25% to a trust fund for health, governed by a board from health interests.
• 25% to a trust fund for "tobacco producers, quota holders and persons engaged in tobacco-related businesses for direct and indirect finanacial assitance and indeminfication to extent allowed by law", governed by a board made up of those interests. Based on North Carolina's 1999 quota of 450 million pounds of tobacco, this would provide for an average of 10 cents per pound per year for 25 years; this 10 cents would have to be divided between growers, quota owners, and tobacco workers.
  
• 50% to a non-profit foundations for tobacco dependent communities governed by a 15 member board of directors, including among them representatives of tobacco production, tobacco manufacturing, tobacco-related employment, health and economic development interests. The bill was amended on the House floor to say that board members shall reflect the geographic, gender and racial diversity reflective of the state's population.
  

Over the next few month, the General Assembly will decide the composition of these boards and the guidelines for the distribution of the funds.

Phase II
In mid-April, Phil Carlton, the chief negotiator for the tobacco companies, announced that the first payments from Phase II of the settlement would be delayed until at least December. Carlton blamed the delay of the payments, which were expected to begin arriving this spring, on cash flow problems of Philip Morris. The Phase II agreement is still a verbal agreement only, with nothing signed by any of the concerned parties. At press time, political leaders were still finalizing the terms of the agreement with the tobacco manufacturers.

"This is no surprise to me," laughed one Johnston County farmer when informed of the delay. "I never thought I'd see a penny of that in my pocket; I'd be amazed if any of it ever gets down to us farmers. If you want to see some real cash flow problems, come look at my books!"

REINVESTMENT FUND PROJECTS FUNDED

Five farmers and two community groups are the recipients of cost-share and technical assistance from the final round of the Tobacco Communities Reinvestment Fund, a pilot program assisting farmers to develop enterprises that can supplement tobacco income.

Kendall and Thelbert Hocutt of Kenly (Johnston County) are converting their tobacco greenhouses to tomato production. "Our tobacco acreage was so small that we had focused on growing seedlings the past few years," said Kendall. "With the quota cuts, the farmer who bought most of our plants went out of business this year."

Jimmy and Jan Bartley of Evergreen (Columbus County) are also converting their tobacco greenhouse to tomatoes. As fertilizer dealers as well as farmers, Jimmy says "These quota cuts are hurting us on all sides of our business; we've got to look at some new opportunities." The Bartleys are planning to utilize Columbus County's new farmers' market to help in their marketing.

Ryan Patterson of Broadway (Harnett County) is expanding his greenhouse vegetable business. Growing primarily tomatoes and cucumbers, has broken into the challenging supermarket channels. He will put up a second house to fill this demand, as well as to sell at the new local farmers market in Lillington.

Randy Pollard of Smithfield (Johnston County) is expanding his produce business by growing specialized greenhouse peppers. "I know that your quality has got to be perfect when you're growing vegetables," he says. "If you deliver a bad box, you don't get a second chance."

Ronnie Fish of Angier (Johnston County) is diversifying into sod production. Though growing sod requires a large initial investment, Ronnie says "I got tired of seeing trucks driving down from Maryland and up from Georgia to deliver sod right down the road. All these new housing developments are driving up the price of my land, so I'm ready to get something back."

The recently formed Johnston County Goat Producers Association is taking a collective approach to marketing goat meat locally. "There are a lot of new people moving into this area," says Association President Woody Wheeler, "and we want to know exactly what they're looking for in terms of cuts, packaging, and distribution."

The Lillington Farmers Market is using cost-share assistance for publicity and facility development as they await their new home in the Harnett County Government complex next year. "Breaking into the wholesale produce business is awfully tough," says market president Dave Spahr. "Our growers want to look at taking their product right to the consumer.

PROTEIN RECYCLING

In recent times, the news media has had a field day making agriculture look like environmental villains, ignoring the reality that farmers and their families are the first to feel any negative impact of their practices. Farmers depend on the land and water for their livelihood, and it is in their strongest interest to protect these valuable resources. Environmental challenges do exist, of course, and a group of Edgecombe County farmers is currently attacking a major concern head-on, with assistance from the Tobacco Communities Reinvestment Fund.

The group of livestock producers, led by S.L. Allen and Benny Bunting, are well on their way toward solving the problem of on-farm mortality. Working closely with County Extension Director James Pearce and Dr. Peter Ferket of N.C. State University, the farmers are developing a method to recycle protein from livestock mortality into a usable product.

Currently, mortalities from poultry and hog farmers are disposed of by burying, incineration, or rendering. These methods all have environmental and economic drawbacks. Burying dead animals has the potential to pollute ground water and is extremely time-consuming for the farmer. Incineration leads to air pollution and unhappy neighbors. At the present time, rendering is the most viable option, but mortality must be transported to the rendering facility. This is often done in open trucks, creating biosecurity and potential public relations problems.

The Edgecombe group plans to utilize a new technique, developed by Dr. Ferket, in which the mortality is ground up and mixed with phosphoric acid in a contained tank on the farm. The phosphoric acid would preserve the resulting mixture and eliminate pathogens. An enclosed tanker truck would then pick up the mixture from the farm and transport it to a processing facility, where it could be utilized as a feed ingredient.

Dr. Ferket is completing the technical research on the finished product. When this is completed, the State Veterinarian will confirm the process as an approved disposal practice, and farmers can turn an environmental and economic liability into a valuable asset.

Serving as a free resource for you and others in the tobacco farming community is the whole purpose of the Tobacco Communities Project. That's what Charles and Gerry do.  So please give them a call with any ideas, questions or concerns.

You can reach Gerry Cohn at 336-376-0592, and Charles Thompson's number is 919-947-5107

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