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The U.S. Department of Agriculture has denied claims made by two Virginia farmers in a lawsuit that accused the agency of slashing the growers' tobacco-buyout payments.
William J. Neese and Daniel M. Johnson, who farm burley tobacco in southwest Virginia, filed the lawsuit in September. They claim Agriculture Secretary Mike Johanns overstepped his authority by deviating from a formula set by Congress that allocates payments under the $10 billion buyout of tobacco quotas.
In a recent filing in U.S. District Court in Abingdon, the department denies that Johanns was outside his authority. The agency also denies other claims, including the farmers' calculations of money owed to them.
A lawyer and a spokesman for the Department of Justice, which is defending the USDA, declined to comment.
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The U.S. Department of Agriculture is denying the allegations of two Virginia farmers who sued the agency over the disbursement of money from a $10 billion buyout of the federal tobacco-quota system.
The farmers of burley tobacco in Southwest Virginia filed the lawsuit in September, claiming that U.S. Secretary of Agriculture Mike Johanns overstepped his authority by deviating from a formula set by Congress to determine payments to farmers.
In a response filed in U.S. District Court in Abingdon, the department denies that Johanns overstepped his authority. The agency also denies other claims in the lawsuit, including estimates of the amount of money the farmers believe they were supposed to receive.
A lawyer and a spokesman for the Department of Justice, which is defending the USDA, declined to comment yesterday.
But in March, the 52-year-old farmer from Abingdon was stunned to learn that he would receive only a third of what he had expected from the $10.1 billion buyout.
Other longtime growers were getting similar unwelcome surprises.
Now Mr. Neese and another Virginia farmer have sued the U.S. Department of Agriculture, accusing it of steering away from Congress’ directives and effectively slashing their payments.
For Mr. Neese, that means he would receive about $190,000 rather than the $563,000 he expected.
The other burley farmer, Daniel Johnson of Meadowview, would get $217,000 versus $503,000.
The farmers say the agency replaced a simple calculation approved by Congress with a complex formula that cuts payments to many farmers.
Claude Gibbs Turner, 94, an official with the U.S. Department of Agriculture's tobacco division, died of congestive heart failure Sept. 20 at the Fairfax, a military retirement home at Fort Belvoir.
Mr. Turner was born on a tobacco farm near Chase City, Va. After graduating from Virginia Tech University in 1934, he became a county agricultural agent for several years, principally in Franklin County. He joined the USDA's tobacco division in 1940 . . . .
After the war, he returned to the Agriculture Department and worked in the tobacco stabilization department. He was later named director of the tobacco division, which was responsible for producing and marketing tobacco. At the time of his retirement in 1972, he was director of the tobacco policy staff.
U.S. tobacco production for the 2005 season was forecast at 644.3 million pounds as of September 1. After the passage of buyout legislation which terminated the tobacco program beginning with the 2005 crop, many growers have ceased tobacco farming or reduced acreage, waiting to gauge the market in the coming years. The crop is expected to be 27 percent below last year’s 879.2 million pounds. Acreage in 2005 is projected at 307,010 acres, 25 percent less than the 2004 season. Cigarette leaf production is expected to account for 91 percent of U.S. output in 2005 or 584.4 million pounds, compared with 816.8 million pounds during the 2004 season. Cigar types accounted for 1 percent, while dark-fired and air-cured leaf accounted for 8 percent.
Two Virginia tobacco growers have filed a lawsuit challenging the U.S. Department of Agriculture's method for determining payments to farmers from the $10 billion national tobacco-quota buyout.
The suit, filed in U.S. District Court in Abingdon, claims U.S. Agriculture Secretary Mike Johanns exceeded his authority by deviating from the formula Congress approved to calculate payments to farmers.
As a result of the changes, Washington County burley-tobacco growers William J. Neese and Daniel M. Johnson say they will lose hundreds of thousands of dollars.
A lawyer for the farmers, Daniel Caldwell of the Penn, Stuart and Eskridge law firm in Abingdon, said Congress established clear rules for calculating buyout payments. But he said Johanns instead applied a "convoluted formula" that has the effect of benefiting tobacco companies, who are financing the buyout.
A federal lawsuit filed by two Washington County, Va., farmers says the U.S. secretary of Agriculture deviated from the original formula derived for the federal tobacco buyout plan.
Court documents state that William J. Neese and Daniel M. Johnson brought suit against the USDA and Secretary Mike Johanns seeking a declaratory judgment against the agency because of unconstitutional regulations submitted by Johanns when the buyout was included in the American Jobs Creation Act.
The law signed by President George W. Bush in October 2004 calls for $9.6 billion to be paid to burley tobacco producers over a 10-year period.
The law dissolved a quota and price support system developed by the government for burley farmers in the late 1930s which effectively acted as a government license that regulated the amount of tobacco a producer could grow each year.
Neese and Johnson charge that Johanns used a "convoluted formula" that included a number of terms and figures that were contrary to the formula originally drafted leading up to the law being signed.
riculture Secretary Mike Johanns today reminded tobacco producers and quota holders to sign up for the Tobacco Transition Payment Program (TTPP), also known as the "Tobacco Buyout," before June 17, 2005.
"Sign-up is important for quota holders and producers so they can enroll in the new tobacco program before June 17, 2005, and be eligible to receive the first of ten possible payments," said Johanns. "I encourage all quota holders and producers to contact their local USDA Service Centers to make an appointment to sign up as soon as possible."
On March 1, 2005, tobacco growers indicated intentions to harvest 319,860 acres during the upcoming 2005 season, the lowest since the 1800s, and 22 percent less than was harvested in 2004, the last season for marketing quotas and price supports. Assuming average yields, production is expected to be around 683 million pounds, as much as 200 million pounds below 2004.
Tobacco leaf production in 2004 is estimated at 883.2 million pounds, 10 percent higher than in 2003. Marketings of flue-cured totaled 499.3 million pounds and burley reached 298.8 million pounds. Marketings of other types are estimated at about 68 million pounds. With beginning stocks of 1.5 billion pounds, total estimated supply for 2004 will be about 2.4 billion pounds, 33 million pounds less than 2003. Supply in 2003 was 2.4 billion pounds.
Bids are in to the Kansas City USDA office for the Commodity Credit Corporation's sale of more than 100 million pounds of flue-cured and burley tobacco acquired through the 2004 tobacco buyout legislation.
Who bid and how much they offered will not be released until next week when bids are awarded, according to Steve Freeman, the point man for the sale with the U.S. Department of Agriculture. Bidding closed Tuesday for 48,000 minimum purchases of the leaf for sale, which totaled about one-fifth the annual domestic leaf production.
More than 800 tobacco manufacturers and importers were eligible to bid on the 72.7 million pounds of tobacco from 2002, 2003 and 2004 flue-cured crops and 27.5 million pounds of burley tobacco from 1994, 1997, 1998, 2000, 2002 and 2003 crops in stabilization inventory, said Brenda Chapin of USDA public affairs.
The U.S. Department of Agriculture announced yesterday that it will sell more than 100 million pounds of surplus tobacco, which means that tobacco growers are likely to grow that much less, an economist said.
"It won't have a huge effect on price - there's such a huge amount on the market anyway," said Blake Brown, an agricultural economist at N.C. State University.
"But it won't help," he said. "This basically displaces tobacco that farmers or other countries could produce."
The federal buyout of tobacco quotas that Congress approved last October said that the USDA could decide how to dispose of surplus leaf that the Commodity Credit Corp. had taken under loan as part of the federal price-support program that the buyout ended.
Farmers lobbied for the government to destroy the stored leaf rather than dump it onto the market.
U.S. Smokeless Tobacco Company (USSTC) today announced the launch of Husky Long Cut Mint and Husky Fine Cut Wintergreen, bringing the number of offerings in the Husky line to five. Concurrent with the launch of the two products, the entire Husky line will now include 10 percent more tobacco per can and be accompanied with a special introductory price.
The line's first three products, Fine Cut Natural, Long Cut Wintergreen and Long Cut Straight, were tested in four states in 2003 for adult consumers whose purchase decisions are primarily driven by price. Based on successful results, Husky was expanded nationally in 2004.
"Driving category growth by converting adult cigarette smokers to moist smokeless tobacco clearly remains USSTC's top priority," said Murray S. Kessler, USSTC president.
North Carolina tobacco farmers and quota holders began signing up yesterday for federal buyouts, but a software glitch slowed the process.
Federal officials expect more than 80,000 growers and quota holders in the nation's leading tobacco state to sign up for the payments by the June 17 deadline.
They have projected that nearly $4 billion in payments aimed at easing the transition out of tobacco will be distributed in the state in the next 10 years.
Workers were processing applications by hand because U.S. Department of Agriculture software that was to arrive yesterday was delayed until later in the week, officials said. . . .
Quota holders will receive $7 a pound over 10 years from the buyout, based on the amount of basic quota they owned in 2002. Quota owners are eligible if they owned a farm to which quota was assigned as of Oct. 22, 2004.
Growers will receive $3 a pound based on the amount of effective quota they grew in 2002. Payments will be made sometime between the June 17 application deadline and Sept. 30, Weatherly said.
USDA's Farm Service Agency will hold an information meeting for tobacco quota producers and quota holders 7 p.m. on March 8 in Lexington to discuss the new Tobacco Transition Payment Program. . . .
This meeting is for tobacco quota producers who are owners, operators, landlords, tenants, or sharecroppers who shared in the risk of producing tobacco anytime between 2002 and 2004. It is also for quota holders who owned a farm with a 2004 basic marketing quota as of Oct. 22, 2004.
The meeting will explain who's eligible for the Tobacco Transition Payment Program (also called the Tobacco Buyout), what types of quota tobacco are eligible and how quota producers and quota holders can obtain payments.
Agriculture Secretary Mike Johanns has announced that sign-up for the Tobacco Transition Payment Program (TTPP) will begin March 14, 2005 and extend through June 17, 2005.
"We are pleased to be able to announce the beginning of the sign-up period for this historic program," Johanns said. "The Tobacco Transition Payment Program will end the decades old tobacco marketing quotas and provide transition payments over a 10-year period. All tobacco quota holders and producers are urged to visit their local USDA Service Center and sign up for these benefits."
Congressional passage late last year of the Fair and Equitable Tobacco Reform Act of 2004 (the Act), commonly referred to as the "Tobacco Program Buyout," ended the federal tobacco marketing quota and price support loan programs with the 2004 marketing year for all quota tobaccos. The marketing year for flue-cured tobacco ends June 30, 2005, and Sept. 30, 2005, for all other tobaccos.