Editor’s note: Our March issue featured a story that looked at how Virginia is spending the money received from the massive Master Settlement Agreement against major tobacco companies. Virginia’s share is $4.2 billion over 20 years. Our story noted that while some money went to economic development in Southside and Southwest Virginia, some $58 million the first year went in no-strings payments to tobacco quota holders and growers. Virginia Business found that a considerable minority of quota holders live out of state. Readers respond to our coverage:

by Carthan F. Currin III
I would like to respond to the lead article in your March issue, titled, "The tobacco settlement: Bonanza or boondoggle?" The Tobacco Indemnification and Community Revitalization Commission has gotten off to a strong start in addressing the economic challenges faced by tobacco quota holders and producers in Southside and Southwest Virginia. We are looking toward the future as we use this money to help transition the economics of these regions into the 21st century. In the Commission’s first year and a half of operation, we have made significant accomplishments to that end.

I would like to take issue with your article’s use of sampling that indicated individuals outside of Virginia are reaping money from the tobacco settlement. In actuality, the vast majority of citizens receiving money from this settlement reside in and pay taxes to the commonwealth. From the outset, the Tobacco Commission, which is bipartisan and multi-regional in scope, clearly understood that with the long-time challenges facing tobacco quota holders and producers, due to significant cuts in quota, their opportunity to continue with tobacco farming as a mainstay to their economy was greatly impaired. The commission felt strongly that it was important to help stabilize tobacco farming families by allowing the use of tobacco monies for multiple purposes, such as paying debts or making tuition payments for their children. Make no mistake that the majority of money going to the indemnification charge of the commission has been spent in Southside and Southwest Virginia, thus infusing money into those regions that need it the most.

While other tobacco-producing states bordering Virginia have been haggling over what to do with their settlement money, Virginia has taken a route to assist those tobacco farmers who have supported the Southside and Southwest economies for generations. While indemnification will continue for the next few years, it is important for your readers to understand there will be a time when the tobacco quota holders’ and producers’ losses will have been completely addressed. At that time, all of the monies coming out of the Tobacco Commission will be transferred to the economic development revitalization of these regions.

You suggest the early efforts of the Tobacco Indemnification and Community Revitalization Commission were modest with regard to economic development. Although most of our money was allocated to indemnification, the Commission also participated in a major bioinfomatics initiative at Virginia Tech, which would not have taken place without our help. We have also funded seven community colleges in Southside and Southwest Virginia with $6 million. These colleges plan to address the challenges of the tobacco families and all of the citizens of their regions. These monies have indeed played a significant role in getting these projects off the ground and thus facilitating the process of transitioning tobacco families and others into new vocations.

Another recent example where the presence of tobacco money has been influential in the economic development of our region is in the City of Danville, the largest city in Southside Virginia, and Pittsylvania County. Danville and Pittsylvania have come together to develop joint economic development programs. They have also reached out to Virginia Tech, Averett College and Danville Community College to create a high-tech institution that, again, will assist in transitioning that region’s economy from a trade economy to a 21st century economy. Without tobacco dollars, these joint relationships would not exist.

To further express the commission’s sincere interest in the economic development of these regions, I would like to mention the long-range economic development plan that has been developed and will come before the commission for adoption at its June meeting in Lynchburg. By adopting this plan the Tobacco Commission embraces the governor’s position that a "Marshall Plan" be put in place to provide the commission with a long-range plan that works in concert with state and federal agencies as well as private foundations to leverage out resources with existing ones going toward Southside and Southwest Virginia.

Currin is executive director of the Virginia Tobacco Indemnification and Community Revitalization Commission.

by Martha Moore
Your March cover story, "The tobacco settlement: Bonanza or boondoggle," while informative in many areas, was very misleading and inaccurate in others.

The Virginia Farm Bureau Federation, which represents most of the state’s tobacco growers, was instrumental in the development and ultimate passage of the legislation, which created the Virginia Tobacco Indemnification and Community Revitalization Commission.

Once the commission was established, a massive amount of research and discussion went into the payment calculations, and monies came from several different sources which may have confused many people.

Specifically, we’d like to set the record straight regarding master settlement payments to growers and communities, and the accusation by Virginia Business that our hard-working farm families have been busy "double and triple dipping."

First, there was critical background information missing in the article concerning the $1.2 billion of the master settlement funds the commission has been and will continue to distribute to growers.

When the payment rates were calculated, farmers had endured two years of significant reductions — nearly 50 percent — of quota, which is the amount of tobacco the government says they can grow. Imagine your paycheck being cut by nearly 32 percent one year and 18 percent the following year. That’s what Virginia’s tobacco growers had suffered through.

Thus, a value of $12 per pound based on 100 million pounds of tobacco was ultimately established to indemnify growers for losses. The $12 per pound figure was based partially on research regarding the value for quota-based capitalization of quota rental values. It was calculated by Dr. Blake Brown, associate professor of agricultural and resource economics at North Carolina State University.

The $12 figure was also based on per-pound machinery and structure losses as well as per-pound lost income. It was derived by the Economic Research Service of the U.S. Department of Agriculture. Regarding the accusation of "double and triple dipping," it most likely was interpreted this way because of the confusing array of financial sources.

The legislation requires the commission to track the funds from Phase Two — a separate agreement secured by Gov. Jim Gilmore and Attorney General Mark Earley.

In 2000, Congress appropriated some additional financial assistance through the Tobacco Loss Assistance Program. The 2001 General Assembly then passed a bill to require the commission to also track those dollars.

All of this money from the various sources will count toward the $1.2 billion figure to indemnify tobacco growers for losses incurred. The commission is tracking all of these dollars because they were given a report March 10 regarding that money.

The policy decisions and subsequent payments which have been made concerning tobacco growers have been discussed, debated, examined, re-examined, analyzed and calculated by the commission, state legislators, the federal government and others.

Farm Bureau believes these payments are based on accurate, realistic figures, sound principles and good public policy.

The writer is director of public affairs for the Virginia Farm Bureau.

by Joy Bechtold
In response to your March 2001 cover story on the tobacco settlement, the article states that Virginia’s settlement arrangement "enrages anti-smoking groups." Yet, there is only one "enraged" group quoted, and this group is not based in Virginia. In fact, several major public health groups in Virginia, including the American Cancer Society, American Heart Association and the American Lung Association, endorsed the 1999 legislation that created the Tobacco Indemnification and Community Revitalization Commission.

Tobacco farmers and health advocates in Virginia have been engaged in a dialogue since 1994 around issues related to a reduction in consumption of tobacco products and its effect upon tobacco farmers’ livelihood. The two groups, through much debate and discussion, were able to agree on several principles. Among those principles was an agreement that should there ever be a federal or state increase in the excise tax on tobacco products, a portion of the tax would be used to assist farmers in addressing their economic dependence on tobacco. We applied this principle to the allocation of funds from the Master Settlement Agreement.

The American Cancer Society anticipates the positive impact the settlement funds will have upon the diversification of tobacco dependent regions of the commonwealth. We are attempting to promote healthy choices in regards to the use of tobacco products. However, with Virginia’s ties to the crop, we must operate with consideration for the impact that our actions will have upon tobacco farming communities. Diversifying these communities has a price, as does improving the health of our citizens. We cannot be successful in promoting public health unless we are successful in sustaining healthy communities.