Tobacco Companies Create Trust Fund For Farmers
A state court in Wake County, North Carolina approved the
establishment of a trust for tobacco farmers to be funded by
tobacco companies.
The National Tobacco Grower Settlement Trust
could receive up to $5.15 billion over 12 years from Philip
Morris, R.J. Reynolds, Brown & Williamson and Lorillard. The
purpose of the trust is to provide financial support to farmers
and quota holders - farmers who have been granted
tobacco-growing rights by the federal government.
Tobacco analysts speculated that the creation of the trust was
politically motivated. "The Trust will keep tobacco state
lawmakers allied with the interests of tobacco industry," said
David Adelman, analyst at Morgan Stanley Dean Witter. Adelman
went on to say, "It's one thing if five farmers dominated
tobacco farming, but there are tens of thousands of tobacco
farmers and quota holders and that is where the votes are.
The tobacco industry had to try to appease that constituency and
align their interests with tobacco companies - this agreement
achieves that goal." The trust is separate from and will not
affect the national tobacco settlement.
Source:
Reuters, (8/19/99) "Tobacco Grower Settlement approval seen as political", Edward Tobin
[Full Text: http://biz.
yahoo.com/rf/990819/bco.html]
WALL STREET JOURNAL, (8/20/99) "Trust To Be Funded By Tobacco Companies For
Growers Is Cleared", p. B7
Commentary: provided by Advocacy Institute, distributed by Smokescreen
Friday, August 20, 1999
BIG TOBACCO BUILDS FARMERS' TRUST WITH TRUST FUND -- Once again, Big Tobacco
has used its huge financial resources to buy political power. A North
Carolina judge yesterday approved the National Tobacco Grower Settlement
Trust, a $5.15 billion dollar payoff from the four largest U.S. cigarette
companies to tobacco states and tobacco farmers to make up for a decline in
sales caused by the Master Settlement Agreement.
This voluntary payoff will
help reduce tension and reseal the bond between Big Tobacco and tobacco
state lawmakers in Congress and state legislatures, who were displeased with
farmers' omission from the Master Settlement Agreement. Big Tobacco hopes
that these policymakers will once again do the industry's bidding as it
seeks to neutralize tobacco use prevention activities in Congress and state
legislatures.
Activists can use this time to remind farm groups that cigarette excise tax
increases can also be used for economic development in farming communities
and would generate more farm money than Big Tobacco is providing.
Considering that a large state or federal excise tax could raise billions
each year for crop conversion, tobacco state lawmakers may be selling their
allegiance for a pittance.