FOR IMMEDIATE RELEASE
March 31, 2003
Contact: Kara Keeton, Communications Director
Governor’s Office of Agricultural Policy
(502) 564-4627

Kentucky Tobacco Settlement Trust Corporation Announces Compensation Plan for 2003

The Kentucky Tobacco Settlement Trust Corporation, chaired by Governor Paul Patton, today adopted its plan for distributing proceeds from the National Tobacco Growers Settlement Trust in 2003.

On an 11-0 vote, the Board agreed to retain its policy of dividing trust proceeds equally among the owners of quota, the party who owns or controls the land used to produce tobacco, and the party who employs the labor used in burley tobacco production. Payments to owners of quota will be based on basic quota ownership records from the United States Department of Agriculture for the 2002 crop year.

Payments for the land and labor components, referred to respectively as the Growing Farm and Grower/Tenant, will again be based on an average of production and marketing activity in the years 1998, 1999, and 2000. The payment unit, referred to as payment pounds, is determined by averaging the effective quota and actual marketings for the three crop years in question.

The plan was adopted as the Board’s policy for the 2003 payments to be made by the Trust. Kentucky is scheduled to receive approximately $148 million in 2003, although adjustments built into the trust could reduce that amount by as much as 10% or more. The Board is obliged by the Trust agreement to revisit its compensation plan annually.

Since this meeting was more than likely the last Kentucky Tobacco Settlement Trust Corporation Board of Directors meeting under Governor Patton’s leadership, the Board was presented a summary of distributions and administrative costs by John-Mark Hack, KTSTC President.

Since December 1999 the Corporation has distributed over $459 million in direct cash payments to over 530,000 recipients while maintaining an administrative cost of less than 1%. In 2002, Kentucky spent $5.62 per payee to distribute just over $130 million to 160,983 recipients. North Carolina, on the other hand, spent $53.55 per payee to distribute $136 million to just 66,481 recipients.

"We committed ourselves from the outset of this program to minimize our administrative costs to put more dollars in the farmers' pockets," said Governor Paul Patton. "Our system has basically proven to be ten times more effective and ten times more efficient than other states to which we are often compared."

The Trust was established as a 12-year program by cigarette manufacturers to offset income losses incurred by tobacco growers as a result of the Master Settlement Agreement, the $246 billion deal between major cigarette manufacturers and 46 state attorneys general. 2002 represents the fourth year that payments were made to farmers from the Trust Fund.

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