1. Replacing Tobacco The Evolution of Agriculture in Durham County

2. A Brief History of Durham Tobacco

3. 1865 – Civil War ends, John R. Green’s small store inundated with orders for Brightleaf Tobacco 1874 – W.T. Blackwell partners with Green, founds Bull Durham Tobacco Company 1881 – W. Duke Sons and Co. established 1885 – James B. Duke acquires license for and purchases first automated cigarette rolling machine 1890 – Duke consolidates four major competitors into the American Tobacco Company 1907 – ATC indicted under Sherman Antitrust Act 1911 – Broken up into ATC, R.J. Reynolds, Liggett & Myers, and P. Lorillard

4. The Quota System FDR establishes Federal Tobacco Quota System in 1938 as part of New Deal Included poundage quotas and acreage allotments Control on supply; maintained stable price Became important financial assets; could be sold and traded like stocks and bonds When farmers grew old and retired, would lease quotas to neighbors in return for tending other crops as well Ended by the Fair and Equitable Tobacco Reform Act of 2004

5. The Tobacco Master Settlement Agreement 1965 – Congress mandates Surgeon General Dr. Luther Leonidas Terry’s warning be printed on cigarette packages Explosion of anti-tobacco litigation follows 1998 – Facing lawsuits from attorney generals of 46 states, Phillip Morris USA, R.J. Reynolds Tobacco Co., Brown & Williamson Tobacco Corp., and P. Lorillard Tobacco Co. settle out of court Manufacturers agree to pay $206 billion in damages over 25 years North Carolina to receive 38% of the funds ($78 billion)

6. The TMSA in North Carolina Three institutions established to distribute funds Golden LEAF Foundation allocated 50% to improve state’s economic and social conditions Tobacco Trust Fund received 25%, charged with helping tobacco-related businesses and individuals, including farmers, quota holders, and individuals who lost tobacco-related jobs Health and Wellness Trust Fund gets 25% to improve health and wellness of North Carolinians with emphasis on reducing youth tobacco use

7. 2000200120022003-2004All Years Total ($)% % % % % Grant Funding Total5 073 94510 509 83617 141 03073 893 546 106 618 356 100 Agriculture2 604 450513 364 250324 458 129262 994 500413 421 32913 Tobacco diversification2 384 450473 364 250324 458 129262 994 500413 201 32912 Supporting tobacco farmers to grow tobacco 200 0004000000 0 Supporting tobacco farmers—unrestricted 0000000000 Equally Beneficial to tobacco and non- tobacco farmers 20 0000000000 0 Inclusive Economic Development 2 469 495497 145 5866812 682 9017470 899 0469693 197 02787 Economic development1 177 235233 060 801294 203 576254 968 000713 409 61213 Workforce Preparedness1 292 260254 084 785393 366 559201 956 262310 699 86610 Biotech consortium00000060 000 0008160 000 00056 Economic stimulus grant00005 099 766303 453 13058 552 8968 Site certification000013 0000521 6541534 6541 Percent Changes in Golden LEAF Foundation (GLF) Grants by Category and Year: North Carolina, 2000-2004

8. The Death Blow Federal Tobacco Quota Program ended in 2004, primarily as response to international competition Program kept US tobacco prices stable while international prices dropped Widening price gap between foreign and domestic leaf caused decline in exports, shift to overseas production, and loss of domestic market share to foreign producers Declining demand for US tobacco forced government to reduce quotas Farmers, needing sufficient acreage make their investments in machinery, equipment, and buildings effective, bid more to rent quotas Rising labor costs Abolishment of quota system means no reason to grow tobacco on expensive land around Durham

9. 195019922007 Tobacco135 22714 4141 844 Cotton21 441349457 Grain3 1415 4815 147 Vegetable1 3481 1052 470 Fruit and Nut7329921 370 Dairy5 312900381 Poultry5 3913 5964 096 Livestock (Non-Dairy/Poultry)6 26215 17724 759 Nursery and GreenhouseN/A2 0282 317 Total Commercial Farms193 67951 85452 913 195019922007 Tobacco2 723 4131 473 365549 636 Cotton576 08858 123211 129 Grain101 979335 788697 792 Vegetable64 68163 022333 939 Fruit and Nut31 90937 48379 288 Dairy224 012322 543161 373 Poultry247 1652 326 4834 087 004 Livestock (Non-Dairy/Poultry)306 9891 783 4523 458 974 Nursery and GreenhouseN/A301 394573 529 Total4 759 1657 074 29410 313 628 Number of Farms by Type in North Carolina Market Value of North Carolina Agricultural Products Sold ($1000, all values converted to 2007 dollars)

10. Declining Demand US tobacco production by year (million lbs) 1950: 1,770 1992: 1,700 2007: 778 Consumers more aware of health effects Quality of tobacco worldwide has homogenized; international buyers no longer willing to pay American prices (kept artificially high by taxation and quota program)

11. Mechanization Labor expenditures: In 1950, average hired tobacco farm laborer paid $888 annually (about $8,000 adjusted for inflation), makes up 53% of total farm expenditures In 2007, average laborer earns $8,051, but hired labor only 28% of total expenditures Buying up of quotas encouraged smallholders to sell Tobacco now produced on fewer, larger farms to the east Fewer farms and owners with the capital to invest in best machines means 1/10 the farms can produce ½ the tobacco

12. Farming in Durham Land around Durham expensive and not particularly suited to farming Soil mainly heavy red clay Region fluctuates between drought and heavy rainfall Tobacco one of the few plants that prospers

13. Why Bother? Having farmland in the watersheds helps preserve clean water for city residents Farmers help subsidize local taxpayer-funded services, as they pay far more in taxes than they receive in benefits Cultural, environmental, and aesthetic advantages

15. Replacing Tobacco Despite huge drop in tobacco production, total market value of agricultural products in NC has risen NC unable to compete with low cost of cash crop production in other states and overseas Farmers turned instead to food production

16. The Rise of Food Demand for and price of food have steadily risen worldwide for past decade Huge demand increases for organic and locally produced food Cattle ranching, hog farming, and animal aquaculture so low 1950 census lumped them into single category; today they are 31% of NC agricultural production Poultry 40% Grain and fruit production double, vegetable production quintupled

18. Durham County’s Response Production has shifted away from cash crops and towards food, but high land prices make it difficult to compete Durham farmers look for goods that gain value from proximity to population centers

19. Greenhouse, Nursery, and Floriculture Includes cut flowers, cut cultivated greens, potted flowering and foliage plants, and bedding and garden plants Due to the difficulty of shipping these products, it is cheaper to grow them near the population centers where they will be sold Low acreage requirements 72% of market value of crop production in Durham County

20. The Aging Issue Many farmers’ children have no interest in agriculture Farms that would traditionally stay in the family are being sold instead Though there are young people interested in farming, high land costs remain a barrier to entering the industry Older landowners are pushed to sell to developers Solution: subsidy or loan to help young people purchase farms of their own

21. Biotechnology: the Future of Agriculture? North Carolina has become the center of America’s biotechnology industry Food modified to increase crop yield, reduce vulnerability to environmental stresses, increase nutritional value, improve taste, texture, or appearance, reduce dependence on fertilizers and pesticides, etc. Biofuels from corn and algae Flu vaccines from tobacco Insulin from potatoes, tomatoes, tobacco, lettuce