It was a roller coaster ride for most tobacco growers in 2013. The lowest point was the excessive rain and resulting yield losses. The peak was the high prices offered when buyers realized there wasn't enough leaf to go around. Will those high prices continue?
Flue-cured tobacco has been enjoying an upward trend in demand the past two years, and much of that increased demand has come from China.
“That upward trend has more than offset declines in consumption in the U.S. and other developed countries,” said North Carolina State University Extension economist Blake Brown. “But it is hard to predict how far into the future we will see it continue.”
Burley production was less than what was needed by tobacco manufacturers, so we should see a seller's market for this upcoming marketing season, said Will Snell, University of Kentucky Extension economist. “But it is important to realize that increasing short-term market opportunities and higher prices for U.S. burley growers are being driven more by tight supplies than overall demand expansion.”
Based on the anticipated supply/demand balance, there is potential for burley contracts to increase in volume again in 2014. “But a multitude of long-term uncertainties remain including immigration reform, future crop insurance changes, U.S./global tobacco regulations and the impact of a small but growing market for harm reduction tobacco products,” Snell said.
Dark tobacco's outlook remains very favorable given projected sales growth for smokeless tobacco products, said Snell.
Increasing sales of domestic snuff and limited foreign competition have benefited dark tobacco growers.
U.S. snuff consumption has increased annually since the mid 1980s thanks to new product introductions, successful marketing programs, restrictions on cigarette smoking and perceived lower health risks compared to combustible tobacco products.
Domestic snuff sales were up 3.3 percent in 2012, with a four percent growth rate during the first half of 2013, slightly below growth of the past decade.
Lessons to learn
What can farmers learn from the wet season of 2013? A number of farmers and Extension specialists shared their thoughts about that question at the request of Southeast Farm Press:
-- Kevin Gardner of Macclesfield, N.C., said that thanks to the rain in eastern North Carolina, his flue-cured leaf had little body. “It didn't have a good root system, and the yield was off,” said Gardner, who farms with his father, two uncles and a cousin. As a result, he is also worried about the nicotine content of the U.S. crop.
“The nicotine levels were very low," he said. “That could cause problems down the road. What makes American flue-cured so valuable is the way it smokes, and nicotine is an important part of that. A low-nicotine crop is expensive for the companies."
-- Ricky Webb of Saratoga, N.C., said that his crop, like many others last season, was good in quality but a little short in yield. “We only made 2,650 pounds,” he said. “We would like to have made 3,000 pounds.”
The average price was considerable consolation. “We averaged $2.18 a pound,” he said.
In hopes of replacing nitrogen that had been lost to leaching, Webb applied some 24S using a drop nozzle. “We put it right on the ground where the plant needs it.”
All the wet weather contributed to target spot, and Webb had to make three applications of Quadris. The physical character of the crop helped in the curing. “We were able to get the crop cured quicker than most years,” Webb said. “It took about eight days per cure.”
He wishes it had cured even faster. This crop was late in maturity, and he lost some leaf because his curing capacity wasn't adequate. “We made 94 percent of what we contracted to produce,” he said. “We would have made it all if we'd had seven more barns.”
-- Barn space also proved to be a problem for flue-cured grower Kenneth Dasher of Live Oak, Fla. “We had our best ever crop until June,” he said. ”Then it rained 28 out of the 31 days in July.” Maturity was delayed, but when it started getting ripe, it came off fast. “As a result, some burned up on me.”
-- Plenty of barns were bought in 2013, and that trend seems likely to continue. An industry report said that the current bulk curing barn inventory includes many old wood-frame barns that show signs of deterioration. Though still functioning, they are not reliable and are expensive to operate and maintain. About 19,200 bulk barns were thought to have been used in 2013. Half will require replacement in the near future, the report said.