Phase II Tobacco Board Announces 2000 Payment Policies

RICHMOND (January 12, 2000) - The Virginia Tobacco Trust Certification Board Inc. today announced modified policies that will govern the 2000 payment to Virginia tobacco producers and quota owners under the National Tobacco Grower Settlement Trust (Phase II), the settlement negotiated between the tobacco growing states and four cigarette manufacturers. Virginia is expected to receive more than $18 million in 2000, the second year of the twelve-year settlement. The amount is expected to rise to more than $27 million in 2001. Applications for the 2000 payment will be mailed after Labor Day for expected payment on December 31, 2000.

"The board has worked very hard to establish policies that will offset the effects of basic quota cuts and other challenges that growers have faced in the last few years," said Walter Bass, a member of the board. Basic quota is the number of pounds allocated by the USDA-FSA to a farm as the farm's share of the national marketing quota in a given year. "The amount of flue-cured tobacco a farmer can grow, the most common tobacco grown in Virginia, has been reduced by 44 percent in the last three years alone," added Bass.

The board's modified policies are as follows:

1. Base year of payments. For the next six years, the board will continue to certify payments to producers and quota owners based on production in 1998 and/or the quota owned as of July 1, 1998.
2. Producer payment policy. For the next six years, producer payments will be made to those who produced flue-cured or burley tobacco in 1998, whether or not they grew tobacco thereafter.
3. Quota owner payment policy. For the next six years, the board's policy is that any quota owner who sold quota after July 1, 1998, or sells it hereafter, will continue to receive payments until made whole for losses sustained from the recent reductions in quota. Defining the point at which such a quota owner has been fully compensated, if ever, will be determined later, and will depend on additional compensation to the owners from Phase I payments. Once a seller of quota has been fully compensated for his loss, the purchaser of that quota will be entitled to payments for quota losses incurred after the purchase date.
4. Payment division. For 2000, flue-cured quota owners and producers will each receive 50 percent of the flue-cured payments. Burley producers will receive 75 percent of the burley payments; burley quota owners will receive 25 percent.
5. Definition of "producer." The board clarified the term "producer" for purposes of determining eligibility for payments. A producer is now defined as "a person or entity actively engaged in planting, growing, harvesting, and marketing of flue-cured or burley tobacco, or who shares in the variable expenses of producing the crop (such as fertilizer, labor, chemicals, etc.), and is therefore entitled to share in the revenue derived from marketing the crop."

The board certified the payment of $21.6 million to Virginia tobacco producers and quota owners who applied for the first round Phase II distribution in December 1999. This represented 90 percent of the $24 million set aside for payment in 1999, one of the highest rates in the nation. Approximately 40,000 checks were mailed to Virginia producers and quota owners on December 30.

In December, the board approved a second round of 1999 fund payments for producers and quota owners who submitted inaccurate or defective applications. In addition, the board decided that those farm operators who did not return an application in 1999 would be mailed a new application at the end of January for round-two payment. All farm operators must postmark their applications for round-two payments no later than March 1, 2000.

The Phase II settlement was reached July 19, 1999. The private settlement between the tobacco growing states and major cigarette manufacturers will provide up to $340 million in aid over twelve years to Virginia tobacco producers and quota owners. Governor Gilmore appointed the 14-member board July 30, 1999.

Virginia Tobacco Trust Certification Board, Inc.

Governor James S. Gilmore, III, Chair
J. Carlton Courter, III, Commissioner, Virginia Department of Agriculture and Consumer Services, Vice-Chairman
Attorney General Mark L. Earley, Secretary
U.S. Senator John Warner
U.S. Representative Virgil Goode (Virginia 5^th District)
State Senator Charles Hawkins (R - Chatham)
State Delegate William W. "Ted" Bennett (D - Halifax)
Don Anderson, President, Virginia Tobacco Growers Association (South Boston)
Walter Bass, Jr. Tobacco Farmer (Gladys)
C.D. Bryant, President, Concerned Friends for Tobacco (Blairs)
Fred Fields (Pennington Gap)
Jonathan Large (Ararat)
John Stallard, Allies for Tobacco (Nickelsville)
Tom West, Vice Chairman, Halifax County Board of Supervisors (Nathalie)