Tobacco market declines in decade after settlement
By Brandon Larrabee| Morris News Service
Sunday, November 30, 2008

ATLANTA --- Tommy Irvin can still remember going to his first tobacco auction opening day nearly forty years ago, back in 1969. Mr. Irvin had just become Agriculture Commissioner for Georgia.

He made the visit an annual ritual, one that continued until a few years ago. Mr. Irvin, the longest-serving statewide elected official in the nation, no longer travels to the southern part of the state even though he is still agriculture commissioner.

"There are no markets to go to anymore," Mr. Irvin said.

The auctions have closed down, victims of a change that sees most farmers signing contracts directly with tobacco companies after the federal buyout program ended in 2004. Like much about the industry, farming has changed dramatically since 46 states and the major tobacco companies signed a legal settlement 10 years ago .

Unlike the rest of the industry, though, the changes on the farm might have less to do with the landmark agreement, in which tobacco companies agreed to pay states billions of dollars in perpetuity to help defray the costs of smoking-related illnesses, than with the changes that followed.

"It's hard to know exactly what impact the master settlement agreement had," said Daniel Green, coordinator of the Center for Tobacco Grower Research at the University of Tennessee.

There were some payments to help farmers deal with expected market losses, but the buyout probably had more to do with any transformation, Mr. Green said.

Some tobacco growth has rebounded over the past few years after the quota buyout, Mr. Green said, but the areas that have benefited most have been in North Carolina and western Kentucky.

North Carolina's expansion in particular has cut into the market share of states including Georgia and South Carolina. That's a symptom of production costs, mostly through cheaper land. Georgia has also had disease problems at times, Mr. Green said.

Mr. Irvin said tobacco production in Georgia has gone from a value of $205 million in 1996 to $27 million last year.

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