Archived Issues

Kentucky growers prevail in Phase II dispute

The House of Representatives in Kentucky, USA, has voted to pay burley tobacco growers us$114 million to replace 2004 Phase II payments that they were denied after a judge ruled in December that cigarette manufacturers were not liable for the payments because of the buyout. Farmers protested that they were counting on the payments to help pay off debts.

Kentucky’s more than 163,000 farmers and quotaholders will be paid with money that was originally intended for agricultural diversification efforts. The state Senate must pass the legislation before growers receive any money.

The Phase II payments were intended to compensate farmers over 12 years for losses they were expected to incur as a result of higher cigarette prices and reduced demand for tobacco following
the 1998 Master Settlement Agreement. The Phase II agreement stated that if a buyout were to occur, the payments would cease, but it failed to specify when they would end.