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Buyout brings changes to Maryland farm landscape

CALVERT COUNTY, Md. - Standing with an old tobacco barn at his back in 2000, Earl “Buddy” Hance looked to the future and accepted one of the first buyout checks aimed at getting Maryland out of tobacco production. It marked the end and the beginning.

It was officially the beginning of the end for tobacco in a state where tobacco had once been the currency during colonial times. It was also the beginning of new ventures for former tobacco growers.

Hance, president of the Maryland Farm Bureau, calls it the “easiest decision I’ve ever made.” He now grows geraniums for a nursery that sells to Home Depot.

A fourth-generation tobacco farmer, he realized the benefit of a buyout long before he agreed to stop growing tobacco. The demand for Maryland tobacco had declined over the years.

As in flue-cured and burley country, talk of a buyout began in Maryland soon after the Master Settlement Agreement from the major tobacco companies. By 1999, the details had been worked out in an anti-tobacco environment.

The first tobacco farmers started getting buyout checks in 2001. The final sign-up period ended in November 2003. Some 86 percent of Maryland’s tobacco farmers will get payments spread out over a 10-year period. The state will pay out $77 million over the 10-year period.

About 14 percent of Maryland’s remaining tobacco growers either object to taking government payments, as is the case of the Amish community, or growers who are fiercely independent and can’t see themselves without tobacco on their land.

The legislation set up the Southern Maryland Agricultural Development Commission for the Tri-County Council with the goal of “sustaining the agricultural industry in Southern Maryland.” The Council administers the buyout, promotes agriculture development to help farmers transition from tobacco to other crops and helps preserve farmland in an area an hour south off the nation’s Capitol.

Against the anti-tobacco backdrop, Maryland growers and the governor at the time came to an agreement on a buyout. In 1999, the governor agreed to give growers 5 percent of the MSA payment, but only if it was used to get people out of tobacco.

“We felt it was an opportunity to transition,” Hance says. “Whereas, if we didn’t take the buyout, we’d be left out in the cold.”

In the buyout, Maryland producers split the difference between $8 and $4 and came up with $10 per pound. Grower payments are based on a three-year average from 1996-1998. “It allowed us the security of income and time to diversify,” Hance says.

Growers agreed never to grow tobacco or be involved in production in any way.

The voluntary program had a five-year sign up period, says Christine Bergmark, director of the Southern Maryland Agricultural Development Commission at the Tri-County Council of Southern Maryland The first year of the buyout, some 67 percent of the eligible growers signed up.

Transition and land preservation are two other legs to the buyout.

In his tobacco-growing days, Hance grew transplants for area farmers in three greenhouses. When the buyout came, it was natural to make use of the greenhouses. Geraniums in tubs are on the floor of the greenhouses where as many as 1.7 million tobacco transplants used to grow. Baskets hang from the ceiling.

Hance and his brother, Tommy, are now growing the horticultural products for Bell Nurseries, located in Burtonville, Md. The nursery company supplies the plants and the technical expertise to grow the plants. “We’re just basically baby sitting,” the Maryland Farm Bureau president says.

Because the greenhouses were already paid for, the Hances didn’t have the expense of purchasing $280,000 worth of greenhouses the nursery company requires for new growers. Bell agreed to purchase all production for three years. The Hances and another grower for the nursery don’t have a contract, but so far the arrangement is working out well. “We’re independent in the aspect that we don’t have a contract.”

They get the geraniums in mid-January. By June, the two loads of the plants have been shipped to the nursery, which provides plants to stores such as Home Depot. With geranium, it boils down to six months as opposed to an all year-prospect with tobacco.

A rolling “Funnel Cake” maker also provides income during the festival season. Hance calls it “an ATM machine.”

As part of the buyout program, the Council is also helping growers transition from tobacco through a number of programs, including a marketing plan designed to brand Southern Maryland farm produce, and developing an Ag Business Park and encouraging agri-tourism. The Southern Maryland Farm Viability Enhancement program awards grant money to farmers, who develop detailed business plans. The Council also supports the 16 local farmers’ markets.

A plan for developing a regional processing kitchen is also in the works, Bergmark says.

The land preservation part of the buyout offers growers matching funds to local counties.

“The problem we’re facing now is that the legislature is whittling away at the land preservation money,” Hance says.

In the shadow of Washington, D.C., Calvert County attracts people looking for the beautiful vistas of the Maryland countryside. It comes with a price. Land can run more than $100,000 an acre. Calvert County is the fastest-growing county in Maryland. In 1972, the population was 14,000; in 2002, the population was 87,000 and growing.

In terms of tobacco, the defining moment of the 20th century for the Maryland tobacco industry arrived with the drought of 1983. Production and prices dropped. Production leveled out around 7 million pounds while prices never recaptured their previous levels. (In price, Maryland tobacco has traditionally tracked with burley.)

Up until the early 1980s, Maryland tobacco growers exported about two-thirds of their crop to Europe, where older smokers prefer the burning characteristics of a heavier smoke. Younger smokers prefer lighter cigarettes. Maryland tobacco had a reputation of being a fast-burning leaf used in blends. You could hold a lighted match up to it and it would burn like paper.

Over the years, alternative sources of fillers were found or developed and production declined. “The end was getting pretty close,” Hance says. “You’ve got to have so many acres in order to make a living.”

Hance says tobacco growers in Maryland were getting squeezed from all sides. By the late 1990s, some tobacco companies weren’t sending buyers to the auctions.

The situation hit Hance fully when, at harvest, he looked around and saw only one person in the field who was younger than 60. Labor had become a huge concern.

This year, there are only three tobacco growers in Calvert County, a county that has a tobacco leaf on its flag. (In colonial times, tobacco was the currency in Maryland. Colonists sent a certain portion of their crop to the queen for a “tithe.”)

Post-buyout production has dropped to around 2 million pounds.

Those who waited to see what effect the buyout would have might have thought prices would go up because of supply and demand. “That’s how out of touch some of us have been,” Hance says.

It took a year before the effect of the buyout was felt. There used to be eight tobacco auctions in Maryland; now, there are two. Farmers Tobacco Warehouse, which used to handle some 40 percent of the state’s tobacco, and Hughesville Tobacco Warehouse. The two warehouses are located side-by-side in Hughesville.

Some 87 percent of Maryland tobacco growers took the buyout. Growers who accepted the buyout are essentially out of tobacco. They are working to transition to other crops while preserving farmland.

As Hance says, the buyout provides income while transitioning to other crops.

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