Local News

States, Tobacco Companies Discuss Farmers' Aid Package

Posted December 17, 1998

— Cigarette executives and tobacco state leaders discussed creating a $5.15 billion fund Friday to bail out growers facing a tougher market because of the $206 billion tobacco settlement.

The anticipated tobacco growers' crisis drew three governors, one governor-elect, and staffers from six other tobacco states to the Triangle.

They joined the country's largest tobacco companies to craft an aid package for growers. The tobacco companies had agree to the assistance package as part of the settlement, but R.J. Reynolds recently said it will not put up its portion of the money.

"It really appears necessary that all the companies participate, and the $5.15 billion is a minimum figure," said Gov. Jim Hunt of North Carolina. "We have said very clearly that we want to continue to grow tobacco, ...but we also feel very strongly that our farmers in a sense have borne the brunt of this big settlement, which has resulted in cigarette prices going up so much."

The tobacco companies' lead negotiator says the state governments need to play a critical role.

"I thought we had an excellent meeting," says Phil Carlton, the tobacco industry's lawyer. "The state political leadership is absolutely crucial to working out the grower issue."

However, Carlton said that the issue is not that simple.

"There is a basic disagreement among some folks and rightly so," he said. "You can't just pour money at everything. You have to understand that the tobacco industry in this context is four separate companies, four feisty competitors, they don't always agree on these things."

Everyone did agree to meet again next month, which is an encouraging sign for growers.

"I'm satisfied with what came out of it," says Rod Kuegel, a tobacco grower. "We didn't expect to leave here with a check."

Filtering through it all, there appears to be some positive moves prompted by cooperation between neighboring governors.

"We'll meet again in January, and I think we'll come up with a good solution," Carlton said.

Instead of giving growers money, R.J. Reynolds wants to purchase more tobacco. However, the tobacco states are still trying to get Reynolds to join in on the aid package.

Friday's meeting arose out of a stipulation in the national tobacco settlement signed Nov. 23 between the tobacco companies and 46 states. It required the two sides to meet within 30 days to address the concerns of the growers, who were not included in the deal.

The landmark settlement calls for cigarette companies to pay the states $206 billion over 25 years for smoking-related health-care costs in exchange for the states dropping their lawsuits against the industry.

From Staff and Wire Reports

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