News Release - N.C. Farm Families Stand to Lose Hundreds of Millions in Phase II Money; Etheridge Fights for Payments

News Release
Congressman Bob Etheridge
North Carolina

November 15, 2004

Contact: Sara Lang
Phone: (202) 225-4531

N.C. Farm Families Stand to Lose Hundreds of Millions in Phase II Money; Etheridge Fights for Payments

RALEIGH - North Carolina farmers and quota holders could lose $189 million in Year Six Phase II payments if the nation's tobacco companies are successful in their request for a full refund of the payments, which were scheduled to be made in December or January. The passage of the tobacco buyout triggered the termination of future Phase II payments because the buyout is funded by assessments on the tobacco companies. However, an end date for Phase II payments was not specified in the legislation, and assessments on the companies for the buyout are not expected to begin until 2005. With a court hearing scheduled tomorrow on a request by tobacco companies for a full refund of the Phase II payments, U.S. Rep. Bob Etheridge (D-Lillington), a member of the House Agriculture Committee and a part-time farmer, has called on R.J. Reynolds, Philip Morris and Lorillard to halt their calls for a refund and allow the payments to proceed.

"North Carolina's farm families are counting on these checks arriving at the end of the year," Etheridge said. "These hard-working, God-fearing folks have been hanging on by a thread for the buyout, and they can't afford for these payments to disappear or to get tied up in legal wrangling. And the pain won't stop with our farm families, the loss of these payments would be a major blow to the economies of our rural communities, from retailers to banks to local stores. It just makes good, common sense that the Phase II payments end when the buyout assessments begin - in 2005."

Phase II payments are made from the National Tobacco Grower Settlement Trust Fund, which provided for twelve years of payments to growers and quota owners to replace income lost due to the National Tobacco Settlement. Payments are adjusted annually based on changes in cigarette sales and the rate of inflation. Last year nearly 80,000 North Carolina farmers and quota holders received $154 million in Phase II payments.

Recently, Etheridge wrote to Agriculture Secretary Ann Veneman urging her to quickly announce a date when tobacco growers and quota holders can expect their first payments from the buyout. Etheridge reminded Veneman that getting payments out as quickly as possible is critical to help North Carolina's families plan for the future and weather the potential loss of Phase II payments.