Scarcnet News Summaries (Advocacy Institute)
Tobacco Companies Create Trust Fund For Farmers
Length: pages
Abstract
A state court in Wake County, North Carolina approved the establishment of a trust for tobacco farmers to be funded by tobacco companies. The National Tobacco Grower Settlement Trust could receive up to $5.15 billion over 12 years from Philip Morris, R.J. Reynolds, Brown & Williamson and Lorillard. The purpose of the trust is to provide financial support to farmers and quota holders - farmers who have been granted tobacco-growing rights by the federal government. Tobacco analysts speculated that the creation of the trust was politically motivated."The Trust will keep tobacco state lawmakers allied with the interests of tobacco industry," said David Adelman, analyst at Morgan Stanley Dean Witter. Adelman went on to say, "It's one thing if five farmers dominated tobacco farming, but there are tens of thousands of tobacco farmers and quota holders and that is where the votes are. The tobacco industry had to try to appease that constituency and align their interests with tobacco companies - this agreement achieves that goal." The trust is separate from and will not affect the national tobacco settlement.
Sources: Edward Tobin, "Tobacco Grower Settlement Approved," REUTERS, August 19, 1999; "Trust To Be Funded By Tobacco Companies For Growers Is Cleared," WALL STREET JOURNAL, August 20, 1999, p. B7.