Raleigh News and Observer

April 1, 2003
Mark H. Creech

Someone once said, “Beware of the man who continues to tell you he’s on your side….  So is appendicitis.”

North Carolinians are very familiar with the standoff that recently took place between Washington, D.C., police and Dwight Watson, a Nash County farmer, who drove his tractor into a pond at the National Mall….  Using an inverted American flag to signal his distress, Watson, a former military policeman in the 82nd Airborne in the mid 1970s, claimed to have explosives….  He said he was on a “mission” to get a message to the American public that he and other tobacco farmers were being forced out of business by unfair government policies.

Fortunately, the standoff ended without further incident when Watson surrendered to authorities after keeping them at bay for 48 hours.

Watson’s protest clearly demonstrates the despair felt by many tobacco farmers today….  The American tobacco grower is facing increasingly hard times….  The number of small family tobacco farms has declined from more than 500,000 in the 1950’s to fewer than 85,000 today with a drop of more than 100,000 since 1980….  No wonder many tobacco farmers like Watson are at their wits end….  But is the government the real enemy of tobacco growers?

For more than a decade, enormous increases in the global demand for American-style cigarettes and U.S. brands have prompted similarly large increases in the overall demand for flue-cured and burley tobacco….  Nevertheless, the tobacco growing quotas for U.S. burley and flue-cured tobacco farmers have been dropping sharply….  The big cigarette companies like to blame reductions in U.S. smoking levels for these declining quotas, but the truth be told the cigarette companies are actually at fault.

Recent sharp declines in quotas have been primarily caused by the cigarette companies reduced purchases of American-grown tobacco, which is a direct result of their shift to foreign-grown leaf and overseas cigarette manufacturing….  At best, U.S. smoking declines can account for only a tiny fraction of the major cigarette companies’ rapidly shrinking purchases of American grown tobacco leaf and the related quota cuts.

According to the USDA Economic Research Service, in the early 1970s, American made cigarettes contained less than 16 percent foreign tobacco leaf but in 1998 they contained more than 48 percent….  Just since 1990, U. S. Cigarette manufacturers have increased the amount of foreign leaf they use in their cigarettes by more than 40 percent….  That means that if American-made cigarettes still contained the same percentage of U.S grown tobacco as they did in 1980, the cigarette companies would be buying more than 250 million pounds of additional U.S. tobacco leaf each year.

Because of massive U. S. cigarette company investments overseas, more and more American brands of cigarettes are being manufactured in foreign countries, using little or no American-grown tobacco….  Foreign manufacturing of U.S. brands has gone through the roof….  Just since 1996, U. S. cigarette exports have dropped by more than 38 percent….  If the U. S. companies still exported as many cigarettes from the United States as they did in 1996, their direct purchases of U. S. leaf would be more than 90 million tons per year.

The point is that major cigarette companies are investing massive sums in foreign tobacco farming and manufacturing at the expense of the people who made the tobacco industry — the American tobacco farmer!

Yet the companies’ profit margins continue to soar while the average U. S. tobacco farmer’s profits continue to plummet….  Between 1990 and 1998, Philip Morris’ international tobacco profits more than tripled, from $1.3 billion to $4.97 billion….  At the same time, tobacco company executives have seen their salaries dramatically increase….  In 1999, Philip Morris Chairman Geoffrey Bible, collected $20.6 million in salary, bonuses and stock options….  Tobacco farmers for the most part have not shared in this wealth, the average U.S. tobacco farmer had a net income of only $19,597.

Moreover, from 1980 to 1998, general inflation went up by over 90 percent and the inflation-adjusted cost of growing tobacco increased by nearly 200 percent….  But the average price per pound for U. S. flue-cured tobacco rose just 19 percent, while burley prices rose only 14 percent….  At the same time, the cigarette prices charged by U. S. cigarette companies, excluding taxes, increased by over 250 percent.

So from 1980 to 1998, the tobacco growers’ share of each dollar spent in the U. S. on a pack of cigarettes dropped from seven cents to two cents, while the cigarette companies’ share increased between 37 and 49 cents….  Since then, the tobacco farmers’ share has shrunk even further, while the cigarette companies’ share continues to grow.

No, it’s not the government or even those who seek to protect the public from the dangers of cigarette smoking that are the real enemies of the tobacco farmer….  It’s the executive from the cigarette company — the guy who keeps telling the American tobacco grower, “I’m on your side”

Like appendicitis!

Rev. Mark H. Creech is the Executive Director of the Raleigh-based Christian Action League of North Carolina, Inc.