The first day of the rest of their lives began for flue-cured tobacco growers recently in Raleigh, N.C., when their radically changed cooperative started the season with a new farmer-president, a new general manager and a new mission to make more use of U.S. flue-cured by manufacturing discount cigarettes.
At the annual meeting of the Flue-Cured Tobacco Stabilization Cooperative, the big news for the 300-odd farmers and others in attendance was that the factory purchased a little over a year ago by the co-op is now up and running.
“It has processed 27 million pounds of loan stock tobacco from the 2004 crop and approximately 1.3 million pounds of puffed stem at the Timberlake, N.C., facility,” out-going president Bruce Flye of Battleboro, N.C., said proudly. And it has obtained “the necessary licenses and permits to manufacture cigarettes at Timberlake for sale in the U.S.”
It has already begun manufacturing little cigars for the domestic market and cigarettes for the export trade. Some of these were on display at the meeting, including the Fact cigarette brand, which features a new filter element that is hoped to have some risk-reducing effects.
The cooperative may eventually produce domestic cigarette brands of its own. If it does, all the flue-cured in these cigarettes will be American.
The factory purchase was completed in August, and a subsidiary, U.S. Tobacco Growers, has been formed.
The mood of the meeting was upbeat, but there are definitely some clouds on the horizon for the cooperative. It is the object of at least two lawsuits, one of which seeks to dissolve the organization.
But little was said about litigation at the meeting. When the cooperative’s lawyer was asked if he wanted to say a few words, he drew a good laugh by saying, “I think they would rather not hear from me.”
On the positive side, Flye noted that since the last meeting, the cooperative had:
• Entered into 1,645 “exclusive” and 1,720 “non-exclusive” marketing agreements with its members.
• Arranged for 11 marketing centers to auction flue-cured tobacco in 2005.
• Received title to 83 million pounds of loan stock tobacco from the Commodity Credit Corporation as part of the buyout.
Flye, who was unsuccessful in his bid to gain re-election to his district seat, was succeeded as president by Albert M. Johnson of Galivants Ferry, S.C., a long-time member of the cooperative board. James C. Pate of Rowland, N.C., took Johnson’s place as one of four vice presidents, and Keith Parrish of Benson, N.C., took Flye’s seat on the board.
This organization has enjoyed considerable stability in its leadership. The new general manager, Arnold Hamm, a longtime cooperative employee, is only the fourth person to hold this position since the cooperative was founded in 1946. Hamm had succeeded Lioniel Edwards, who served as general manager since 1995 and Edwards retired at the end of April. Edwards, who had been ill with a brain tumor, died a few weeks later, and he was the subject of a memorial tribute at the meeting.
Hamm noted that his first year in the position would be the first in 60 years in which flue-cured tobacco is sold in a free market.
“The domestic marketing structure has lost its familiarity,” he said. “We are working hard like everyone else to try to find the balance point in this new way of producing and marketing tobacco. We won’t know how well we have done until after the marketing season, but right now we are exceeding our goals.”
Moot Truluck, director of the U.S. Department of Agriculture and Farm Service Agency's Tobacco Division in Washington, D.C., gave an update on the progress of the tobacco quota buyout.
It included one surprise. He said that if the full amount budgeted for the buyout–about $10.45 billion — is not spent on grower payments or the other costs included in the buyout, the unspent portion will be deducted from future assessments to the companies.
With two weeks of farmer and quota owner sign-up to go, $8.9 billion had been requested for buyout payments, Truluck said. That represented 80 percent of potential payments.
Eldred E. Prince Jr., chair of the history department at Coastal Carolina University, provided a highlight of the meeting with an amusing and sometimes stirring analysis of the tobacco grower’s current plight.
“Don’t spend your buyout payments on things you can do without,” he joked. “Mickey Mouse will still be in Florida after the bills are paid.”
He reminded that tobacco is the reason that Americans speak English and that it paid for our independence. But he was very apprehensive of the problems farmers may face dealing with buyers without a program. “The loss of third party grading is one of the most frightening aspects of the new marketing plan.”
Nevertheless, Prince ended his presentation with a challenge to the farmers to take advantage of the opportunity the buyout has presented them. “Seize it, it’s yours!” he told them.