More acres in the hands of fewer growers. That pretty much describes the Georgia tobacco production situation for 2005, according to J. Michael Moore, University of Georgia Extension tobacco specialist.
While the state's agricultural statistics service is predicting a relatively small drop in Georgia tobacco acres this year — from 23,500 to 19,000 — Moore says only about half of the approximately 1,000 growers who planted tobacco in 2004 will plant again this year. And, he adds, the predicted acres for 2005 is questionable.
“The numbers are very fuzzy,” he says. “There's no required reporting anywhere of contracted pounds. The only information you can get is word-of-mouth, and I'm not sure how much stock to put into that. It's a guess.”
This will be a transitional year for Georgia tobacco producers, says Moore. This past fall, the federal government ended the tobacco quota program that began in the 1930s. The program helped farmers receive consistent prices and guaranteed a steady supply for U.S. tobacco companies.
Tobacco companies are scheduled to pay growers about $10 billion in compensation over the next 10 years in the form of a quota buyout. The buyout and uncertain future have prompted many Georgia growers to exit tobacco production, says Moore.
“There's also a lot of uncertainty and concern because we're now faced with late decisions on contracts, resulting in the late seeding of beds and delayed orders for greenhouse plants. All of this meant that our plant situation was tight to begin with. Now, we've had 12 inches of rain in a two-week period, and only a few growers have been able to get into their fields,” said Moore in mid-April.
Transplanting is running behind, says Moore, certainly behind the April 7 cutoff date for reducing the incidence of tomato spotted wilt virus in tobacco. At a time when more than half of Georgia's crop usually has been planted, only 5 percent had been planted, he says. The planting window normally is March 20 to April 20.
Those farmers who still grow tobacco now contract their crop directly with the tobacco companies, says Moore, and many are disgruntled with this year's offerings. “Companies didn't offer the contracts until late, and growers were not pleased, especially with the Reynolds and Universal contracts. They were very low. Also, the Reynolds contract requires dropping one-third of the leaves on the bottom part of the plant onto the ground, and not harvesting them. This reduces yields by about 20 percent and reduces the overall value of the crop by about 15 percent, according to North Carolina data,” he says.
The average price for tobacco last year was $1.85 per pound while contracts this year are about 35 to 40 cents less, he says. This is near the break-even level for many growers.
Growers do expect to receive buyout checks by the end of September, says Moore. But in the meantime, there's no ready capital to pay operating expenses. “We have a good number of growers who have retired, and some who have turned their operations over to family members. There doesn't appear to be another crop that's directly replacing tobacco. Some growers are in limbo, and they're not sure what they'll be doing.”
Some growers have said that they'll sit out this year and possibly grow tobacco again next year, but Moore doesn't think that's likely. “I believe once a grower has sat out for a year, he probably won't come back. Many growers have sold barns and other equipment needed for producing tobacco.”
But it's still too early, he says, to count out Georgia tobacco growers. Once the U.S. tobacco industry settles from this transition year, the companies may want a more stable supply that's closer to home, and they'll increase their contracts with U.S. farmers, says Moore.