East Tennessee State University Digital Commons @ East Tennessee State University Electronic Theses and Dissertations Student Works 5-2007 The urB ley Tobacco Buyout Program and Its Impact on Farmers in Tennessee, Virginia, and North Carolina. William T. Jarrett East Tennessee State University Follow this and additional works at: https://dc.etsu.edu/etd Part of the Work, Economy and Organizations Commons Recommended Citation Jarrett, William T., "The urleyB Tobacco Buyout Program and Its Impact on Farmers in Tennessee, Virginia, and North Carolina." (2007). Electronic Theses and Dissertations. Paper 2039. https://dc.etsu.edu/etd/2039 This Thesis - Open Access is brought to you for free and open access by the Student Works at Digital Commons @ East Tennessee State University. It has been accepted for inclusion in Electronic Theses and Dissertations by an authorized administrator of Digital Commons @ East Tennessee State University. For more information, please contact [email protected]. The Burley Tobacco Buyout Program and Its Impact on Farmers in Tennessee, Virginia, and North Carolina ________________________ A thesis presented to the faculty of the Department of Sociology and Anthropology East Tennessee State University in partial fulfillment of the requirements for the degree Master of Arts in Sociology ________________________ by William Thomas Jarrett May 2007 ________________________ Dr. Scott Beck (Chair) Dr. Martha Copp Dr. Lindsey King Keywords: Tobacco Farming, Southern Appalachia, Burley Tobacco, Buyout Program ABSTRACT The Burley Tobacco Buyout Program and Its Impact on Farmers in Tennessee, Virginia, and North Carolina by William Thomas Jarrett This thesis addresses the Burley Tobacco Buyout Program and its impact on three local economies. Data collection involved obtaining information from government reports, internet sources, public documents, agriculture offices, federal agriculture officials, and books. Personal interviews were conducted with 32 farmers in Sullivan County, Tennessee; Washington County, Virginia; and Watauga County, North Carolina. This study is significant because it addresses not only the decline of an agricultural product but also changes in a way of life in Southern Appalachia. The future of burley tobacco growing in this region appears to be bleak because of foreign market competition and decreasing domestic demand. From the personal interviews, many farmers had already abandoned tobacco production and older respondents were often planning to stop all farming practices. Specifics of the federal government-mandated Buyout Program to compensate quota holders and growers are presented, as well as the experiences and opinions of farmers regarding this program. 2 DEDICATION This thesis is dedicated to the memory of Joe K. Thomas III (Sonny), a relative who was killed in a farm accident during the preparation of this manuscript, and to his father, Joe K. Thomas, Jr., both of whom were farmers involved with tobacco production and agriculture in general throughout their lives. Much of the material used in researching this thesis was provided by Sonny, who was deeply involved with the Burley Stabilization Corporation. 3 ACKNOWLEDGEMENTS I would like to acknowledge several people who have assisted me in the preparation of this thesis. I would first like to thank Dr. Martha Copp and Dr. Lindsey King in the department of sociology and anthropology at East Tennessee State University for their help and support in writing and organizing this manuscript, and particularly Dr. Scott Beck for his help and support with this thesis. I would also like to acknowledge the many tobacco farmers and their families for their support and cooperation in willingly agreeing to be interviewed for this study. In a similar vein I wish to extend appreciation to the agricultural extension agents who graciously provided time to respond to my questions and provide additional information during the course of this research. But first and foremost I wish to thank my parents, Ronald D. and Teresa Thomas Jarrett, and our extended family, for their help and encouragement over the many years I have been in school from the beginning up to this point. Without them, I would have never been able to obtain such a high level of scholastic achievement. I would also like to acknowledge the three vision teachers who were so helpful and supportive during my pre-college education: Nila Collins, Jann Conley, and Lee Bryan. The completion of these degrees has been somewhat of a challenge because I struggle with two disabilities. I have been legally blind since birth and a juvenile diabetic since the age of eight. Upon the completion of this degree in 2007, I hope to pursue some form of employment that will accommodate these fields of study and be feasible considering my physical limitations. 4 CONTENTS Page ABSTRACT ……………………………………………………………………. 2 DEDICATION …………………………………………………………………… 3 ACKNOWLEDGEMENTS ……………………………………………………… 4 LIST OF TABLES ………………………………………………………….. 8 Chapter 1. INTRODUCTION ……………………………………………….. 9 Purpose of Thesis ………………………………………………… 10 Overview of Thesis Organization ………………………………... 11 General History of the Tobacco Industry ……………………….... 13 2. THE YEARLY CYCLE ……………………………………………. 18 The History of Early Tobacco Sales …………………………….. 21 The Quota System ……………………………………………….. 28 3. RECENT DEVELOPMENTS IN THE TOBACCO INDUSTRY …………………………………………………………. 45 Health Concerns and Costs of Tobacco ………………………….. 46 The Strategy of Big Tobacco ……………………………………. 48 4. PHASE I, PHASE II, AND THE BURLEY TOBACCO BUYOUT PROGRAM ………………………………......................... 54 Phase I …………………………………………………………… 54 Phase II …………………………………………………………... 56 The Burley Tobacco Quota Buyout ……………………………… 58 5 Phase I in Tennessee ………………………………………. 58 Phase II in Tennessee and Introduction of the Buyout ……………………………………………… 62 Phase I in Virginia ………………………………………… 64 Phase II in Virginia and Introduction of the Buyout ……………………………………………… 64 Phase I in North Carolina ………………............................ 65 Phase II in North Carolina and Introduction of the Buyout ……………………………………………… 66 Specifications of the Buyout Program …………………………... 67 5. DATA COLLECTION AND ANALYSIS PLAN ………………….. 72 Sampling Strategy ……………………………………………….. 72 Interview Structure and Recording …………………………….... 75 Tobacco Farmer Interviews ……………………………...... 76 Agricultural Agent Interviews …………………………..... 78 Analysis Plan …………………………………………………… 80 6. ANALYSIS OF INTERVIEWS…………………………………….. 81 Sullivan County Tobacco Farmer Interviews …………………… 81 Tennessee Agricultural Extension Agent Interviews ………………………………………………………. 90 Watauga County Tobacco Farmer Interviews …………………... 94 North Carolina Agricultural Extension Agent Interviews ……………………………….......................... 99 Washington County Tobacco Farmer Interviews ……………….. 102 6 Virginia Agricultural Extension Agent Interviews ………………………………………………………. 107 Summary of Findings …………………………………………... 111 7. SUMMARY AND CONCLUSIONS ………………..................... 115 REFERENCES ……………………………………………………………….. 129 APPENDIXES ………………………………………………………………... 133 Appendix A: Interview Guide for Tobacco Farmers …………………… 133 Appendix B: Interview Guide for Agricultural Extension Agents ………………………………………………………. 135 Appendix C: Informed Consent Document …………………………….. 137 VITA ………………………………………………………………………….. 141 7 LIST OF TABLES Table Page 1. Estimates of U.S. Burley Tobacco Production Over Time …………………………………………………………….. 39 8 CHAPTER 1 INTRODUCTION The process of raising Burley Tobacco is an age-old tradition deeply instilled in the Southeastern United States. Once a top cash crop, agricultural production of tobacco has declined significantly in value in regions of our nation. Since the inception of the Burley Tobacco Buyout Program (October 22, 2004), also called the Tobacco Transition Payment Program, many changes have taken place and are deeply affecting areas where burley tobacco production was once a major cash crop. The Burley Tobacco Buyout Program was proposed by “Big Tobacco” (Phillip Morris, RJR, Brown and Williamson, and Lorillard, including over 300 less known tobacco companies) and by the importers and manufacturers of tobacco products. One of the main problems encountered by tobacco growers is the loss of income in an area that is somewhat economically challenged anyway. Not only are the livelihoods of farmers in these areas being put to the test, but so are the families, communities, and regional economies with ties to the tobacco industry. A way of life and a definitive culture are being challenged as never before. Almost every small family farm raised some amount of tobacco or had an allotment that increased the value of their property by allowing the owner to sell their poundage or rent it to another farmer to raise. This, in turn, allowed farmers to pay their land taxes, purchase machinery, or take care of any large bills which they might not have had the funds for without profits from tobacco. 9 The average person might fail to comprehend the cultural importance of tobacco to small tobacco farmers and their place in the tobacco industry. Raising tobacco imposed almost ritualistic demands and encompassed a great deal of the farmer’s agricultural calendar and way of life. There was a sense of comradery in the fact that as the season and weather permitted almost everyone in the surrounding farm community was in the process of producing a tobacco crop. A common phrase heard was, “Have you gotten your crop laid by yet?” Meaning, is the crop tall enough or far along enough that it no