As planting approached, it seemed increasingly likely that American tobacco farmers would not plant enough acres to meet the demand. The reason: the cost-price squeeze.
“The production costs for 2008 have far exceeded anyone's best prediction or reasonable expectation and remain very uncertain for the near future,” says Mel Ray, a flue-cured grower from Whiteville, N.C., and president of the Tobacco Growers Association of North Carolina.
“I can name growers of more than one million pounds worth of production that have informed me about their decision to divert tobacco acres to alternate crops.”
They all cite the escalating input costs of growing tobacco as the reason for quitting, Ray says.
“Unless we can immediately address the profitability of producing leaf in our marketplace, there will be fewer than enough acres planted to meet industry volume demands in the future,” he says.
In an aggressive step to get tobacco planted, the Flue Cured Tobacco Cooperative (FCTC) increased its average contract price for 2008 by 20 cents per pound to $1.80 per pound.
“We were trying to help our farmers remain viable,” says Keith Parrish of Benson, N.C., a director on the cooperative board. “You've got to have farmers to have tobacco, and there is only a finite supply of farmers. They can't stay in it if they can't make a decent living.”
With commodity futures prices at unprecedented high levels, the grower may decide to grow another crop on land intended for tobacco production, says J.T. “Tommy” Bunn, FCTC general manager. “Cooperative growers need assurance these unexpected high production costs will be offset by an increase in market prices for contract growers.”
Burley grower Roger Quarles of Georgetown, Ky., president of the Burley Tobacco Growers Cooperative, says, “There could very well be a ‘shortfall’ in plantings compared to what buyers planned because of the increased production costs and relatively low contract prices.
“The price has got to go up if farmers are to stay in it.”
Tobacco farmers in Tennessee and Georgia told the U.S. Department of Agriculture before planting they would set out considerably less acreage this season than last.
The Prospective Plantings report issued by the National Agricultural Statistics Service of the USDA in March projected that:
In Georgia, plantings of flue-cured will be down 14 percent at 16,000 acres, compared to the 18,500 acres planted in 2007.
In Tennessee, plantings of burley are headed for a 15-percent drop, from 13,000 acres last year to 11,000 acres this season.
The report was based on a survey of farmers conducted the first two weeks of March.
The news from Georgia seemed drastic, but Extension Tobacco Specialist J. Michael Moore says the numbers seemed credible.
“Those numbers seem pretty good,” he says. “They are certainly not out of the realm of reality.
He says a reduction in plantings at some level was a certainty, since some Georgia growers have opted out of tobacco altogether, and others have cut back their acreage.
Still, he thought in early April that plantings in the state might actually reach 17,000 acres.
Ironically, the drought year of 2007 was actually one of Georgia's better recent years in terms of yields, he says. “But they still weren't good enough. The problem is the ever-increasing price of fuel, fertilizer and other inputs.”
Also, Georgia is severely hampered by consistently high levels of tomato spotted wilt virus. It is so high that farmers have to take expensive preventive measures before planting whether they end up having the disease or not.
Among the other flue-cured states, Virginia and South Carolina were also projected to plant less, though not by nearly as much as Georgia: 6 percent for Virginia at 17,000 acres and 2 percent for South Carolina at 20,000 acres.
North Carolina, on the other hand, was expected to register a slight increase at 168,000 acres, up 1 percent from the 166,000 acres grown in 2007.
The projection for all flue-cured was 221,000 acres, down 1 percent from the 223,000 acres grown in 2007.
The report included no projection for Florida since that state has not participated in the USDA survey since 2006. But the tobacco specialist responsible for Florida tobacco production predicted that about 1,000 acres of tobacco (all flue-cured) would be grown this season, 9 percent below 2007.
All of the burley-producing states were expected to decline in acreage. After Tennessee, North Carolina and Missouri registered the biggest projected drop at 12 percent, down to 3,500 acres. Missouri's small acreage was also expected to drop 12 percent, to 1,400 acres.
Kentucky, the leading state, was projected at 71,000 acres, 8 percent below last season, while Virginia at 2,100 acres, Pennsylvania at 4,800 acres and Ohio at 3,400 acres were down 5 percent, 4 percent and 3 percent respectively.
Nationwide, acreage was projected at 97,200 acres, down 9 percent. This would be the lowest U.S. burley acreage on record.
No projections were available for Indiana, Maryland or West Virginia, since like Florida, those states have chosen not to participate in the survey.
Among the minor tobacco types:
Dark air-cured plantings were projected to increase by 50 percent in Kentucky and by 28 percent in Tennessee.
Fire-cured plantings were projected up 25 percent in Kentucky, up 13 percent in Tennessee, and about the same in Virginia.
Cigar-type plantings were projected at 6,020 acres, the same as last season.
Southern Maryland plantings were projected to increase by 182 percent, almost entirely in Pennsylvania. Less than 25 acres were expected in Maryland.
All tobacco plantings in 2008 are expected to reach 350,920 acres, down 1 percent from 2007.