Tobacco farmers want companies to soften blow from settlement.
Updated November 30, 1998
12:57 p.m. ET
RALEIGH, N.C. (Court TV)— On the heels of rising cigarette prices spawned from the $206 billion settlement signed between cigarette companies and 46 states, tobacco growers are seeking $12 billion in compensation for the anticipated drop in sales.
To pay for the settlement, some tobacco companies have raised wholesale prices of cigarette packs by as much as 45 cents. The National Tobacco Growers Association fears the price hike will decrease the demand for their crops and will scare buyers away. The group claims it will take at least $12 billion over the next 10 years to make up for the loss.
Still, increased prices are not the only potential hindrances tobacco growers must worry about. They will also lose profits from the advertising restrictions mandated by the settlement. Under the settlement, which was announced Nov. 16, Big Tobacco will be banned from using billboard and transit advertisements and will not be able to sell clothing and merchandise with cigarette brand logos.
The companies also cannot use cartoon characters such as Joe Camel in their advertisements. However, despite the limits on advertising, the tobacco companies still will be able to use human figures such as the Marlboro man. They also will be able to sponsor at least one sporting event a year. The National Tobacco Growers did not address their potential loss in ad revenue.
North Carolina Attorney General Mike Easley has said that the tobacco industry would offer $5 billion to tobacco growers. The U.S. Department of Agriculture determines how much tobacco farmers can grow and sell. That quota is based on how much tobacco companies plan to buy and how much tobacco is exported over a three-year period.
The Associated Press contributed to this report.
