[Because of the sensitivity of these discussions, and concerns that statements intended as inquiry or preliminary proposals might be interpreted otherwise, no effort is made to relate specific statements or ideas with individuals except as required for understanding. If you have questions about any portions of the meeting, we suggest that you contact a participant or Frank Dukes (804-924-2041).]  

Welcome  

Frank Dukes welcomed everyone to the seventh Southern Tobacco Communities Roundtable. Mr. Dukes noted that meetings are most productive when participants speak candidly but respect issues of confidentiality. He reviewed the agenda and gave a special welcome to Dr. Michael Erikson, the Director of the Office on Smoking and Health at the Centers for Disease Control.

Rebecca Reeve, Project Director of the Southern Tobacco Communities Project (STCP), thanked everyone for coming to the meeting and expressed her excitement about the variety of people in attendance. Dr. Reeve distributed examples of the Core Principles Statement Between the Tobacco Grower Community and the Public Health Community that she has placed in brochure format. Although the wording of the Core Principles themselves cannot be changed, she offered to help other states to create similar brochures for distribution.

Dr. Erikson expressed his pleasure in taking part in this STCP meeting because of its ability to bring together such a diversity of perspectives regarding tobacco issues. In this talk, Dr. Erikson hoped to explain the following: 1) What is the CDC, 2) What does the CDC do, and 3) How does the CDC work with and recommend options to states.

The CDC is a cabinet-level agency within the United States Department of Health and Human Services. Located in Atlanta, GA, it happens to be the only federal agency not headquartered in Washington, DC. Seventy-five staff members in the Atlanta office work on issues dealing with smoking and health.

The CDC is funded by taxpayers dollars allocated to the Department of Health and Human Services through the congressional appropriations process. In 1992, the Office on Smoking and Health budget totaled approximately $3 million. The 1999 budget will be around $74 million, with the vast majority of this money going to states for tobacco control programs. In fiscal year 1999, the CDC will be providing the 50 states with an average of about $1 million each. In addition to program services, the CDC funds national organizations, conferences, labor union meetings, programs to stimulate partners to get involve in tobacco use prevention, and studies and programs at universities. A recent CDC-funded university study asked, "Why do white American girls smoke seven times more than African American girls?" The study concluded that African-American girls view smoking more as a social liability; whereas white American girls see smoking as a social asset. Another CDC-funded university study asked teenagers, "What would make you stop smoking cigarettes?" Many of the teens responded that if chemical additives contained in the cigarette were listed as ingredients on the packaging, they might stop smoking cigarettes and start smoking something more "natural".

The CDC also conducts epidemiological work such as developing Surgeon General’s reports, compiling smoking and health statistics, and researching effective tobacco control programs. For instance, the CDC is currently performing a budget analysis of comprehensive state tobacco control programs. Both California and Massachusetts have increased their state excise taxes and spent that extra money on tobacco prevention programs. Statistics gathered for 1996 show that both California and Massachusetts have experienced a rate of decline in smoking two to three times greater than states without such a tax. The CDC is also examining other large-scale state tobacco programs. Oregon increased its excise tax and after two years of implementing a comprehensive tobacco control program it has seen results similar to those in California and Massachusetts. This seems to support that there is not only a relationship between cigarette price and consumption but also a program effect (non-price effect) on cigarette consumption. The complete findings of this study will be published.

The CDC is now working with the four settlement states (Mississippi, Florida, Minnesota, and Texas) and trying to extend what has been accomplished in California and Massachusetts into a national program. Dr. Erikson noted that after the McCain bill was defeated, the CDC began to explore what could be done in the area of tobacco control through the states. During the Attorneys-General settlement negotiations with the tobacco manufacturers, the CDC established the following nine elements that should be included in any state comprehensive tobacco program:

1. Community based programs need to be put in place so that money can reach the community level for a tobacco control program. The money in California and Massachusetts actually reaches the local level for school programs, coalitions, etc. Currently, most states fund 10-20 cents per person on tobacco control programs. CDC studies have shown that there seems to be a relationship between the amount a state spends on tobacco control and decreased consumption, and that this amount should be at least $10 per capita.

 

2. Programs to reduce the burden of tobacco-related diseases need to be implemented.

 

3. School programs have the potential to be quite effective, but effective programs simply are not being put to use.

 

4. Money for enforcement should be put in place in order to enforce laws dealing with issues such as minors’ access to tobacco products and clean indoor air.

 

5. Partnership grants can be used to fund statewide associations.

 

6. Counter-marketing can provide changes in the image of tobacco.

 

7. Cessation efforts should include a program with incentives to quit smoking. The United States has never had a national program on smoking cessation.

 

8. Surveillance and evaluation tools need to be in place to track trends such as how many people are smoking and how smoking rates are changing over time.

 

9. Administration and management should account for the cost-effective spending and allocation of funds.

Some 30 states are using the economic estimates that the CDC has developed for these nine areas. The typical range for spending on tobacco control programs is $6-$7 per capita. The CDC is finding that the states with large programs are spending around or lower than that amount. However, these large states have no cessation programs. If they did, the amount spent would come to around the recommended $10 per capita spending amount. In order to reach that $10 per capita goal, around 25-30% of settlement funds would need to be spent on tobacco control.

Dr. Erikson noted that the material he presented did not cover specific issues for farmers and other stakeholders because the CDC mission is to provide scientific information that will serve as the basis for tobacco legislation.

Dr. Erikson also noted the following actions that are being taken at the federal level:

1. President Clinton proposed a 55% excise tax increase;

 

1. The federal government is trying to recover from the states the Medicaid portion of the states’ settlement; and

 

1. President Clinton announced that the federal government would sue the tobacco companies for reimbursal of Medicare money spent dealing with tobacco-related illnesses.

Dr. Erikson then answered questions from Roundtable participants:

Q: If money is made available for states to spend $10 per capita on tobacco control programs, does that mean that, according to the model, there would be a subsequent 70% reduction in tobacco consumption? Is this model accurate?

A: Dr. Erikson answered that the reduction in tobacco use would be more likely at the 50% level at its highest. Although the model may not be totally accurate, it does demonstrate a positive relationship between money spent on tobacco control and a decrease in consumption.

Q: Do these models apply to overall tobacco use?

A: The data shown has applied to overall per capita consumption of cigarettes.

Q: How can the decline in consumption in California and Massachusetts be characterized?

A: The CDC has found that the reduction has been primarily with adults – not children. What the CDC wants to determine is how much of the reduction can be attributed to price effects and how much can be attributed to program effects.

Q: Is there a different model that is more applicable in regions that are actually growing tobacco, unlike California and Massachusetts?

A: Regional estimates are possible. The effects of these tobacco control programs in tobacco growing states could possibly have a larger proportional effect because more people smoke in tobacco-growing regions.

Q: What implication does this have for the overall "health" of tobacco communities?

A: The biggest differential factor in smoking in the United States is socioeconomic connection. The lack of formal education and unemployment have the biggest impact on who smokes.

Q: What is causing people to stop smoking if none of these states have effective cessation programs [note: "cessation programs" provide support for individual smokers who are trying to quit smoking]?

A: Factors include the price effect, laws that make smoking inconvenient, and cessation programs that just are not as effective as they could be.

Q: How are the smoking rates in a given state quantified?

A: The smoking rates are based on per capita sales shown by tax records, and are controlled for differences in excise tax and other distorting factors.

Q: Are advertisements in the media for over-the-counter nicotine replacement treatments having an effect on smoking cessation?

A: Tobacco companies do not want the aggressive marketing of smoking cessation programs, and have pressured companies into using low-key advertising only. The tobacco industry is very powerful.

Q: What has been the highest "success rate" for a decrease in tobacco consumption for a state?

A: There have been approximately 12-14% annual decreases in California and Massachusetts.

Q: What states are launching substantial tobacco control efforts?

A: What states are planning to do and what legislatures will actually do may not always be the same. The Massachusetts settlement agreement was done without federal intervention. The states' use of settlement money has no guidance from the federal government.

Q: How does influencing labor unions decrease youth smoking?

A: The CDC's main goal is youth smoking cessation, but that is not the only goal. Because union members tend to have high smoking rates this population has a great potential for cessation.

Q: If 40% of high school dropouts smoke, and 12-14% of college students smoke, could not some money be invested in scholarship funds?

A: Public health is always open to finding creative solutions to public health problems. The best overall public health strategy would be to have everybody be educated and everybody employed.

Q: Are there statistics on which subgroups of adults are quitting smoking?

A: Because of price manipulation, the movement in quitting among adults seems to be among younger adults.

Q: Has there been any research on what will be done to replace the settlement money if consumption reduction is successful?

A: The fewer the people that smoke, the less money there will be in settlement funds. Hopefully there will be a big effort at economic diversification that will make a difference.

Q: Has there been any research on how price manipulation will effect the tobacco black market?

A: The industry’s role in smuggling is an integral one. Serious efforts are underway to examine this in Washington, DC. With federal price increases, there are more international black market issues. With states price increases, there are more issues dealing smuggling across state lines.

Q: Is the United States introducing cigarettes and other tobacco products from other countries without controls?

A: There is currently very little imported tobacco use in this country, but with the increasingly global economy, this may change.

Q: Does the CDC have a stance on prohibition of tobacco products?

A: Yes, the CDC is totally opposed to prohibition – it is not a viable option.

Dr. Erikson was thanked for speaking at the meeting. He thanked the Roundtable participants for their efforts and declared that the CDC is receptive to differing viewpoints and to finding places where public health and tobacco farming community agendas overlap. Dr. Erickson provided his office number where can be reached, 770-488-5701, and the CDC's web site: www.cdc.gov/tobacco.

Arnold Hamm of the Flue-Cured Stabilization Corporation reported that the cigarette manufacturers have agreed to pay $5.5 billion over 12 years under "Phase II" negotiations. These payments will be placed into a national trust fund and then distributed to each tobacco-producing state where the governor will appoint a commission (typically including the governor, the commissioner of agriculture, the attorney general, appointed citizens, and representatives from the state senate and the state house of representatives) to oversee the use of these funds. If the sales of tobacco products decrease, so will the contribution to the fund. The fund is also adjusted for inflation.

Danny McKinney of the Burley Tobacco Producers Cooperative reported that three meetings have been held regarding the master settlement with the states Attorneys General. The last meeting was to decide how to distribute the settlement funding. The states that produce burley and flue-cured tobacco are included in this second bargaining agreement.

There was concern expressed that if Phase II money goes to tobacco producers and quota holders, that might change the support for the tobacco program. Several tobacco farmers agreed that the tobacco program is at risk, given the severe quota cuts over the past two years. It was noted that domestic tobacco production is estimated to increase by about 50% if the program were to end. Final confirmation of the Phase II agreement should be released in a few weeks.

J.T. Davis reported that history has been made in Virginia. Two weeks ago, members in both the public health and tobacco farming communities stood together to support a bill that would provide a "soft landing" for farmers and address issues of youth access to tobacco. This bill can be used as a model for other states wishing to help tobacco growing communities and advance public health. The bill passed 90-0 in the House and 40-0 in the Senate. If the bill is accepted by the governor, 50% of the settlement money will be reinvested into tobacco communities, 10% will go towards tobacco control, and the fate of the remaining 40% has yet to be decided. By placing the settlement money into the two dedicated funds, there will be a big opportunity to benefit both tobacco farmers and their communities and public health interests. On the other hand, placing the money into the state's general fund would probably leave it open to being spent on programs not directly related to tobacco issues. Mr. Davis noted that the Core Principles played an integral role in the success of this legislation.

Rebecca Reeve added that having Sen. Patsy Ticer’s name on this legislation draws attention to Northern Virginia’s concerns for public health and urban-rural coalitions such as the tobacco and health coalition. This legislation can be viewed as a long-term investment for public health in the state of Virginia. Virginia’s public health advocates also are planning to seek funding for public health initiatives out of the remaining 40%.

Lisa Poovey-Greene from the American Cancer Society reported that there have been significant changes underway in North Carolina. The public health community has expressed a desire to join together in a coalition with tobacco growers. They are now in the process of revising legislation that they hope will be submitted within the next week. According to Ms. Poovey-Greene, the health community is very supportive of Attorneys General's proposal to reinvest 50% of the settlement money into tobacco communities. The public health community hopes that the other 50% will be put into a foundation modeled after the Minnesota Foundation. The public health community is trying to write effective legislation that will address health as well as economic issues of tobacco communities. Originally, the legislation had called for 75% of the public health funds to go to tobacco prevention and control programs and 25% to other health issues. The legislation has now been revised to remove the percentages and to state that the primary goal of the fund would be to help the citizens of the North Carolina. Ms. Poovey-Greene said that the biggest need is to get the money out of the General Assembly's hands and into directed programs such as tobacco control.

Arnold Hamm added that farmers believe that this Phase I money should be able to be used for direct quota and producer compensation like it is in Virginia. Other farmers suggested that putting the compensation money directly into the hands of the farmers is the best entrepeneur development strategy, since they will be highly motivated to provide for their families.

Karen Armstrong-Cummings of the Commodity Growers Cooperative reported that there has been a lot of talk about Phase I in Kentucky, although there will be no legislative session until January of 2000. The tobacco task force, a standing committee of the state legislature, has been working closely with Governor Patton about Phase II (the $5.5 billion compensation for declining quotas). Attendance at meetings held to discuss Phase II has been around 400-600 people. There seems to be a lot of confusion about the difference between Phase I and Phase II because the purposes can overlap.

Ms. Armstrong-Cummings has been developing a set of principles to guide legislators as they determine the best uses of any funding that will be put into agricultural development. These principles include:

1. Invest in farming families;
2. Invest in farm productivity;
3. Invest in rural agricultural business and market development that respects Kentucky;
4. Invest in new ways of thinking of Kentucky agriculture (moving from commodity-driven to market-driven); and
5. Ensure responsible management of any funding.

Farm leaders are working together to develop a strategic plan for Phase I money. There should be something to take back to the governor by April 15^th. According to Ms. Armstrong-Cummings, the governor has made clear that he is not wedded to any single idea and is welcoming suggestions and specific recommendations.

Julie Brackett of the American Lung Association, Kentucky, reported that the public health community in Kentucky is trying to finalize its recommendation for a program on tobacco prevention and cessation focusing on youth access. The public health advocates are hoping for about $15 million/year (around 35%) of the state's settlement money. They are still trying to iron out the details of their strategy, but are getting close to finalizing their plans. The Kentucky Health and Agricultural Forum has continued with monthly meetings as well, and the partnership among public health and farming interests is working very well, although the Kentucky Farm Bureau is still not part of the partnership.

Danny McKinney remarked that because 90% of Kentucky legislators are from rural areas, health groups have an uphill battle in the state. Julie Brackett added that regardless of what the governor wants, the legislators have made clear that their first priority is to the growers.

Ada Lou Steirer of the Strom Thurmond Institute reported that the public health community in South Carolina has put together a coalition to develop a plan for the support of various health initiatives, although this plan has not yet been shared with the public. Through their work together, the group has agreed on what their purpose should be, and they have included some community development components. A House bill has been introduced that calls for one third of the settlement money to be reinvested into tobacco communities. There is a Senate bill that does the same, as well as providing for direct compensation to growers. Ms. Steirer noted that the South Carolina Farm Bureau has been a productive part of the dialogue.

John Litz, tobacco farmer and participant in the Tennessee Tobacco Working Group, reported that nothing major has happened as far as legislation in Tennessee. There has been a proposal to the Senate Agriculture Committee to give tobacco communities a 50% share of the settlement money. The Tobacco Working Group continues to meet. The Farm Bureau has expressed a desire to start putting the money into venture capital. Many people also seem to like the Virginia legislation model. The big issue now will be reconciling the interests of the governor and the legislature, which seems to be moving toward the development of a trust fund.

Kristen Betts from the American Cancer Society reported from the public health perspective. Georgia's state Tobacco Prevention Coalition has been around for about four years. The report from the governor's office is that the settlement money has not come yet and until it does, Georgia will not address what to do with it. Of the three bills dealing with the settlement currently in the legislature, one would have the money go back to taxpayers, and two would have the money go into an indigent health care fund.

Mike Owens, farmer, reported that from the growers’ perspective farmers feel deceived. Although they have been trying to work cooperatively, they honestly do not think that they will be receiving their fair share of the settlement. J.T. Davis suggested that Georgia’s new Director for the Flue-Cured Stabilization Corporation should be invited to these discussions because he has an obligation to represent the tobacco farmers in his state. If he fails to do so, he is not representing the farmers justly.

Georgia participants agreed to meet after the meeting to discuss potential collaboration.

Dr. Blake Brown presented a detailed analysis of the current tobacco farm situation and the outlook for the near-term future. He noted the effect of substantial quota cuts of the past two years and the prospects for dramatic reductions in smoking rates as prices increase. He projected that elimination of the tobacco program could result in more stable production levels and a shift of production further south, but the pricing might be extremely volatile. There would be large numbers of farmers leaving production and consolidation of farms, but there is a possibility of fairly stable production increase over time.

He suggested that there are a number of policy alternatives to consider for the future. These include:

• No changes, with the program continuing as is;
• Maintain the status quo for burley tobacco, while eliminating the price support in flue-cured;
• Moving quota from non-producers to growers;
• Eliminate the program and follow the example of other commodities.

His presentation included a substantial number of slides [which are attached for your review]. For additional information, Dr, Brown provided the following web site address: www.ag-econ.ncsu.edu.

Dr. Purcell explained that the outcome of adjustments occurring today is predictable. If prices are adjusted today for inflation, everything the farmer is buying is increasing in price, while everything that he is selling is not, thus resulting in a cost-revenue squeeze. Dr. Purcell came to the first Southern Tobacco Community Project meetings with hopes of developing some solutions to these issues. Because this cost-revenue squeeze is unstoppable, a "soft landing" needs to be developed for tobacco farming communities. Because there is diversity among grower families, there is no single solution to the problem. To address this diversity, Dr. Purcell developed the idea of a matrix of options. One side of the matrix contains the type/profile of family while the other side of matrix lists a particular program.

The following four factors are needed for each of these programs:

1. Technology and production;
2. Diversification (not "alternative" but "supplemental");
3. Reasonable access to credit/money; and
4. Enhancement of employment opportunities (i.e., rural economic development).

Since this matrix was initiated, technology and production has received support in the form of additional extension agents. As for reasonable credit, progress has not been very satisfactory.

Virginia’s 1996 General Assembly called for the Department of Economic Development to develop a rural economic development policy and implement a program in three years. The economic development program fell through because the resolution did not provide for any money or staff. Dr. Purcell noted that there probably will be little advancement for the economic development or quality of life in rural communities unless that issue is raised at the state commission level.

With regard to employment opportunities, Dr. Purcell has been preparing a computerized algorithm using a Geographic Information System (GIS) model as a starting point. Natural resource data and a marketing/economic algorithm overlay are then added to the model. Shortly, this will be developed into a user-friendlier computer program that can be taken out into the field to perform individualized analyses.

Dr. Purcell noted that with Phase I funds, there needs to be investment in infrastructure so that there will be long term benefits to tobacco communities. There has been much research done in this area, but there is also an educational aspect that needs to be addressed.

"Managing For Success"

Dr. Reeves observed that farm families and communities are the ones who will deal with the outcomes of the changing tobacco market; therefore, the "Managing For Success" program helps producers look at all of the changes they are facing and decide how to manage these changes. This farm and family approach program aims to help producers become better long term decision-makers and view decision-making and communication skills as a family and as a business.

The kick-off event for the program was to be held February 20^th for a day and a half with eight families participating. After a few weeks, there would be an additional one and a half-day follow-up meeting. At this point the "Managing for Success" program is directed toward tobacco families; it might be expanded to others at a later point. Three agricultural and applied economists and three educators will actually deliver the program.

This is really a strategic decision making process – not just applicable for tobacco, but very necessary for tobacco at this point in time.

Questions:

Q: Have you looked at the private sector?

A: They should certainly be brought into the picture, but this program can be put in place within the cooperative extension framework.

Q: How are new crops, which can often introduce more risks, being addressed?

A: There must first be crops that will work in the soil and other natural characteristics of the particular land. However, it is not simply a matter of what a farmer can grow. It is a matter of what a farmer can grow and have a competitive advantage. The matrix would not only show an optimal mix of crops for a particular farm, but a price that would have to be low enough to make it economically successful.

Regarding the nine principles guiding the spending of Phase I money, Ms. Armstrong-Cummings noted that they should be viewed under the larger framework that all American agriculture is going through a period of transition with freedom to farm issues. There needs to be attention brought to the plight of tobacco farmers. Currently, the tobacco growing community is taking these principles and working with other farm organizations to develop what to take to the governor of Kentucky. For example, they are currently examining what is happening in universities to expand research and what is needed as far as agricultural entrepreneurship. The group hopes to have a detailed plan to present to the governor by April 15^th.

Meeting attendees were given the opportunity to break up into small groups to develop plans for coordinating activities.