July 16, 2003

2 Min Read

Tobacco producers who weren't party to the actual lawsuit against major tobacco companies stand to benefit from the $200 million settlement, says a North Carolina State University Extension ag economist.

Under the settlement of the class-action lawsuit reached out of court in May, if you're a tobacco farmer, you can claim your share of the money.

Forms were mailed to flue-cured and burley producers in late June. The amount of money that a grower can receive is based on how much tobacco farmers grew from 1996 to 2001, the years in question.

“The class-action includes all growers and quota owners,” says Blake Brown, North Carolina State University Extension ag economist. “It will be a large number of growers when you consider burley. If you're a small grower, it might not be much money, but for a fair-sized flue-cured grower, it could be substantial.”

Growers have the option of accepting the money and agreeing with the settlement; taking the money and disagreeing with the settlement; or opting to send their portion to a land-grant university.

“It's hard to imagine what the downside is,” Brown says. “I think there's nothing to lose by sending in the form.”

Philip Morris and five other tobacco companies announced May 16 the out-of-court settlement of a class-action lawsuit alleging that manufacturers fixed prices at auction. In settling the lawsuit, the companies vigorously denied the accusations.

People in the industry say the $200 million helps stabilize the industry. The companies also agreed to purchase 450 million pounds annually from U.S. growers and use a minimum of 70 percent U.S. tobacco in their cigarettes.

Philip Morris is also largely responsible for a $8 million trust fund, which may be used for research and Extension. Of that total, $5 million can be used to lobby for a quota buyout.

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