RALEIGH — For years, any gathering of North Carolina farmers was likely to focus on one word: buyout.
But Congress passed, and President Bush signed, a quota buyout bill last year. So when Democratic Congressmen Bob Etheridge, Brad Miller and David Price held their annual Congressional Farmers Breakfast in the Jim Graham Building at the State Fairgrounds on Tuesday morning, it was another story. This time the farmers focused on change — and the buyout.
“Our elected leaders in Washington have answered many of our prayers with the tobacco buyout, and we have all been blessed by their hard work,” farmer Keith Parrish said in the invocation. He was one of the leading lobbyists in the multiyear struggle that culminated in the passage of the quota buyout legislation last year.
The breakfast was held six days before today’s start of the three-month signup period for the buyout. Quota holders are eligible for $7 per pound of 2002 quota, and growers are eligible for $3 per pound. The amounts will be paid in 10 equal annual installments.
“The buyout is good for the farm families of North Carolina, the allotment holders of North Carolina, and we should never lose sight of that, no matter how much chaos we have to endure to get to a free-market system,” state Agriculture Commissioner Steve Troxler said.
Both the short-term chaos and the long-term uncertainty were on the minds of the farmers as they ate their $8-a-plate eggs, grits, bacon, sausage, biscuits and gravy Tuesday morning.
“The books aren’t closed yet, but it’s a tremendous achievement,” Price, D-Chapel Hill, said of the tobacco buyout, recounting how it was the dominant issue a year earlier and how Congress took advantage of a window of opportunity.
Etheridge, D-Lillington, a tobacco grower whose district includes southern Vance County, asked for a show of hands of those who actually believed a year ago that a buyout would happen. The response proved his point: The buyout was a dream no one thought would come true.
“We would not have gotten the tobacco buyout unless they needed our vote to pass another bill that had a lot of sorry legislation in it that we voted for,” Etheridge said. “That’s the truth.”
Another truth, he said, is that a lot of farmers who fought for the buyout weren’t really sure they wanted it once they got it. “We’re facing a great deal of change in agriculture, probably the biggest change that anyone who’s farming today has ever known.”
Miller said the rural economy is going to be dramatically different under the buyout, which removes controls and supports from tobacco growing. Anyone may grow as much tobacco as he wants wherever he is, but he’s not guaranteed any price for that crop.
“There is going to be a big change in our economy, and you know it,” the Raleigh Democrat said.
He said a lot of questions remain about the buyout’s implementation and effects because the legislation was such a rush job. Farmers weren’t in the room to address their what-ifs, he said, and perhaps the cigarette manufacturers were.
One example is the effect on Phase 2 payments to growers under the 1998 Master Settlement Agreement between the tobacco companies and 46 states. It was known during the buyout debate that the legislation would end those payments, costing growers about $3 billion. Farmers thought they would get the 2004 Phase 2 money because the buyout didn’t go into effect until this year.
Instead, the legislation was vague on the question, and the tobacco companies have won court rulings exempting them from the 2004 payments. The Phase 2 fight continues, but even the delay in receiving that money has squeezed farmers who had budgeted for the income.
That type of unexpected change is particularly hard on North Carolina because tobacco encouraged the development of such a large number of small farms, but “we’re going to get through it,” Etheridge said of the many adjustments.
He said the quota system provided stability, security and wealth to small farmers in North Carolina for 70 years, and tobacco money built much of modern North Carolina, from roads to universities. The buyout marks the end of that era.
But with the rise of foreign competition and contract selling and the sharp decline in quotas, Etheridge said, “we were headed to Armageddon as it related to tobacco.”
Miller, like other tobacco-state lawmakers, has a section on his congressional Web site devoted to the buyout. He has taken the concept one step further by creating a question-and-answer section., People can post their buyout questions, and Miller’s staff will post the answers for all to see.
The congressman, whose district includes most of Granville County, addressed one common question: Should I sell the rights to 10 years of payments in exchange for a smaller total paid in a lump sum now?
“Be very careful,” Miller said, warning that Congress isn’t going to bail out people who make a bad deal with the buyout.
Many older growers are taking the buyout money and retiring, but others are taking one year off from tobacco to see how the market shakes out, Etheridge said.
The buyout does not mark the end of tobacco as a major economic force in North Carolina, he said.
“We don’t know what the future holds,” Etheridge said. You can grow all the tobacco you want, but “you’d better be ready to chew it if you do” without contracts for manufacturers to buy the leaf.
He said the big hope is for increased exports as growers are freed from quota lease payments that added as much as 50 percent to the cost of production.
The U.S. Department of Agriculture needs to do a lot in implementing the buyout, and the congressmen pledged to keep a close eye on the bureaucrats. Etheridge said they’re pushing for a written USDA statement that the buyout payments are guaranteed and aren’t in danger of being cut or revoked in the future.
Another buyout-related issue, Parrish said, is that the legislation removed a requirement for strict inspection of all imported tobacco, meaning that domestic leaf is now subject to far more scrutiny.
Farmers also will need help in the next two years to make the transition from tobacco to other crops if that’s their choice. Etheridge said one important shift in Washington will be the provision of more support for specialty crops in the farm bill due in 2007; federal farm programs traditionally have favored crops such as wheat and soybeans.
The next farm bill and Bush’s current proposal for farm cuts filled the nontobacco time at Tuesday’s breakfast and formed the heart of the address by the guest speaker, Rep. Collin Peterson of Minnesota, the ranking Democrat on the House Agriculture Committee.
Proposed cuts in the agriculture budget would cost North Carolina half a billion dollars over 10 years on crops and rural development, Etheridge said.
Price accused Bush of trying to shift blame and budget blows onto agriculture for irresponsible policies that turned budget surpluses into record deficits with no end in sight.
“Somehow we’ve gone over the cliff financially,” Price said, but the culprits aren’t the farm, education and health programs that are subject to cuts under Bush’s spending plan for fiscal 2006.
Peterson took the microphone as a fierce storm of wind, rain and sleet raged outside. The thunder claps, loud enough to stop the Minnesota Democrat at one point, amplified the stormy content of his speech.
He said the 2002 farm bill was an important correction to the failed concept of the 1996 Freedom to Farm Act, which he said removed the safety net from American farmers.
Even with the additional subsidies, the 2002 legislation has been a bargain, Peterson said, because spending has been $15 billion less than projected. “It’s the only part of the government I know that’s under budget.”
He and all other Democrats on the Agriculture Committee, including Etheridge and Rep. G.K. Butterfield of Wilson, who represents the northern half of Vance County, have signed a pledge to oppose Bush’s proposed cuts or any other reductions to the appropriations promised under the 2002 farm bill.
Peterson said the World Trade Organization and possible future trade agreements further complicate the American farm picture.
The WTO calls for cutting agricultural subsidies, standing in the way of new supports for specialty crops. One answer, he said, is to put more money into conservation payments, which are outside WTO limits.
Bad trade experiences of the past decade have turned agricultural interests away from an almost blind allegiance to the concept of free trade, Peterson said. Now, for example, he can’t see a proposed free-trade pact with Caribbean nations winning congressional support.
The not-so-free trade in migrant farm workers also was a concern Tuesday. Farmers said the wage rules are making the federal guest-worker program prohibitively expensive. Etheridge said a planned overhaul of that program has never recovered from the Sept. 11, 2001, terrorist attacks, which ramped up homeland security and shifted public opinion against immigration.
Those farmers who couldn’t make Tuesday’s breakfast still will get their chance to make their voices heard on agricultural issues. Etheridge said he will hold meetings in every county of his district in the coming months to hear farmers’ concerns.