Tobacco crop up a bit, down from a decade ago

tobacco farmer

Third-generation Kentucky tobacco farmer Gene Witt says this year's crop, his 46th, may be his last.

SHELBYVILLE, Ky. — It’s harvest time in much of the nation’s tobacco patches, and this year’s harvest is expected to be among the smallest in at least a decade.

Farmers are expected to produce 726 million pounds, the U.S. Department of Agriculture said. That’s up 1 percent from 2010, but down nearly 28 percent from a decade ago, when more than 991 million pounds made its way into cigarettes and other products.

Tax increases, smoking bans, health concerns and social stigma have driven a decline in cigarette sales, but the drop is less stark outside the United States. Growing markets such as Asia offset worldwide declines and contribute greatly to U.S. exports.
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Gene Witt’s 46th tobacco crop might be his last in a part of the country where the “golden leaf” was once an economic mainstay. The crop that helped build much of the South and was once celebrated at festivals now seems more a vestige of the past.

The third-generation Kentucky tobacco farmer was upbeat about the prospects for his long, green tobacco leaves hanging in a barn to cure for the fall market. A timely rain the night before promised to sprout more growth in the crop still to be harvested.

But Witt, 62, said he’s increasingly worn down by the unpredictability of tobacco farming - from the weather to the tobacco companies that sign up farmers under production contracts to supply them with leaf. The companies can pick and choose what part of a crop they want to buy at market.

“It used to be fun, and you made some money,” Witt said. “You’re not making as much money now, and it’s not as fun.”

U.S. tobacco production has fallen sharply since the 2004 tobacco buyout, which ushered in a free-market system to replace a Depression-era price support program. The venerable program was reeling from steep declines in tobacco demand because of anti-smoking efforts. Some tobacco companies also have set their sights on crops overseas, where tobacco often can be grown less expensively.

In Kentucky, the nation’s top producer of burley tobacco - an ingredient in many cigarettes - farmers are expected to bring 126 million pounds to market, down about 11 percent from last year and down nearly 43 percent from 10 years ago.

North Carolina is the country’s top producer of flue-cured tobacco, growing more than 3 million pounds in 2010. Overall production of flue-cured tobacco is expected to be up 3 percent this year.

The increase is due to a new purchaser, U.S. Growers Direct, said David Reed from Virginia Tech’s Southern Piedmont Agricultural Research and Extension Center. The N.C.-based company, which contracts with farmers and exports products overseas, would not say which tobacco companies it was working with for its purchases. Reed and others said the tobacco is headed for the Asian cigarette market, and exports have played a big role for U.S. tobacco farmers.

However, the coming selling season could be crucial in determining how many farmers sign up with tobacco companies to grow another crop next year, said University of Kentucky agricultural economist Will Snell.

Farmers weigh options

Decrease in demand has caused some tobacco farmers not to put much or any money into rehabbing old tobacco barns used to hang and dry their crop - another example of the dwindling industry. And with grain prices high, some farmers might opt to get out of costly tobacco growing and convert that land into corn or soybean production. Others might turn tobacco plots into pastures for beef cattle.

“Growers just can’t sustain,” Reed said about the costs and uncertainty of being a tobacco farmer. “You just can’t keep doing that.”

Farmers contract with tobacco companies, which then come to local receiving stations to grade and purchase leaf. But how much they buy depends on the quality.

In the United States, large tobacco manufacturers include Richmond, Va.-based Altria Group, parent company of maker Philip Morris USA; Reynolds American, the Winston-Salem producer of and; and Newport maker Lorillard Inc., based in Greensboro.

Witt has a production contract with Philip Morris International. Last year, Witt averaged $1.62 a pound for his tobacco, enabling him to eke out a profit. The year before, he averaged $1.79 to $1.82 a pound.

Many farmers last year had at least a part of their crop rejected by their contract buyers, and some growers had big chunks of their crops turned away by the tobacco companies. That leaf ends up at auction, selling for much less than it cost to produce.

“Used to be, when you took your tobacco to market, you were happy to go get your check,” Witt said. “Last year, your stomach rolled over because when you took it down there, you didn’t know if they were going to take it or not.”


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