For Immediate Release
Office of the Governor
November 30, 2001
Contact: John-Mark Hack, (502) 564-4627

Kentucky Tobacco Settlement Trust Corporation Announces Payment Rates for Tobacco Trust Fund

FRANKFORT, KY. -- The Kentucky Tobacco Settlement Trust Corporation, chaired by Governor Paul E. Patton, announced the payment rates for the 2001 distribution of the National Tobacco Growers Settlement Trust.

Otherwise known as Phase II of the tobacco settlement, the Trust compensates tobacco quota owners, growers and tenants for income losses they incur as the tobacco industry changes. This distribution represents the third of the scheduled 12 annual payments from the Trust.

“This help comes at a critical time for our tobacco farm families,” Governor Patton said. “I’m pleased that we were able to negotiate this trust fund on behalf of our tobacco growers.”

Kentucky’s tobacco farm families will share a total of $109,594,512.31. Compensation is provided equally for three factors of tobacco production: quota, land and labor. Quota compensation is based on crop year 2000 basic quota. Land and labor compensation is based on an average of crop years 1998, 1999, and 2000 effective quota and actual marketings. This average is referred to as payment pounds.

The payment rate from the National Trust is 21.57 cents per basic quota pound. Payments to the individuals or entities that control land and employ labor used to produce burley tobacco are based on an average of the three crop years 1998, 1999 and 2000. Individuals will receive payment t hat corresponds to their level of production activity in each crop year.

The payment rate for the Growing Farm will be 2.58 cents per payment pound for crop year 1998, 3.17 cents per payment pound for crop year 1999 and 5.94 cents per payment pound for crop year 2000. The payment rate for the Grower/Tenant will be 2.61 cents per payment pound for crop year 1998, 3.17 cents per payment pound for crop year 1999 and 5.94 cents per payment pound for crop year 2000.

The National Trustee, the JP Morgan/Chase Bank, will issue checks from the National Trust on December 28, 2001.

The $5.15 billion National Tobacco Growers Settlement Trust was negotiated by four cigarette companies and the political leadership of tobacco growing states. Governor Patton helped lead tobacco state governors in their negotiation and played a critical role in the establishment of the trust.

When one cigarette company began to back away from negotiations and threaten establishment of the Trust, Governor Patton and other governors demanded to speak with the chief executive officer of this company’s parent corporation. The resulting conversation put the negotiations back on track, and the Trust was established shortly thereafter. The participating companies started making annual payments to the Trust beginning in 1999 and will conclude in 2010.

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