The Tobacco Buyout component is a voluntary program which provides funds to a) support all eligible Maryland tobacco growers who choose to give up tobacco production forever while remaining in agricultural production and b) restrict the land from tobacco production for 10 years should the land transfer into new ownership.

Eighty six percent of the 1998 eligible tobacco has been taken out of production forever for human consumption as 877 growers have taken Maryland's Tobacco Buyout by January 2005. This represents 7.80 million pounds of tobacco and 94% of the producers.

Tobacco Buyout

Program Eligibility

• Eligibility is based on tobacco production in the 1998 crop year.
  
• Eligibility will also include verified tobacco production in 1998 that never made it to market as a result of losses due to natural occurrences, or medical data that indicates a grower produced tobacco before and after 1998, and, but for extenuating circumstances, was not able to produce in 1998*.
  
• Verification of eligibility for Phase II payments or verifiable tobacco warehouse receipts.
  

• Participating growers will be paid $1.00 per pound for ten years.
  
• Payments will be based on the growers’ average verified tobacco production in crop years 1996, 1997, and 1998 as documented in sales records.
  
• Payment determination may also include verifiable losses due to natural occurrences at the sole discretion of the Southern Maryland Agricultural Development Commission.
  
• Payments will be based on pounds of tobacco produced and recorded/sold, not on acres planted.
  

• Program is voluntary.
  
• Program sign-up will occur over a five-year period from 2000-2004 for Buyout contracts effective 2001-2015
  
• Once enrolled, a grower agrees to permanently cease production of tobacco for cigarette manufacturing and similar personal consumption.
  
• Program terms/conditions will apply to individual producers.
  
• Corporate farms and partnerships will be required to bind the business entity, and all shareholders, officers, and partners to the terms of the buy-out.
  
• Grower must remain in agricultural production for ten years.
  
• Non-commercial property will carry a deed restriction for the duration of the growers lifetime, or for the ten-year duration of the contract should the property be transferred to new ownership, prohibiting the production of tobacco for purposes of cigarette manufacturing and similar personal consumption unless otherwise approved at the discretion of the Southern Maryland Agricultural Development Commission*.
  

• Applications will be accepted from November through January for the following year
  
• Applications will include:
  
  • Names of producers of record affiliated with the farming operation to include corporations, corporate offices, partners, and others.
    
  • Producer’s social security number.
    
  • Copies of all non-commercial property deed held in the State of Maryland, or signature affirming grower does not own property.
    
  • Birth-date and co-signature of parent or legal guardian is grower is a minor.
  • Minors and their parent or legal guardians are required to sign a memo attached to the contract stipulating that the minor must reaffirm the terms of the contract once they become 18 years of age, or they will forfeit all future payments, and the co-signing adult may be liable to repay all payments made, plus interest and any other associated fees.
  • Other appropriate information.

  Program Compliance

  • Annual affidavit that states parties to the contract are not producing tobacco.
    
  • Annual affidavit that states how the producer stayed in agriculture.
    
    • Allowable exceptions include verifiable medical conditions, or other extenuating circumstances at the discretion of the Southern Maryland Agricultural Development Commission*.
      
  • Monitoring of land-use.
    
  • Annual random inspections of 5% of program participants.
    
  • Random inspections of program participants including an audit of warehouse records.
    
  • Investigation into complaints.

  Contract Stipulations

  • Civil penalties clearly stated on contract.
    
  • If land use changes, participants will forfeit all remaining payments.
    
  • Breach of contract will require forfeiture of all program proceeds received to date, future payments, plus a to be determined penalty payment.

  Incentives

  • Enrolled farms, in good standing, will qualify for a 10% increase in easement valuation (County and State programs).
    
    

    * Special Requests or Exemptions All special requests or cases are thoroughly reviewed. All requests are initially heard by a Tobacco Review Committee and/or the full Southern Maryland Agricultural Development Commission. Final decision authority rests with the Southern Maryland Agricultural Development Commission.

   

  Sample Tobacco Buyout Contract