Sunday, December 19, 1999
NO ROOM TO GROW
CONTINUING REDUCTIONS IN TOBACCO ALLOTMENTS ARE FORCING THE PEOPLE WHO OWN AND RENT THEM TO RE-EVALUATE THEIR VALUE AS SOURCE OF INCOME
By David Rice
JOURNAL RALEIGH BUREAU
For years, Bruce Sizemore of Boonville has used the money he gets from renting out his two acres of tobacco quota to pay property taxes.
But next year he’s not so sure that the rent will cover his tax bill.
“I got $800 last year. I didn’t get but $796 this year,” he said. “We’ve had to take so many cuts. . . . I don’t know if I can pay my taxes or not another year.”
Sizemore, 83, is typical of the 98,000 people who own government-issued allotments to grow tobacco in North Carolina.
He inherited his allotment from his grandfather, who once farmed 400 rolling acres in Surry County. He is retired from farming. He has watched his own sons go to work off the farm.
And, like two-thirds of the quota owners, he doesn’t grow tobacco himself. He rents it to a younger farmer, and he gets one-quarter of the profits from each year’s crop.
Sizemore says that his tobacco money is his only source of income other than Social Security. And he is worried that his tobacco quota – another government contract that provides a type of social security in the rural South – is steadily drying up.
FROM 1997 TO this year, Sizemore and other quota owners have seen their allotments cut by 35 percent as tobacco companies bought less and less U.S. leaf. Last week federal officials announced a cut of another 18.5 percent for 2000. The total amount of leaf that farmers can grow in 2000 will be 44 percent less than in 1997, when the quota reached an unusually high level, and roughly 37 percent less than typical quota levels during the 1990s.
“Social Security plus your little allotment has been able to give retired people across North Carolina a little more income than they otherwise would have had. It’s been a good thing,” said John Merritt, a former aide to U.S. Rep. Charlie Rose, who is helping a Winston-Salem law firm make compensation payments from the tobacco industry to farmers and quota owners.
“Is it a death of a thousand cuts?” he said. “You’re talking about a billion-dollar part of the economy that is spread through every nook and cranny of 80 counties.”
Once the money that growers and quota owners receive each year ripples through the economy to banks, tractor and equipment salesmen, fertilizer and car dealers, he said, “you’re talking about taking $6 billion or $7 billion out of a part of our state that is already struggling.”
Protecting price was goal
The federal tobacco allotment program began in 1934, when the government began handing out a license to grow to farmers. The intent was to restrict supply so that the price that farmers got for their leaf would remain high.
Each quota was attached to a specific farm. A person could sell the land, with the quota attached, but the quota couldn’t be moved across county lines. So as farm families branched out and left the farm over the years, quota ownership also migrated off the farm. Some quota owners have moved out of the state.
Today, only about one-third of the tobacco quota in North Carolina is owned by the people who actually grow the crop, said John Cyrus of the N.C. State Grange.
A few people have bought and accumulated hundreds of thousands of pounds of tobacco allotment that they lease to farmers or grow themselves each year, but the median size of quota attached to a single tract registered in North Carolina in 1998 amounted to just 2,694 pounds, or about what can be grown on 1 1/4 acre, according to an analysis by the Winston-Salem Journal of a U.S. Department of Agriculture database. Many quota holders own or co-own more than one tract, but by far most still own enough quota for just a few acres.
And quota ownership remains concentrated in the hands of rural folks – retired farmers, their widows and their offspring who hold those small allotments. The retirees will be particularly vulnerable to the cuts, said Cyrus.
“You’d probably find that two-thirds of the quota is held by widows and retirees that are using it as a retirement system,” he said. “The cuts are going to affect people who have been accustomed to that check coming in like a retirement check. It’ll probably affect them more than it will some of these larger producers.”
Could increase the rent
A. Blake Brown, an agricultural economist at N.C. State University, said that the question for allotment holders is whether they can increase the rent for their quota enough to compensate for the loss in pounds.
“In cash rental situations, as the quota gets smaller, the rental rates get bid up,” Brown said. “They will get bid up as long as those farmers can cover their fixed costs.”
Particularly in Eastern North Carolina, where growers have bought equipment and assembled operations to grow large tracts of tobacco, quota -rental costs have increased as allotments have shrunk in recent years.
A 1991 survey by the U.S. Department of Agriculture found that while farmers in the Piedmont owned about half the quota they grew at the time, farmers in the coastal plain owned only about 25 percent of what they grew, Brown said.
Quota -rental rates have escalated dramatically in the eastern part of the state, Brown said. Quota that once rented for 40-45 cents a pound now goes for as much as 60-65 cents a pound, and in some cases even more, he said.
But quota owners can’t raise the rent indefinitely. At some point the cost of renting quota outstrips the profit that a grower can get for his crop, from which he must pay the rent and make debt payments.
“In general, the grower takes the brunt of that,” Brown said. “In the long term, that’s not a sustainable thing. Eventually some farmers are going to have to go out of business.
“I think we’re probably going to see the exit of some farms next year,” he said. “A lot of farms had enough to survive this year. . . . But if you get two years of that, it’s harder.”
Although rent for quota has gone up overall, a few quota owners have resisted raising the rent they charge to the grower down the road. They rent to a relative or a neighbor and find it difficult to put dollars ahead of their relationship.
“There are some quota owners who are benevolent, who say: `I’ve been working with this grower. I’m not going to gouge him,’ ” Brown said.
Kester Sink, an allotment holder in Mount Airy who held 180,000 pounds of quota last year, said he hasn’t raised the rent for the farmer who grows his quota , even though other growers have offered to pay him as much as 55 cents a pound for it.
But Sink said he’s the exception.
“There aren’t many Santa Clauses in this world. I’m one of ’em,” he said. “I’m not going to kick him out. But if I depended on him to put food on my table, I’m going to kick him out.”
Donald Gibson, 56, of Pine Hall in Stokes County owns about four acres’ worth of tobacco allotment, though he once owned six acres’ worth. Gibson works part-time as a computer technician in Winston-Salem to make ends meet, but he said he hasn’t raised the rent for the young man who leases quota from him.
“We have not made any adjustment whatsoever,” Gibson said. “If you come in there and raise it . . . you’re going to overload that boy that’s growin’ the tobacco.”
But Gibson, who has used his quota -rental income to pay taxes on the two farms he owns, said that the rent could change next year if Stokes County’s property taxes go up.
“If the taxes go up again this year, we’re going to have to raise it,” he said. “We can’t afford to have a farm that we’re not making money on.”
No longer a guarantee
While rental rates for tobacco appear to be headed up, Brown said that the price to buy quota is not. That’s because the cuts in recent years have made it clear that tobacco allotments are no longer a guarantee of a steady income for years on end.
“The expected life of the asset, the useful life, has come way down,” Brown said.
Still, Cyrus of the State Grange said he is surprised at the amount of quota that has changed hands in the past few years. He noted that one young farmer in Granville County bought $50,000 worth.
“He has a lot more confidence in the program than I do,” Cyrus said. “He would have to farm that quota at least five years to break even.”
In fact, Cyrus said that as quota income falls, he wouldn’t be surprised to see farmers and quota holders do away with the entire quota and price-support program when they vote in a referendum scheduled for next fall. That happened once before, in 1938, when farmers got tired of government involvement in their crop.
In 1939, after they voted against the program, farmers planted tobacco from fence row to fence row. And leaf prices fell to 6 or 7 cents a pound.
“That’s the year I primed tobacco six days a week,” said Cyrus.
It’s also the year that young John Cyrus started looking for a job off the farm.
If farmers reject the tobacco program, there once again would be no restrictions on how much any of them could grow.
Small farms may dwindle
Bruce Sizemore, meanwhile, said he has had four or five people offer to buy his tobacco allotment in Surry County. But he said he intends to keep his quota as long as he has someone to tend it.
John Merritt said he suspects that big growers in the eastern reaches of the state will find ways to accumulate enough quota to pay off their sometimes massive debts.
“They’ll cling. They’ll find a way to get the quota ,” Merritt said. “There are people out there with notes on equipment. They’ve got to pay it off. And they’re sure not going to pay it off growing corn.”
Tobacco can bring growers profits of $3,000 an acre, while most farm crops bring, at most, a few hundred dollars an acre.
But Donald Gibson in Stokes County said that as the acreage covered by tobacco allotments shrinks, it will become harder for the owners of small farms to survive without their rental income.
“When you get down to two acres, forget it,” Gibson said. “You’ve got to raise (the rent) or go to a corporate lease.”
Gibson, who plays with a bluegrass band throughout Northwest North Carolina and southern Virginia, said he hears similar tales from farmers across the region.
“This is probably the last year for the little guys in western North Carolina – two years at the most,” he said. “Every one of them has barely got their head above water. The majority of the small farms will go. Ain’t no way.”
PAYMENTS FALL SHORT, EXPERT SAYS
By David Rice
JOURNAL RALEIGH BUREAU
Tobacco growers and allotment holders will soon receive payments under the so-called “Phase II” of the nationwide tobacco settlement. The question is whether those payments, intended to compensate for quota cuts, make the allotment holders whole.
The answer depends on how far back you measure.
Under the Phase II agreement, cigarette-makers have agreed to pay $5.15 billion over 12 years into a trust for growers and allotment holders.
North Carolina’s share for this year amounts to $144 million. From that, a state board headed by Gov. Jim Hunt has agreed to pay quota owners 68.5 cents for each pound of quota they lost from 1998 to 1999. Growers will also receive 68.5 cents a pound for each pound they lost.
That means that a quota owner who also grows his leaf will receive a combined total of $1.37 a pound.
For that year alone, the payments appear to be a good deal for quota owners. A quota holder who once received 40 cents a pound in rent for his allotment will receive 68.5 cents a pound for the pounds he lost from 1998 to 1999.
But if the cuts in the tobacco companies’ leaf-buying over the past several years are considered, the Phase II payments don’t come close to full compensation, said A. Blake Brown, an agricultural economist at N.C. State University.
“Certainly it doesn’t make them whole,” he said.
A quota owner who owned 10,000 pounds of tobacco in 1997 lost almost 3,400 pounds of that leaf to quota cuts by 1999. But the Phase II payments are based only on the 1,300 to 1,400 pounds he lost from 1998 to 1999, Brown said.
“You get paid right around 900 bucks,” he said. “That doesn’t make you whole.”
By comparison, 3,400 pounds of quota renting for 40 cents a pound would have brought the owner $1,360 a year.
Coupled with disaster payments for damage caused by Hurricane Floyd, Brown said, some farmers might be able to survive another year, but farmers who rent the quota they grow, or who have high debt, face a particularly difficult situation, Brown said.
“The ones who are probably in trouble are the ones who rent a lot of their quota , depending on their debt,” he said.
“If they have a substantial amount of debt, just Phase II alone will not make up the cash deficit . . . because of the large fixed costs they’ve got. Most of them are operating at 60-65 percent of capacity now.”
Young farmers are more likely to have a high debt load because they have invested in such new equipment as tobacco balers or mechanical harvesters remain at risk, he said.
“The irony is that those with a high debt load and who rent a lot of their quota are younger farmers. They’ve invested in technology. Normally that would help,” Brown said.
Monday, December 20, 1999
HOLDERS OF QUOTA LEARN THAT WHAT GOVERNMENT GIVES, IT CAN TAKE AWAY
FOR MANY WHO HAVE BOUGHT TOBACCO ALLOTMENTS AS INVESTMENTS, REDUCTIONS IN THE AMOUNT OF LEAF THEY CAN GROW MEAN LESS PROFIT, NO PROFIT OR EVEN BANKRUPTCY
By David Rice
JOURNAL RALEIGH BUREAU
For Jimmy Newman and Donald Rumley, the hundreds of thousands of pounds of tobacco quota they own isn’t some part of their heritage that they view with nostalgia.
It’s an investment.
And now that investment is slowly being stripped away – the government has cut the amount of leaf that farmers can grow by 44 percent since 1997.
“I can’t believe they can come and take our allotment. It’s like going to a car dealership and taking a third of their cars,” said Newman, a grower in Mount Airy who in 1998 held quota allotments for almost 350,000 pounds of tobacco.
“It’d be different if they gave it to us. But they didn’t. We bought it,” Newman said.
The government handed out allotments for quota to growers when the tobacco program started in the 1930s. Each allotment is attached to a specific tract of land. Whoever inherits the land also inherits the quota , and growers can buy and sell the land and the attached quota . Most quota owners have relatively small holdings, but over the years a few people such as Newman accumulated enough to grow hundreds of thousands of pounds of tobacco.
Though less than 1 percent of North Carolina quota holders own allotments totaling more than 100,000 pounds, in 1998 the top 75 holdings accounted for more than 18 million pounds of tobacco, according to a Winston-Salem Journal analysis of a U.S. Department of Agriculture database. Though that sounds huge, that’s less than 4 percent of the flue-cured leaf that North Carolina produced last year.
Some inherited their quota , but Newman points out that others, like himself, laid down cash for what they own.
“I never had a pound when I started,” Newman said.
In the 1970s, he said, “I bought everything that was for sale. . . . I bought every pound I could buy and every acre and put everything I made back into it.”
Though a retired allotment holder who inherited quota and rents it to a grower might depend on that money to supplement other income, Newman argues, those who have bought quota stand to lose more.
“He has the same loss as I have. Except he hasn’t made the investment I’ve made,” Newman said.
Though some would argue that buying large amounts of quota is like any other investment and carries a risk of falling in value, Newman clearly feels wronged by the cuts in quota that have followed tobacco companies’ diminished demand for U.S. leaf in the past three years.
He is learning that what the government giveth, the government taketh away.
“I’m 58 years old. I want to quit,” he said.
In addition to the quota he owns, Newman leases an additional 300,000 pounds of quota . Though he has 25 bulk barns and enough equipment to grow 400 acres of tobacco, he now grows about 200 acres. And he expects the price of the quota he leases to go up because the government’s cuts mean that just as more growers will need to lease more quota , quota owners will need to charge more to keep their rental income up.
“That’s going to kill people. This 50 and 60 cents a pound that people are paying – there’s no way they can make a living,” he said.Costly reductions
Donald Rumley of Browns Summit in Guilford County tells a similar story. Rumley owned quota for 273,360 pounds of tobacco in 1998. He once grew 200 acres of tobacco and filled his 26 curing barns.
“They have already taken 70 acres of that. We’re at 130 now. If they take another 30 percent, we’re out of business. It’s just that simple,” Rumley said last week before federal agriculture officials announced that the quota for 2000 would be 18.5 percent lower than this year.
For years, Rumley leased quota from as many as 40 quota holders. But he started buying quota in the early 1980s, eventually spending almost $500,000 on it.
“We went out here and spent more (for quota ) than I paid for all this land . . . ,” he said. “About the time we got it all straightened out and paid for, they started takin’ it away.
“We have spent every dollar we ever made buying that allotment,” he said. “It’s like you were putting all your money you made in the bank and then somebody tells you it’s not there.”
Because of health problems, Rumley retired from farming five years ago and now rents his quota to his son-in-law and his wife’s brother.
Quota -rental rates around Browns Summit have jumped in recent years. “Several of ’em around here are begging for it at 60 cents a pound now, he said.
But Rumley so far has resisted the urge to raise the rent for his own kin.
“I haven’t had to raise it yet, but I will have to (someday),” he said. “How are you going to raise the rent when these boys aren’t even breaking even? They can’t even make ends meet right now. . . . I just can’t do that to these boys.”
The big fall harder
Under the so-called “Phase II” tobacco settlement, an outgrowth of the main national tobacco settlement in which cigarette companies agreed to put up $5.15 billion over 12 years to compensate growers and quota owners for reduced demand for tobacco, growers and allotment holders will each receive 68.5 cents for each pound by which their quota was reduced from 1998 to 1999.
But Rumley and other large quota owners say that those payments will not make up for their losses in recent years.
“Nowhere close. It’s nowhere close to offsetting what we’re losing,” Rumley said. “With 70 acres of tobacco, we’re talking $280,000 gross (in lost revenues). And they give us $30,000 or $40,000.
“It’s going to run a lot of people out of business,” he said. “The cost of what we’re doing right now with 130 acres is very little different from what we were doing with 200 acres.”
Other costs keep rising as well, he said. His relatives hire workers through the federal H-2A program, which brings farm workers from Mexico for seasonal work in the United States, and are required by the government to pay wages of $7.03 an hour. In addition, Rumley must carry $1.5 million worth of liability insurance on his farm.
Because of the debts that many large farm operations carry, Rumley said, big farmers are no more insulated from the effects of quota cuts than small farmers.
“There’s no difference, the way I see it. If you’re big, you fall hard. If you’re small, you still fall. . . . He may fall first, but the big farmers that have got a big debt load, they’ll go with ’em. It all depends on how much debt a man is carrying.”
The shrinking quota eventually will present a stark choice for tobacco growers, he said. “Either you’re going to have to get a mighty good contract with a (tobacco) company, or half your farmers are going to have to go,” he said.
Philip Morris Cos. has pushed for several years to contract directly with growers. Farmers have resisted because they feel that competitive bidding at auction brings them a better price, but economic pressures may drive growers to enter contracts.
Those who may find themselves in the worst shape next year may be big tobacco farms that lease large amounts of quota , said John Cyrus of the State Grange. They will be hard-pressed to find quota available for lease for them to grow the amount of tobacco needed to cover their investment in equipment.
“There’s just not enough quota out there to keep all of these big operators going,” he said.
“A lot of these larger operations will go bankrupt. They can’t get enough quota to use their equipment. And there’s no market for the equipment – you can’t use it for anything else.”
Some will survive
The story is different for large farms that are well-diversified, which are most likely to be found in the coastal plain in Eastern North Carolina.
Though Dale Bone of Nashville — whose quota holdings in 1998 were the largest in the state owned by an individual – has grown as much as 500 acres of tobacco in the past, because of quota cuts he’s now down to 330 acres.
“For the past 20 years I’ve bought allotment. It just means my costs go up, and there’s a helluva lot less of it to grow,” he said.
Despite the cuts and the $5.5 million in storm damage that his farm operation suffered from Hurricane Floyd, however, Bone figures he’ll come out all right. After all, he also grows 900 acres of sweet potatoes and 4,200 acres of pickle cucumbers.
“We’ll probably survive because we’re diversified,” he said. “There’s going to be a lot of people who go out of business.”
Kester Sink, 76, of Mount Airy also is among the biggest quota owners in the state – he owned 180,405 pounds of quota in 1998. But he said he doesn’t feel terribly sorry for big quota owners because many are already recovering their losses through higher rent charges.
If the owner of 10,000 pounds has been charging 40 cents a pound in rent, he would receive $4,000 a year for it. Assuming that the quota is cut to 8,000 pounds, “If he gets 50 cents a pound for it, he’ll still get his $4,000 out of it,” Sink said.
“I doubt if many quota holders up here will go on poverty because of this.”
The ones he feels sorry for are young farmers who went into debt to buy new equipment in the past few years.
“They had to do it in order to get competitive, to stay in the game. And now, three years later, they’re still in debt. Their gross income is cut 50 percent, and yet they still have to maintain payments on their investment,” he said.
As the increasing financial pressures on tobacco farmers are leading to more frequent farm auctions across rural North Carolina, Sink said that even big quota holders like himself are more cautious about expanding their investments because of the uncertainty of the tobacco program.
“I’ve been to two auction sales in the last month. Each of ’em had 20,000 pounds of tobacco quota . I’ve gambled some – I’m not going to gamble more on tobacco quota ,” he said. “There ain’t going to be a quota in eight years, in my opinion.”
Tuesday, December 21, 1999
OUT-OF-STATE QUOTA OWNERS RELAX, WATCH MONEY POUR IN
SOME IN N.C. OBJECT OVER TOBACCO SETTLEMENT, SAY IT SHOULD BENEFIT THOSE WHO WORK THE LAND
By Kirsten B. Mitchell
JOURNAL WASHINGTON BUREAU
Sam Beddingfield is 40 years and three states removed from his native North Carolina, but once a year he gets a reminder of his link to the rich Tarheel tobacco legacy.
“Every year, without any investment on my part, I get about $40,000. That’s a pretty good deal,” said Beddingfield, a retired aeronautical engineer who lives near Cape Canaveral, Fla., and owns tobacco quota on 22 acres in Wilson, Greene and Pamlico counties.
About 10.5 percent of the 111,870 parcels of land used for growing tobacco in North Carolina last year was owned or co-owned by people who lived outside the state, according to a Winston-Salem Journal analysis of a U.S. Department of Agriculture database.
Most had only small holdings – a partial interest in a few hundred or a few thousand pounds of quota . Beddingfield, 66, has one of the largest quota holdings among the out-of-state owners. In 1998, his quota – the amount of tobacco that the federal government allows him to grow – amounted to 100,340 pounds, about the amount that can grow on 32 acres. He leases his quota to tenant farmers.
This year, quota cuts reduced his quota to 22 acres. Next year, because of an 18.5 percent cut in the quota announced Wednesday, he’ll lease about 18 acres.
Think of a tobacco farmer, and Beddingfield’s not the type of man who comes to mind. The 1956 graduate of N.C. State University spent nearly 30 years at NASA engineering space launches, including the Apollo moon missions during the 1960s.
His retirement in 1985 gave him time to fly his two ultra-light airplanes, devote time to a wildlife preserve at Cape Canaveral and travel to such far reaches as the Amazon, the Galapagos Islands, Kenya and Zimbabwe. Beddingfield’s pursuits are financed by his tobacco income, his NASA pension and other investments, including more than 600 acres of nontobacco farmland in North Carolina.
Out-of-state quota holders offer a sharp contrast to the allotment holders who grow their own leaf and have the weathered, brown hands to prove it.
For growers who rely on the crop for money to buy groceries and pay the mortgage, quota reductions of 17 percent, 18 percent and 18.5 percent since 1997 have caused hardship, especially for those saddled with farm debt.
But for many out-of-state quota holders, the cuts simply mean a little less money in their investment portfolio.
Beddingfield, who inherited the allotment from his wife when she died in 1992, concedes that he doesn’t despair over the government shrinking the quota .
“I inherited the thing anyhow with no investment on my part,” Beddingfield said in an accent that 40 years in Florida have failed to erase. “I’m not too worried about it.”
Out-of-state quota holders have been the subject of some debate since last year’s national tobacco settlement and the so-called “Phase II” tobacco settlement, an outgrowth of the main national tobacco settlement in which cigarette companies agreed to put up $5.15 billion over 12 years to compensate growers and quota owners for reduced demand for tobacco.
North Carolina’s share of the Phase II settlement for this year amounts to $144 million. From that, a state board headed by Gov. Jim Hunt has agreed to pay quota owners 68.5 cents for each pound of quota they lost from 1998 to 1999.
A lawsuit filed last month in Raleigh by lawyer Eugene Boyce argues, among other things, that out-of-state quota holders have no legal right to a portion of North Carolina’s share.
It also argues that Attorney General Michael Easley, who helped negotiate both settlements, cannot legally represent nonresidents who own tobacco allotments.
“We don’t think he can represent the interests of people who don’t live in the state,” Boyce said. “We’re not paying him $100,000 a year to represent 400 people in New York City.”
A judge dismissed the suit last week in Wake Superior Court, but Boyce said he will appeal.
Out-of-state quota holders, he maintains, are not injured parties like tobacco farmers.
“Allotment holders are in many senses nothing more than investors,” he said. “There’s a pretty strong argument for tobacco growers that they ought to get all of the money.”
But Hunt said that out-of-state allotment owners are just as entitled as in-state owners to the payouts.
“They own the quota ,” Hunt said. “They’re the quota owners of record, and they’re entitled to this money. And they own the land, too.”
Boyce, who has won multimillion-dollar lawsuits against the state over illegally taxed intangibles and government pensions, also argues that although out-of-state quota holders pay property tax, it wasn’t until a 1998 state appellate-court ruling that allotments were considered in determining a tobacco field’s taxable value.
“They may pay some North Carolina tax, but they are not North Carolina taxpayers at whose cost the money went out the door,” Boyce said. “The whole basis for the settlement is the recovery of money in the name of the state based on health costs.”
Owners have N.C. roots
Data from the U.S. Census Bureau helps explain why 11,794 parcels of North Carolina tobacco land have owners or co-owners who live out of state. Since 1950, there has been a steady pattern of migration, and about one-fourth of the people born in the state now live elsewhere, said Kristin Hansen, a Census Bureau demographer.
In 1950, 900,435 North Carolina natives – 20.3 percent of the total – were living outside the state, she said. By 1960, 1.2 million Tarheel natives – 24.3 percent of the total – lived elsewhere.
The peak came in 1980, when 1.68 million, or 27.3 percent of the total number of people born in the state, lived elsewhere.
A number of these people eventually inherited family farms – or a share in them.
Some tracts have so many heirs attached to them, both inside and outside North Carolina, that it’s hard to keep their owners straight. Womble Carlyle Sandridge & Rice, the Winston-Salem law firm that is identifying growers and quota holders who will be paid Phase II settlement money, found one tract that had 25 heirs sharing ownership.
Carolyn Watkins Cheatham of Jupiter, Fla., who co-owns nearly 98,000 pounds of quota in Granville County with her brother, was part of the migration out of the state.
She grew up in Oxford, north of Durham, but left for Florida when she married in 1962. Cheatham’s brother handles the allotment, leasing it to a grower and managing it much the same way their father did – as an investment.
“I’m sure back there somewhere, I’m sure someone (in my family) farmed it, possibly my great-great-grandfather,” she said.
Tarheel tobacco quotas are the stuff of family legend for another native North Carolinian who left the state. Beverly Moore Jr., a lawyer in Washington, said that his grandfather was a country doctor from Wilson who treated land-rich, cash-poor patients during the Depression, the era when the quota system was set up. The story that has been passed down in the family – Moore doesn’t know whether it’s true – is that his grandfather was sometimes given pieces of land with quotas attached as payment for his services.
Moore; his mother, Irene Moore of Greensboro; and his sister, Warren Miller of New York City, co-own quota in Edgecombe and Wilson counties. Their ownership is a tangled web, Beverly Moore said, with each of the three owning a different percentage of various parcels.
“I have so many different farms that I own with so many different interests that I don’t know what my total allotment is,” he said.
But according to the U.S. Department of Agriculture’s 1998 records, Moore was a co-owner of quotas for 89,872 pounds.
Moore and his sister each get about $9,000 a year for their share in the allotment, said Moore, whose law practice on Washington’s busy Massachusetts Avenue sharply contrasts with the tobacco auctions he remembers attending as a child.
Few out-of-state quota holders manage their allotment.
“I’m a lawyer and publisher and I have all this other stuff to do,” Moore said. “It’s not in the cards for me to go down there.”
He leaves the chore to P.L. Woodard Co. Inc., a century-old farm-supply and management company in Wilson, an hour’s drive east of Raleigh. For quota holders who live far away, the company’s farm managers weed through the complicated quota and farm regulations.
Managing tobacco quotas isn’t the bulk of Woodard’s business, but the company has quota -owning clients as far away as Australia and manages farms within an 80-mile radius of Wilson, said Carroll Coleman, the president and one of 12 employees of the company.
“In most cases, they inherited the farm from their ancestors who had worked it . . . ,” he said. “As each generation dies out, they leave it to the next generation. . . . I manage farms for people who have never seen their farms.”
Many North Carolina banks, including BB&T, Centura and Wachovia, offer similar farm-management services.
“We’ll go out and find a tenant and do a cash lease,” said Bob Denham, a spokesman for BB&T, based in Winston-Salem. “They’ll work the land and we’ll manage it. If there’s a quota involved, we make sure it meets regulations. . . . We take out a fee for managing the process. You get a check and that’s all you have to worry about.”
Most out-of-state owners view their quotas as a family investment, Coleman said.
“This to them is an inheritance just like inheriting stocks or inheriting buildings in the city,” he said. “I know we’ve had a lot of bad publicity because they do live in California or New York or Washington, D.C., but it’s no different than owning a real-estate trust where you rent out the buildings. It’s an investment. We manage an investment.”