ANNAPOLIS – Gov. Parris N. Glendening will try to entice more tobacco farmers into the state’s crop buy-out program with a proposal to pay farmers a lump sum, rather than spreading payments over 10 years.
After more than 300 years of tobacco farming in Maryland, Glendening hopes to eliminate the crop in the state by paying farmers not to grow it.
The money for the buy out comes from the state’s $4.4 billion share of the nationwide settlement with cigarette companies. The buy out is just part of the state’s plan to help Maryland’s tobacco growers find other agricultural uses for their land.
Maryland Deputy Agriculture Secretary Hagner Mister and representatives of the Tri-County Council for Southern Maryland presented the proposal to members of the Southern Maryland legislative delegation Friday morning. About 98 percent of Maryland’s tobacco is grown in Southern Maryland, with more than one-third from St. Mary’s County.
Under the buy-out plan, farmers would receive 10 annual payments of $1 per pound of their annual harvest based on average production in 1996, 1997 and 1998. The price of tobacco was about $1.65 at the close of the last market in April 2000.
The new legislation, expected to be introduced next week, would allow farmers to receive one lump sum of $7.74 per lb. also based on farmers’ three- year average production. Under the new proposal, growers also could choose to spread the lump payment over three or five years to lessen the tax burden.
For example, a farmer who produced an average of 1,000 pounds of tobacco would receive 10 payments of $1,000. That farmer’s up-front payment would be lower, $7,740, because the higher amount accounts for inflation over the life of the payments.
The up-front payment is designed to attract farmers worried about receiving all 10 payments. The original plan calls for the General Assembly to approve funding each year.
Under Glendening’s new plan, funds for the up-front payments would come from bonds issued by the state backed by money from the cigarette company settlement, transferring the risk from the farmers to the bondholder.
No matter how small the risk, there was wariness about the buy out among some legislators Friday morning. Sen. Roy Dyson, D-Calvert, is concerned growers who choose not to participate in the buy out will be penalized because the market for Maryland’s tobacco will dry up.
Although the governor’s plan includes funding to help all farmers use their land for other crops, Delegate Samuel C. Linton, D-Charles, opposed it, saying he sees no benefits for farmers who chose to stop growing tobacco before 1998. Farmers had to grow tobacco in 1998 to qualify for the buy out.
The opposition may be on more symbolic grounds than practical. “I still believe tobacco farming is a very honorable profession . . . Tobacco saved this colony and made this state,” Dyson lamented.
So far, 647 tobacco growers have applied for the buy out, or about 76 percent of the total tobacco produced in the state. However, only half of those have signed and returned the contracts necessary to participate.
Mister expects that number to increase before this year’s deadline of Feb. 22, a deadline that he said may be extended for a month to allow more participation. Any tobacco grower can sign up for the 10-year buy out for the next five years, but the lump sum payment would only be available for growers who sign up by this summer. – 30 – CNS-1-26-01