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Tobacco Companies to Pay Farmers $24 Million

N.C court settlement favors Pennsylvania and Maryland tobacco growers.

Pennsylvania’s tobacco farmers will receive $11 million from tobacco companies stemming from this week’s North Carolina court ruling on a 1999 agreement between states and the nation’s largest tobacco companies. And, as part of the settlement, Maryland growers may be eligible to receive $13 million.

“After working for nearly two years to secure payments, this settlement is a victory for Pennsylvania’s 500 tobacco growers,” said Agriculture Secretary Dennis Wolff, in making the announcement. “Our farmers have experienced difficult economic times since the 1999 agreement was signed.”

Payments were delayed due to tobacco manufacturers’ concerns about their obligations under the federal Fair and Equitable Tobacco Reform Act, passed by Congress in 2004. The federal act provided for a tobacco quota buyout for most growers, but not Pennsylvania and Maryland. Maryland enacted its own buy-out program. The court’s decision makes clear that the tobacco companies are obligated to continue payments to the tobacco trust through 2010, which was established to help Pennsylvania and 13 other states. When the act passed, the companies stopped making payments.

Pennsylvania and Maryland took action. Maryland’s $13 million settlement is to be paid through 2010. But it’s unclear, at this point, how the Maryland funds will be handled since the state conducted its own buyout program.

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