ANNAPOLIS-The $5.5 billion trust fund for tobacco farmers negotiated by six state governors with Big Tobacco this week has Maryland scrambling to get its share.
Craig Nielson, assistant attorney general of agriculture, said “there is a role for Maryland” in the farm settlement, even though Gov. Parris N. Glendening was not one of the six governors involved in talks that produced the agreement with cigarette makers, including Philip Morris, the nation’s largest tobacco company.
Pat McMillan, assistant to the secretary of the Maryland Department of Agriculture, said no one is sure how the trust fund agreement will affect Maryland because the state’s crops aren’t regulated in the same way as other tobacco states. In other states, growers produce crops according to allotments, or quotas, based on demand.
“We are not certain, nor is anyone else, what it might mean to Maryland tobacco growers,” he said. “We only grow a small amount of the overall total of tobacco grown in the United States. We have no allotment system, so it’s difficult to determine the damages farmers might face.”
The fund established this week is separate from Maryland’s $4.4 billion share of last year’s 46-state settlement with tobacco companies. The governor has not released his proposal for spending this settlement money, but he is considering funding some kind of compensation program for growers with it.
That means Maryland tobacco growers could be looking at help from two large pots of cash, both funded by cigarette makers.
Don Vandrey, the governor’s assistant press secretary, said because Maryland produces less tobacco than more southern states like North Carolina and Virginia, Glendening didn’t get as involved in the latest talks for a farm settlement as the governors of the other two states.
“We’ve had ongoing talks with the tobacco companies about compensation for the farmers,” he said. “But that’s separate from the governor’s own plan to compensate the farmers.”
Glendening plans to combine revenues from his proposed tobacco tax increase and the settlement to pay for increased efforts to reduce smoking, construction of research facilities and grower compensation.
But if Glendening’s planned $1 tax increase on each pack of cigarettes passes the General Assembly this session, tobacco growers could be hit hard by declining cigarette sales. As the price of cigarettes rises, consumption decreases. This downward trend may ultimately lead to Maryland receiving less money than originally expected from last year’s state settlement.
J. William Pitcher, Annapolis attorney and lobbyist for The Tobacco Institute in Washington, told Southern Maryland delegates in a briefing Friday that the first check coming to Maryland from the settlement would for $54.25 million, but he did not say when the check would be issued. In the year 2000, the state can expect $144.9 million, with the amount increasing each year.
“There are some add-ons and bonuses Maryland may receive in the next 25 years to total over $4.4 billion,” he said. “It’s conceivable, sometime in the future, it could approach $6 billion for the state.”
But a provision of the state tobacco settlement resolved last year stated that as cigarette sales nationwide decreased, the amount of money received by the 46 states involved in the settlement would decrease proportionally. That could impact Maryland’s payments, Pitcher said.
It’s impossible to predict exactly what will happen to the payments at this point, said Gary Hodge, adviser to the Maryland Tobacco Farmers Board.
Hodge said although Maryland has seen a steady production over the last 10 years of 10 to 12 million pounds of tobacco each year, tobacco growers are worried the market for their product may shrink significantly as cigarette prices rise.
“The growers of Maryland see the storm clouds gathering over the whole industry at all levels, and there’s uncertainty of what the consequences of that will be in the future of Maryland tobacco growers,” he said.
— 30 —