Idea for the Commissions Report - Tom Gourley, 5/7/01 2:59PM   

I realize that I have come into this site probably too late to have this
idea considered, however there is a factor that I feel ought to be
considered in improving the economic opportunity in communities
dependent on tobacco production.  That is the long term economic
opportunity of the tobacco farmer who in the past has been able to meet
his debt load on the profits of a larger tobacco crop, but is now
struggling or not able to meet his debt structure due to reduced
profits.

As the acreages of allotment per producer fell so did the profits of the
tobacco farmer.  Those profits went to make debt payments and to
purchase goods in the community.  Now with allotments 1/2 or less of
what they were 3 years ago, many of these farmers who were at a stress
point in their debt repayment structure are only able to make it due to
the phase 1 and 2 class settlement monies they have been receiving.
This will not last much longer and the profit margin is not as great due
to increased variable costs and fixed costs which are margined against
less acreage.  Thus some ability to restructure their debt is needed to
get some of these farmers in a repayment structure that provides them
more room to meet payments and purchase those goods in their
commmunities as before the settlement and the resultant acreage
reductions.

What I feels needs to be available is a way for these farmers to
refinance their debts at a lower interest rate, even as low as 5% or
less, to provide them with a greater repayment margin.  Some of these
farmers went into debt for real estate purchases just prior to the
reductions and have been struggling to meet payments when due.  There is
no longer a refinancing of real estate authority in FSA's farm loan
program direct loan programs and this could provide the necessary
opportunity to accomplish this.  Or as money from the settlements comes
in it could be set up as a loan fund to be loaned out to refinance these
farmers.  Even if set up at a low interest rate program it would still
return an investment back to the fund. 

Again this would provide immediate economic opportunity to the farmers
who are most affected by the settlement and would allow them the
opportunity to turn unused tobacco land acreage to trying other types of
production without the worry of whether a loss on that land might take
them under due to their tight cash flow.  Also, it would provide them
more cash to use in the local community, thus boosting economic
opportunities for other local commercial ventures.

Tom Gourley