The McCain bill would have included both FDA regulation of tobacco and a quota buyout plan as well as de facto immunity from future lawsuits for the manufacturers. Tobacco companies secured the support of many tobacco growing organizations to join them in opposing the McCain bill and its quota buyout provisions by promising a $28 billion payout to growers under a separate settlement.The McCain bill failed to pass and was replaced by the private Master Settlement Agreement , which included a separate settlement between manufacturers and tobacco growers to compensate growers for potential loss of revenue associated with the MSA’s provisions, known as Phase II. However, under the MSA’s Phase II payments to tobacco growers, the growers were to receive only $5.2 billion, not the promised $28 billion. This failure by tobacco manufacturers to stand by their agreement with growers led to the first major break of the manufacturer-grower organization alliance. In early 2000, tobacco farmers filed a classaction lawsuit against cigarette manufacturers, DeLoach vs. Philip Morris, alleging that the tobacco companies misled farmers when they encouraged them to oppose the removal of the quota system and accused manufacturers of rigging the federal price support system to keep prices low. This suit was settled by Philip Morris and other major tobacco companies in 2003 and by RJR in 2004, after 175,000 tobacco farmers had joined the suit, providing approximately $254 million to those growers .In March 2000, Philip Morris exacerbated existing tensions with growers by announcing that it had developed a direct contract system for purchasing burley tobacco, under which they would arrange to buy a set amount of tobacco from a specific grower at a set price, circumventing the Tobacco Price Support System by setting the price and purchasing the tobacco prior to the tobacco reaching federally-controlled auctions. The direct contract system provided little protection and high risks for farmers compared with the federal tobacco program, and the expansion of this program would undermine the quota and price support system further by manipulating both supply and demand outside the system.

Philip Morris began executing this system in 2000 over opposition by most growers and grower organizations. Despite the decreasing importance of domestic tobacco farming to the tobacco industry, tobacco growers represented an important source of legitimacy for the tobacco manufacturers’ political goals. Therefore, despite the increasing divergence between the two groups, maintaining a seemingly close relationship was beneficial to the tobacco companies because, as one Philip Morris representative put it in 1990, “local growers have more credibility in legislatures than do hired guns.”The importance of the relationship also extended outside of merely legitimizing their lobbying efforts, resonating in the public sphere as an important public relations tool. Thus it was in the tobacco industry’s best interest to maintain an appearance of commonality with tobacco growers, despite the underlying tensions over quotas. Nationwide and in Virginia, the net effect on farmers was that many immediately stopped producing tobacco. Moreover, the remaining production was consolidated on fewer but larger farms. Finally, some Virginia production of flue-cured tobacco, free from the geographical constraints of the quota system, moved to regions with lower production costs such as North Carolina.Tobacco control advocates capitalized on the growing animosity between growers and tobacco companies over the quota buyout and concerns among tobacco growers about declining demand for U.S.-grown tobacco.One outcome of this growing rift between farmers and the tobacco industry was the creation of the Southern Tobacco Communities Project , an attempt by tobacco control advocates to discover areas of common interest. An implied goal of the health groups in the STCP discussions was to alter the historical hostility of tobacco farmers towards tobacco control issues. The predecessor of the STCP was the Virginia Tobacco Communities project, a 16-month project from 1994 to 1996 initiated by health advocates, including the Institute for Quality Health, American Cancer Society and Virginia Department of Health with a similar purpose, seeking common ground with tobacco farmers and farming communities.The University of Virginia’s Institute for Environmental Negotiation provided independent facilitation between these health groups and the tobacco growing community representatives that they reached out to. VTC leveraged the mission of the Virginia House Joint Subcommittee Studying Alternative Strategies for Assisting Tobacco Farmers, which had been established prior to the formation of VTC, as a vehicle to reach out to tobacco farmers. VTC members attended Subcommittee sessions and used the time to build informal contacts in the farming community, and VTC’s participation in the Subcommittee lent the project credibility among farmers.VTC’s primary strategy was to create an ongoing dialogue between diverse interests through roundtable meetings, intended to react to and analyze the chances in tobacco communities.A total of five round table meetings were held and resulted in an exchange of knowledge between advocates and tobacco growers. Ultimately, VTC presented four main legislative recommendations to the Virginia House Joint Subcommittee Studying Alternative Strategies for Assisting Tobacco Farmers: 1) improvements in production and marketing of tobacco; 2) improving access to information about profitable supplemental on-farm enterprises; 3) improving access to financing for small business development; 4) increasing access to education for employment in specific non-tobacco growing work sectors.Additional lessons and findings from the VTC appear in Table 52. The VTC project led to the creation of the Southern Tobacco Communities Project in 1997 funded by the Robert Wood Johnson Foundation and,indoor farming equipment like VTC, was managed by the Institute for Quality Health, a division of the University of Virginia’s Department of Health Services.

The program was facilitated by the Institute for Environmental Negotiation, a part of the University of Virginia whose mission was to promote conflict resolution and consensus building, building on the work that had previously been done by the VTC.STCP brought together regional leaders from public health and tobacco interests with the goal of promoting health in rural southern communities.The STCP collaborative project eventually led in 1998 to release of the “Core Principles Statement,” a memorandum of understanding that outlined areas of agreement between the farmers and health advocacy groups. Health advocates would push for the continuation of the tobacco quota system and for funds to be secured for tobacco community diversification. Farming interests agreed to support tobacco control goals supported by federal taxes, FDA regulation of tobacco products, and marketing programs aimed at reducing youth smoking rates.After the Master Settlement Agreement was announced, Southern farmers and grower organizations began a dialogue with health advocates under the auspices of STCP concerning how to best utilize the incoming MSA funds for their respective interests that was initiated by STCP. An agreement was reached to introduce a bill, HB 2635, that embodied the understanding of the parties: 50% of the incoming MSA funds would be directed towards tobacco-dependent communities, to be administered by the Virginia Tobacco Indemnification and Community Revitalization Commission and Fund ; 10% of the funds would be used for youth-prevention oriented tobacco control work, eventually conducted by the Virginia Tobacco Settlement Foundation after its formation in 1999 ; the remaining 40% of the funds were not earmarked and their distribution was to be left to the Virginia legislature. STCP considered the negotiations surrounding the use of MSA funds as a major success that balanced the needs of tobacco farming communities and public health advocates.However, this position ignores the fact that no MSA funds were directed towards general tobacco control advocacy, because the establishment of the Virginia Tobacco Settlement Foundation used all the MSA funds earmarked for tobacco control for youth-targeted efforts. Therefore, the use of the MSA funds as negotiated by STCP was not as effective in promoting public health goals as it might have been had MSA funds been utilized to fund tobacco control efforts for all Virginians. The meetings that led up to this agreement included many of the representative groups from STCP. The tobacco farmers were represented at the meetings by the Farm Bureau, the FlueCured Tobacco Cooperative Stabilization Corporation, the Burley Tobacco Growers Cooperative, the Tobacco Growers’ Association, and the National Black Farmers Association.Some traditional tobacco industry allies, like the Farm Bureau described their new relationship with their former foe as a strange result of circumstance. One Farm Bureau member observed to the press at the announcement of the formation of STCP, “You’ve seen how dogs and cats are sometimes found to depend on each other. There’s a little bit of that going on here.” However, Al Glass, a Farm Bureau director, noted at the same time some of the advantages of the meetings, saying that health advocates have “learned a lot about tobacco farming. They always saw Joe Camel and the Marlboro man – they never saw an economic community scattered through ten states.”A leader among the farmers was Clarence D. Bryant III of Virginia, the founder of the Concerned Friends of Tobacco , a group that has organized in 1993 to combat a federal cigarette taxation proposal by President Bill Clinton to fund his health care reform package.Bryant served as one of the farmers’ representatives and was a farmer himself. Bryant characterized the growers’ interest in working with STCP as a way to secure funds for farmers, to serve as “insurance to protect us, because everything was being created [by the MSA] between the industry and the states and we were caught in the middle.”One reason for farmers’ interest in STCP according to Andrew Shepherd, a representative of the Virginia Cured Tobacco Cooperative Stabilization Corporation, was the increasing importation of foreign tobacco, which lead to a decline in domestic purchasing and hit farmers in the pocketbooks.Bill Novelli, President of the Washington, DC-based Campaign for Tobacco-Free Kids , noted that both growers and health advocates had realized their notions about tobacco farming had evolved from thinking of the growers as being in lockstep with the manufacturers “regardless of the consequences” to realizing the inherent friction in the relationship. Additionally, Novelli said that “the public health community has come to better understand that tobacco producers, their families, and the people in their communities have a very different set of values than do the tobacco companies.”Shepherd noted that “meetings between [health advocates and growers], away from the rhetoric of politicians … led to the realization that many of us on both sides had similar concerns.”JT Davis, a member of the Concerned Friends for Tobacco organization, also felt upbeat about the meetings, stating, “This is truly a unique win-win situation. Direct, face-to-face discussion invariably results in new, more accurate understandings.”