Sunday, September 19, 1999

Burley farmer payouts addressed

The Cincinnati Enquirer

        Ever since he was guaranteed a portion of a national tobacco settlement, Bob Flaig has been stumped about how much that would mean and what he would have to do to get the money.

        The sample paperwork he recently received wasn't much help. It had 15 different scenarios for tobacco arrangements among quota owners, landowners and tenants in Kentucky.

        “It's just a bunch of gobbledygook. You just wouldn't believe all the stuff,” said Mr. Flaig, 80, who grows burley tobacco on about 27 acres in Union for people from Texas to Maryland.

        Beginning Monday, he and other Northern Kentucky tobacco growers can attend training sessions to help them fill out the forms needed to receive a portion of $112.7 million, Kentucky's first installment of a 12-year settlement with tobacco companies.

        Northern Kentucky farm agents say about $800,000 is intended for Boone, Campbell and Kenton coun ties.

        Growers say the money, which should arrive by the end of the year if forms are mailed out by Oct. 8, will help them deal with this year's 30 percent quota cut and the summer drought.

        The money is “not enough to save somebody who is already bankrupt, and it's certainly not enough to make them rich. But every little bit helps,” said Danny McKinney, CEO of the Kentucky Burley Tobacco Growers Cooperative.

        Half of the $112.7 million already is sitting in a New York bank, with the other half expected by the end of the year. It is to be shared equally among quota owners, landowners and tenants.

        Most of those in Kentucky's tobacco-growing industry satisfy all three roles and will receive about 24 cents for each pound of their basic quota, which is the amount of tobacco the federal government allows the farmer to grow and sell. Figures from 1998 will be used.

        For example, someone who owns a 10,000-acre tobacco farm where he actually does the farming and sells the quota can expect a $2,400 share of the tobacco settlement.

        In Kentucky, the average quota is 2,500 to 3,000 pounds. But it can range from 2 pounds to hundreds of thousands of pounds. Generally, two acres yield between 5,000 and 6,000 pounds of tobacco.

        Marshall Kinsey, director of the Grant County Farm Bureau and a grower himself, expects to receive about $1,000 in settlement money from the 12,000 pounds of tobacco he grew in 1998. He plans to split the money with his son and use his half for bills.

        “It's a little bit too small. It's quite a bit too small,” he said. But he said the money will still be helpful for growers.

        The $112.7 million Phase II payout is designed to compensate Kentucky farmers who are expected to lose income from tobacco production because of the higher prices that manufacturers are planning to cover costs of a larger, 25-year national settlement with individual states. Kentucky is expecting up to $1.5 billion in Phase II money.


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