RALEIGH, N.C. — In one year, those in the tobacco business will mark the 10th anniversary of the Master Settlement Agreement (MSA), which changed the face of the tobacco industry from production and perception standpoints.

That agreement brought more than $200 billion to 46 states from the then-four largest tobacco manufacturing companies, to be distributed over a 25-year period. The action came from several separate lawsuits by individual states over Medicare costs associated with smoking-related illnesses. At the time, it was the largest civil lawsuit in history.

Many states have funneled their share into general funds. Tobacco-producing states such as North Carolina and Kentucky – two of the largest producers of burley tobacco in the country – have set up agencies to distribute those funds in a variety of different ways, funding everything from early childhood development programs to smoking cessation programs, to agriculture diversification projects. North Carolina is expected to receive approximately $4.6 billion of the money by the end of the 25-year period. The state’s General Assembly created three different programs to distribute those “Phase I” funds, as they are known.

The agencies include the Golden LEAF Foundation, a nonprofit corporation that receives half of the Phase I funds and makes grants for economic development in tobacco-dependent communities; the Health and Wellness Trust Fund, a state agency that receives 25 percent of the Phase I funds and makes grants for health-related programs; and the Tobacco Trust Fund Commission, which receives the remaining 25 percent.

Information from the North Carolina Department of Agriculture and Consumer Services (NCDACS) states “the Commission was created to assist tobacco farmers, tobacco quota holders, persons engaged in tobacco-related businesses, individuals displaced from tobacco-related employment and tobacco product component businesses in the State, due to the adverse effects of the MSA. The Commission can disburse funds through compensatory programs and qualified agricultural programs.”

By statute, the Commission has the authority to “develop guidelines and criteria for eligibility for disbursement of funds, to determine forms of direct and indirect economic assistance to be awarded and to develop procedures for applying for and reviewing applications for assistance from the Fund … the Commission may periodically set a list of funding priorities which it will follow in awarding grants for qualified agricultural programs and in granting compensatory programs.”

The agency recently approved grants totaling $3.2 million for 25 projects that focus on diversifying farm activities, training and preserving natural resources and farmland. Two of the grants were for the maximum $300,000 each, one going to the town of Fair Bluff for expansion of a river walk meant to help replace lost tobacco income with tourism and the other to the Rural Advancement Foundation in Pittsboro, to help farms develop diverse crops.

According to the NCDACS, the state ranks number one in the production of tobacco with “an approximate 2006 annual farm income of $506.2 million dollars. In 2006, North Carolina flue-cured tobacco farmers raised 155,000 acres, with an average yield of 2,090 pounds per acre. Burley tobacco farmers in the state raised 3,800 acres, for an average yield of 1,450 pounds per acre.”

Those 3,800 acres are a long way from the 12,700 acres raised in 1982, but with the changing tide of tobacco use, coupled with tobacco quota buyout legislation, all tobacco-producing states have seen similar drops in production. Love or loathe it, tobacco is still a driving economic force in North Carolina and should be for years to come, as long as U.S. companies are buying and the demand exists.