[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 for formal presentations. If you have questions about any portions of the meeting, we suggest that you contact a participant or Frank Dukes (804-824-2041).]

Meetings of the Southern Tobacco Communities Project were held on Sept. 22 and Sept. 29, 1998, in Charlottesville, VA. The main purpose of these meetings was to develop leadership and coordination, both regionally and in individual states, for further distribution and enactment of the Core Principles Statement Between the Tobacco Producer and Health Communities. Two meetings were held only one week apart in order to provide for the best attendance and the most convenience for participants. While the agenda for both meetings was the same, the difference in participation did make for somewhat different, albeit complementary, outcomes.

The following were the key topics of discussion during the two meetings:

• Updates on the status of tobacco farming and tobacco control

• Core Principles

• Immediate and long-term agenda of the Southern Tobacco Communities Project.

It was explained that each year’s determination of how much quota will be allotted depends upon three factors:

1. How much tobacco has already been taken under loan by the co-ops (tobacco that did not meet the minimum purchase price and was purchased for the minimum price by the appropriate co-op). Early flue-cured purchases were down, more recently it has leveled off. Burley tobacco has not brought to market yet, and won’t be until mid-November. There is far less of other types of tobacco grown, so changes there do not affect many farmers or communities.
2. 3-year average of exports. 1997 exports were down, and it is anticipated that this year’s exports will continue to decline as the world’s financial crisis continues and as competition from overseas increases. It was noted that the leaf dealers, who purchase tobacco for the manufacturers, maintain considerable control over production in many other countries, providing seed, equipment, and information as well as a market. Also, other countries may have tariffs that protect their farmers, so that American producers face an uneven playing field.
3. Domestic purchase intentions for the following year. The higher the amount the companies submit that they intend to buy, the greater the amount of quota allotted for the following year. It was noted that companies that don’t meet their purchase intentions must pay a fee, but the penalty is not significant. Imported flue-cured stocks (tobacco held by the companies) are much higher now than has been the case in the past.

Given these facts, it appears that another significant cut will follow last year’s 17.5% cut for flue-cured tobacco, and that even burley quota holders, who as a whole generally are affected less by variations in quota, may face a substantial cut next year.

Price support has been steadily losing ground, cutting into farmers’ return for risk and management. Market average has been flat as a pancake, and production costs will catch up. Flue-cured farmers have kept up through consolidation; however, not much more consolidation can take place. A 40% decrease in gross income may occur, and that will put a lot of people out of business. Limited resource or socially disadvantaged farmers, many of them minorities, are particularly at risk.

A concern expressed about declining quota is how it ends up pitting farmer against farmer. Flue-cured producers with fixed costs to repay bank loans must seek additional quota in order to make enough money to stay in business at all.

Another concern about elimination of quotas and price supports is that the value of much farm land is tied to ownership of quota. If there is no quota, the value of the land declines, which hurts not only the landowners but reduces the tax intake for local government.

It was noted that farming is having difficulties around the nation, with crop and livestock prices too low to support expenses. Some people argued that free-market policies, as enacted in recent freedom-to-farm ("freedom-to-fail" was how one participant put it) legislation, are responsible for this decline, and that tobacco will follow other commodities if the program is eliminated.

A number of people expressed concern that the manufacturers have shown how they can influence national policy by throwing millions of dollars into advertising. One participant argued that communication and information is currency, and that people concerned with the future of tobacco producing communities need to use that currency. There was also speculation that the companies may attempt to buy political support from the farmers in exchange for increased purchase intentions and other economic incentives. In that case, a quota cut may not occur.

A global settlement such as was offered in McCain’s bill seems highly unlikely any time in the near future. More likely is piecemeal legislation, such as was introduced last June to end crop insurance, or legislation to bolster FDA authority over manufactured tobacco products. Another likelihood is that Sen. Lugar will offer another proposal to end the entire tobacco program. Participants wondered where funding for any buyout might come from, and were extremely skeptical that offers would be made along the lines of $8-$4/lb. owner/producer, as introduced by Sen. Lugar last year.

It was noted as well that Sen. Lugar’s plan, which offered the full buyout in three years, had never had any chance of being implemented because of opposition from midwestern congressmen to the total funding required and the fact that there was insufficient funding to finance a three-year buyout at all. Some farmers report being misled about the feasibility of Sen. Lugar’s plan, and are more careful about what they will support now.

There was some interest in exploring what might be done regionally, as with a consortium of states, or on an individual state-by-state basis. Many states are running budget surpluses. Some argued that a coalition of farmers, health groups and others should start pressuring for use of the surpluses for tobacco farming communities.

Some participants reported that they have already approached their state’s attorney-general together to propose ways of sharing any fund that might come into the state for public health and farming issues.

The question was posed about whether any tobacco farmers and farm groups have developed plans about what they would like to see if there were to be funding from the attorneys-general settlement or excise tax or other sources of revenue. Nobody was aware of any such plans, although tobacco farmers are working in other ways, such as exerting political influence to ensure purchase of their crop.

It was suggested that the participants in Southern Tobacco Communities Project develop ideas for contingency plans. The modified LEAF Act was seen as a place to start, since that had received considerable support from tobacco farm groups and public health advocates. It also included both provisions for individual farmers and community development. The work done by this group and others in developing a more detailed plan for a tobacco communities investment fund also had much good that could be resurrected.

Frank Dukes agreed to draft a letter inviting tobacco farmers and tobacco farm organizations to consider the following questions [note: these were refined to this point after the meeting]:

After some discussion, it was agreed to convene a Roundtable meeting to consider any responses to this invitation, to share among the various states what each is doing, and to share plans made by the public health community for what they might be requesting from any attorneys-general settlement with the tobacco companies. Because of the need for sufficient time for any ideas or plans coming out of such a meeting to influence the states’ or national legislative agenda, it was agreed to schedule such a meeting in December.

A question was raised about what the public health advocates wanted to gain from helping the farmers. Responses included increasing support for stronger legislation preventing youth access to tobacco products, stronger clean indoor air legislation, a potential excise tax increase, and the general health of communities in the state. The ultimate goal is to improve public health and prevent premature death by tobacco use. The goals of the public health community as included in the Core Principles were noted. One farmer noted that there is a perception from tobacco growers that health advocates want to put them out of business; in response, one health advocate observed that they must convince people that putting farmers out of business won’t meet any of their objectives. It was pointed out that the companies have spent a lot of money convincing farmers that health advocates are their enemies, and in the meantime much has happened to put the farmers at risk.

A number of individuals offered several examples of benefits that were brought by relationships and alliances between the tobacco producer and public health groups, and the Core Principles. These included the following from the farmer perspective:

• Farmers have been able to point to many problems (e.g., declining income from overseas competition, lower prices, smaller purchase intentions, and in some cases threats to the tobacco program) that have come from the leaf dealers and manufacturers, and compare those to the policies in the Core Principles for how they can be helped in the long run by working with the public health community.
• In June, legislation that was introduced to end crop insurance was quelled by the public health community, and the support of the public health community has helped keep the tobacco program in place.
• Farmers have gained access to elected officials at the highest levels who are allied with the health community. Joint visits to the White House and legislators by farmers and health advocates have been effective at getting the farmers’ perspective heard.
• The support from the public health community was critical in keeping the plan favored by the vast majority of tobacco farmers (the Ford LEAF Act) in the McCain bill.
• A bank that had initially refused to contribute funds to a tobacco communities investment fund, because it was concerned that it would generate unfavorable publicity about funding tobacco farmers, changed its policy when it found out that Kentucky Action, the coalition of tobacco control organizations in Kentucky, had already donated money.

Examples from the public health side included the following:

• Similarly, relationships with farmers have opened doors to state and national legislators who formerly would not even speak to public health advocates, and who now receive them warmly.
• In Kentucky, the burley co-op is producing radio ads that have supported some health initiatives. And during the President’s visit to Kentucky, tobacco farmers were advocating some of the public health goals.
• Some health advocates have been promised support for funding of public health initiatives from any money entering the state from a settlement by the attorneys-general.
• The McCain legislation, which would have advanced many public health goals, received support from tobacco-state legislators, the first time in history that has occurred. (Note: many health advocates joined tobacco farmers in criticizing how the legislation diverted funding into so many unrelated special interests)

In general, participants agreed that shared principles have meant greater credibility with policy makers on different sides, with a chance for ideas to be looked at more seriously.

While a number of new signatories to the Core Principles were reported (see enclosure for the latest list of signatories), participants emphasized the importance of enacting what is in the Core Principles, and not letting the search for additional signatories deflect attention away from gaining support for what is contained within them.

It was agreed that there needed to be a multi-faceted approach to building support for what is contained within the Core Principles. On the one hand, people needed to be approached at a grass-roots level to build support. On the other hand, emphasis ought to be placed on getting "quality" signatories, including policymakers and other people with national influence, such as former President Carter.

People suggested the need to have key supporters of the Core Principles be able to visit and speak with influential individuals and organizations. It was agreed that a packet of "talking points" needed to be assembled that would provide information about the Core Principles and about the benefits that working with one another can provide. A database of signatories will be maintained by the STCP and put on the project web site (http://www.virginia.edu/ien/tobacco/).

There was discussion of maintaining a "balance" of signatories on the health and farming side. Given that there are many more public health organizations than farm groups, that may not be practical. It was reported that tobacco farmers are particularly interested in seeing who among the health groups has real influence, and whether such influence will be brought to bear on behalf of the farm communities.

There was also some discussion of organizations who are reluctant to agree to the Core Principles. One farmer observed that the manufacturers adamantly oppose the Core Principles, and that those public health groups who do not sign on are taking the side of the manufacturers.

An informal plan describing possible activities of the Southern Tobacco Communities Project was presented for discussion. It was emphasized the Project is what participants make of it, and that participant interests drive project activities.

The bulk of the project funding provides for travel and other expenses related to holding Roundtable discussions. Other funding provides for the development by Virginia Tech of a matrix of economic development options for tobacco growing communities. A small amount of funding is provided to the states of Tennessee and South Carolina supporting expenses for their statewide dialogues concerning tobacco growing communities. Funding also goes to the Institute for Environmental Negotiation for convening and facilitation services, maintenance of the Project web site, and assistance to the state dialogue efforts.

The elements of the plan are presented below, with a summary of comments made during the meetings.

1. Core Principles:

2. Regional Roundtable:

3. State roundtables:

4. STCP leadership:

5. Outreach and communication:

8. Diversification: