As of last week, 325 sign up in Md. Deadline is Dec. 22

11/28 By MARK POWELL

As of Nov. 22, the count of Maryland tobacco farmers indicating they will take the state buyout had risen to 325. That would represent a 35 percent reduction, or 3.6 million pounds of tobacco removed from yearly production, dropping the state’s poundage to about 6 million.
Bobby Swann of Southern Maryland’s Tri-County Council said producers have until Dec. 22 to decide if they would like to participate in the buyout. Swann, who is leaving his temporary tobacco buyout assignment to go back to duties as a Calvert County commissioner, said the buyout was going as anticipated.
“We’re still expecting about half of the farmers to take it,” he said.
(Swann has been replaced by Dr. Christine Bergmark who is the Tri-County Council’s director of ag development.)
Under the buyout program, endorsed by Gov. Parris Glendening and the state legislature, farmers would be paid $1 per pound in return for agreeing not to be involved with tobacco production.
The average Maryland producer taking the buyout would get an annual payment of $20,000 for the next decade, or a total of $200,000.
Also last week, the Maryland Department Agriculture certified 940 tobacco growers certified for payment from the National Tobacco Grower Trust (or Phase II of the Master Settlement). According to MDA’s Pat McMillan, that means about 85 percent of Maryland’s tobacco farmers will receive payments from the pool of money from cigarette manafacturers managed by New York-based Chase Manhattan.
On average, in the first round of payments, Maryland farmers got about $2,500 from a total of about $2.335 million distributed in the state.
“This year, we think we’ll be distributing approximately $1.5 million,” McMillan said.
The Phase II payments will continue for a decade more, with varying amounts each year depending on a formula that takes into account reduced cigarette consumption in this country.
The Phase II program was created to specifically offset tobacco producers loss of market resulting from federal efforts to reduce cigarette use. Initially, Maryland farmers were ignored in the efforts because the state’s producers do not participate in federal quota programs. Officials from MDA, however, convinced tobacco state officials that Maryland farmers deserved part of the money from cigarette manufacturers.
MDA also announced dates for the 2001 tobacco auction season last week. Based on the recommendation of the state’s Tobacco Authority, the auction will be held March 13 through April 5, or 15 days over four weeks.
Secretary of Agriculture Dr. Henry “Bud” Virts said, “It is significant that will be the last auction for Maryland tobacco farmers taking the state’s buyout offer.”
It is anticipated that some 9 million pounds of tobacco — nearly half of it from St. Mary’s County — will be sold at the auction. The last tobacco auction pumped about $15 million into the Southern Maryland economy.
Anticipating that a decline in tobacco production will impact their business, owners of the five tobacco warehouses in Southern Maryland have approached the Southern Maryland Agriculture Development Commission with a general request their businesses be considered when assessing the economic impact of the loss of tobacco acreage in the region. The group has been asked to come up with a specific request.
In other tobacco states, tobacco warehouses are fast failing as acreage is reduced and increasing numbers of farmers begin growing under contract to cigarette manufacturers.
Since 1997, the number of tobacco warehouses from Florida to Virginia has dropped from 198 to 147. Philip Morris Co. of Richmond, Va., is the country’s largest cigarette manufacturer. It has contracted with 100 million pounds of burley this year and for 2 million pounds of flue-cured.
R.J. Reynolds Tobacco Co. of Winston-Salem, N.C., has contracts with 250 producers.