Statement by
W. B. Jenkins

before the Committee on Agriculture, Nutrition and Forestry
Washington, D.C.
September 18, 1997

Good morning. My name is Bob Jenkins, President of the North Carolina Farm Bureau -- the largest Farm Organization in North Carolina. The Farm Bureau has always vigorously supported the current tobacco program. We wholeheartedly support the continuation of the program in its current form. We know that farmers, our rural economy, and the tobacco industry will best be served by this program where tobacco supplies are kept in line with demand for this legal product.

North Carolina has systematically over the past 30 years been diversifying its agricultural economy. North Carolina has evolved from being wholly dependent on this single crop to being the 3rd most diversified agriculture state in the nation. Tobacco income fueled this transition. It is a 1 billion dollar annual crop to our farm families. The no net cost tobacco program and its positive impact in the market place -- not government handouts -- have funded our diversification efforts.

North Carolina growers will receive $72 million in government payments through the Production Flexibility Contract Payments program. States such as Indiana will receive $295 million, Kansas $423 million, and Iowa a whopping $686 million. Tobacco provides our money in the market place.

Our farmers are the most progressive, up-to-date, technologically advanced farmers in the world and have already embraced any commodity that makes an adequate profit. We still have a long way to go. There are no agricultural alternatives to replace tobacco's income. No one has found a better answer other than to continue with a tobacco program. The infrastructure to support diversification programs for new factories and industry does not exist in most rural counties.

The infrastructure exists now to grow tobacco and grow it well. The tobacco farmer is like any other person in America. He or she is just trying to make a living and provide adequately for their families. By your actions on this program, you are determining the economic future and well-being of rural North Carolina.

North Carolina grows two-thirds (2/3) of the tobacco grown in this country. Tobacco will be consumed in the world for the foreseeable future and will be grown somewhere, so why not in North Carolina?

Government created this program over 50 years ago to stabilize the agriculture economy. It is the gold standard of all such programs. I want to emphasize that farmers want to maintain the current program which has worked well for 50 odd years. The farmer made and continues to make good faith investments in expensive equipment, barns and land. If the program is to be changed and/or modified, this investment should be protected and the farmer compensated first. The end of the tobacco program will spell economic ruin for thousands in rural North Carolina.

Farmers have never advocated youth smoking and stand solidly behind efforts to curtail youth smoking. Through their farm organizations they have strongly supported our state's and nation's effort to prevent youth access to tobacco products. However, we will continue to vigorously fight for the right for adults to consume tobacco products.

Tobacco allotments contribute significant revenues to county governments enabling them to provide a host of programs and services for the economically disadvantaged. For many rural counties, it provides the bulk of the property tax base. It helps fund schools, hospitals, social services, police and fire protection. The program has caused tobacco farming to provide income stability to County Government. Aside from Federal intervention, nothing will replace this tax revenue in the short term. But, if by Congressional action the program is to be dissolved or dramatically changed, resulting in price reductions, quota loss and excessive inventory buildup, farmers need to be compensated for their equity loss and loss of farm income. Farmers that lease tobacco allotments should also receive transitional payments for their capital investments. Farmers, not rural economic programs, are going to pay the suppliers and bankers. They will look to the farmer and producer. Mortgates and capital investments are incurred by farmers, not the rural community.

The settlement negotiations before Congress, however promising, has had a most destabilizing effect in the tobacco community. The $368 billion settlement is almost incomprehensible to our farmers in North Carolina. We deserve to share equitably in any proceeds distributed as a result of a settlement. These proceeds should be set aside for farmers and producers if and when the tobacco program is significantly altered. Funds to compensate farmers for loss of tobacco quota, income and equity in land, buildings and equipment must be set aside as part of the agreement.

In conclusion, 63,630 tobacco allotment holders and 42,070 tobacco producers in North Carolina are awaiting the outcome of your actions. The widow, the young farmer, the elderly, the children of rural North Carolina are at your mercy.