History and Background Information
North Carolina was built on income from tobacco and other commodity crops. But for North Carolina’s modest-scale, family farmers and rural communities, those crops are no longer paying the bills. Boarded up warehouses, neglected business districts, and farmers who have to leave the farm in order to meet basic living expenses are symptoms of how changes in agriculture have affected our farms and rural communities.
In 1997, the average North Carolina flue-cured tobacco grower raised about 27 acres of tobacco. While actual profitability varied from farm to farm and from season to season, it was well accepted that a flue-cured tobacco grower who owned his quota could expect to net about $1,000 per acre under the old federal tobacco program. That is around $27,000 per year of net income on a very small piece of land.
Starting with the Master Settlement Agreement in 1998 and culminating with the “buyout” in 2004, many tobacco farm families were forced out of tobacco and to adjust to the loss of tobacco income. Gone was a decades-old commodity program that had stabilized tobacco prices and earned farm families money to plant other crops, pay living expenses, send children to college and put a bit aside. Very quickly, farmers realized that only large acreage could earn a profit on tobacco in the new system. Small farmers would have to use their wits and wisdom to devise alternatives to lost tobacco income and to remain viable contributors to the rural economy.
Signs of oncoming change were clear before the buyout was done and the first check mailed. In the mid-1990s RAFI-USA committed itself to a major initiative to support North Carolina growers and rural communities. We launched our Tobacco Communities Reinvestment Fund in 1997 as a resource for reinvesting in our state's farm economy.
The guiding principle behind our new program was our conviction that reinvestment is the key to long-term success in rural economic development. Our analysis identified an abundance of human resources: farmers with energy, ideas, agricultural skill, and a superb work ethic. Another great resource is the state's agricultural infrastructure of farm land, fences, pastures, and farm equipment. By giving farm entrepreneurs the resources that they need, the Tobacco Communities Reinvestment Fund allows farmers to put their own ideas to work to transition their farms away from raw commodity production and to more lucrative enterprises.
RAFI has proven in the decade since the first investment by the Tobacco Communities Reinvestment Fund that small investments in existing farm entrepreneurs pay huge dividends in terms of maintaining existing jobs and businesses, leveraging new investment in rural communities, and providing new income streams for farms and rural communities. Thanks to a grant from the North Carolina Tobacco Trust Fund Commission, RAFI’s Tobacco Communities Reinvestment Fund is well positioned to assist North Carolina farmers and rural communities to stay ahead of the dizzying pace of change in the rural economy. By maintaining our commitment of resources to support development of new farm income sources, RAFI hopes to retain modest-sized farm businesses as viable contributors to the rural economy far into the future.
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