Tar Heel Tattler - July 2005
The story sounds familiar: Farmers find mailboxes stuffed with notices from banks and other financial institutions. But for about 70,000 tobacco growers and allotment holders, the letters aren’t duns. They’re from businesses wanting a piece of the $3.8 billion that Tar Heel farmers will start getting this month as part of the federal allotment buyout.
Banks, financial planners and others want to help invest the money. For a cut, of course. Allotment owners will get $7 a pound, and growers — who use their own or lease allotments — will get $3 a pound. Allotments limited the supply of tobacco to keep prices stable.
Vance County grower Ronald Stainback, 63, owned a 385,000-pound allotment last year and leased enough more to grow 500,000 pounds. His total payout will be about $4.2 million. He gets at least five offers a day. “I’ve had phone calls and mail. I don’t even know them from Adam. They’ll write you a letter and introduce themselves.”
Stainback also runs a warehouse where farmers who grow tobacco under contract to manufacturers bring their crop. They tell him they’ve had similar experiences. “It’s kind of amusing, really. Nobody’s going to do anything before they weigh it all the way out.”
That’s as it should be, says Godfrey Ejimakor, associate professor of agribusiness at N.C. A&T State University in Greensboro. Among other things, they must decide whether to take the money in 10 yearly payments or assign their rights to somebody else for a lump sum. If they do, Ejimakor says, farmers should demand at least 75% of the total.
Stainback hadn’t decided in late May what to do with his first payment, but he might invest in land or rental property. He hasn’t abandoned tobacco farming: He planted 200 acres, enough to grow 600,000 pounds. As for his new pen pals? “Everything they send to me, I throw in the trash can.”