TORONTO - The almost total surrender of their tobacco-growing quotas under a federal program to help Ontario farmers leave the business speaks to their financial despair, a marketing board official said Monday.

New figures show the province's roughly 1,000 tobacco farm families have surrendered 99.7 per cent of the outstanding quota in exchange for about $284 million from Ottawa.

"The uptake speaks to the reality of where we're sitting," Linda Vandendriessche, chairwoman of the Ontario Flue-Cured Tobacco Growers Marketing Board, said in an interview.

"Most farmers are in financial despair and had little choice but to apply to the program."

Last year, the federal government offered Ontario farmers $1.05 per pound as a way to help them exit the tobacco-growing business, which has been in serious decline in recent years.

High taxes, lower consumption, contraband and smuggling, along with the move to source tobacco and produce cigarettes off-shore have all contributed to the precipitous drop.

Last year, for example, Ontario farmers produced only 23 million pounds -- less than 10 per cent of the available quota.

In all, farmers tendered 271.1 million pounds in quota worth $284.6 million under the program, the figures show.

"The cheques will be flowing mid-April and the last cheques have to be out May 1," Vandendriessche said.

Agriculture Minister Gerry Ritz said the government was pleased to offer the help to farmers who want to leave tobacco production and pursue new opportunities in agriculture.

"We hope to see this money get to hard hit farmers as soon as possible," Ritz said.

Originally, tobacco quotas were given away, but were later traded for money and banks began accepting them as collateral.

Under new regulations, the quota-based system in Ontario is now dead and a new licensing system has been put in its place.

Ontario has refused to get involved in the transition program despite pleas from Ottawa and farmers and the federal money is lower than what many farmers paid for their quotas, which sold for as much as $1.50 a pound.

"A $1.05 won't come close to getting some of these people out of financial trouble," said Garry Proven, co-chairman of the New Tobacco Alliance Committee, a joint effort of the Landowners Association and National Farmers Union.

The deadline for applications for new licence eligibility is May 15 but it remains to be seen how many farmers might now try their hand at tobacco growing in the province.

Cigarette companies are offering about $1.90 a pound for tobacco, well below the current production cost in Ontario of about $2.50.

"Hardly anybody is going to want to grow tobacco -- there isn't enough money in it," Proven said.

Under the transition program, those taking the transition funds are required to undertake never to grow tobacco in the province.

Anti-smoking advocates have been arguing a loophole could allow farmers to cash in on the program but stay in the business by transferring their quotas to a family member to surrender.

Figures show the number of quota transfers ahead of the deadline was fewer than 20, some of involving estates and transfers from deceased spouses.

"We had an audit of all the applications here by an independent firm and that has been completed," Vandendriessche said.

"We have followed the program, have walked through it with the auditors."