A group representing tobacco growers is seeking more than $12 billion from cigarette makers as compensation for an anticipated drop in demand for their crop.
Some tobacco companies already have hiked wholesale prices by 45 cents a pack in order to pay for the $206 billion settlement signed this month with 46 states, the District of Columbia, and five U.S. territories.
The growers fear the price hike will depress demand and have sought compensation from the tobacco industry to cushion the impact of the settlement, which is to be paid out over 25 years.
North Carolina Attorney General Mike Easley has said that cigarette makers would offer about $5 billion to growers. But the National Tobacco Growers Association said it will take more than $12 billion over the next 10 years to make up for the damage done to the tobacco market, The News & Observer of Raleigh reported Monday.
The U.S. Department of Agriculture now determines how much tobacco farmers can grow and sell. The quota is based on how much tobacco the companies plan to buy and how much is exported on average over three years.