It's a new day in tobacco marketing, and with one year of the post-buyout era behind us, it appears that farmers can hope for success if they come in with the right attitude.
At least, that's what flue-cured tobacco grower Thomas DuRant of Gable, S.C., believes. In a speech that kicked off the recent 42nd Tobacco Workers Conference in Charleston, DuRant advised growers to look at their relationship with buyers in a different way.
“We have to bring our ‘A game’ to tobacco production,” he said. “Each farmer will have to be a reliable source of raw product at an increased efficiency level. Reality dictates that we perform to the best of our ability and live up to expectations of our buyers.”
For most of his leaf-producing life, DuRant says the dynamic between growers and manufacturers has tended to be adversarial. But that needs to become a thing of the past.
“Before, there tended to be resentment among farmers toward the companies that they were too prosperous,” he says. “But now, I want the companies to be as successful as possible. It benefits me. I want to provide the best product I can as long as I can.
“We no longer have an adversarial relationship. There is a long-term relationship now. My desire is to build on that relationship.”
An immediate benefit of the buyout is that there is now at least a chance that production is headed back up. “We have grown as much as 200 acres on this farm, but in 2005, we only grew 112,” he says.
There is one “huge” advantage of the new system over the old one, says DuRant, and one that might not be apparent to anyone on the outside. “We don't have to lease land we don't really need just to get quota any more,” he says. “Production is not hinging on leasing land, and now you can grow it where you want to. It affected our efficiency (negatively) when we had to travel long distances to get quota grown on the farm it was attached to.”
There were also problems when the old program sometimes effectively dictated that tobacco be grown continuously on certain land. That threatened to lead to yield-reducing disease problems. Now that those decisions are up to the grower, rotations should be improved, DuRant says.
Management is going to be very important in the free market era, but it will be a little different than what it was before.
“It is important that we know what our expenses are,” he says. “There has to be a willingness to revisit those numbers and modify them.”
Justifying the purchase of new equipment is going to be a challenge. “With thin profit margins, how can capital investment be made? We have to maximize our yield and our efficiency. It may take 2,500 to 2,600 pounds of quality (flue-cured) tobacco per acre to survive. We can't plant a lot to get a little.
“If there are tax tools available to us, we need to find them. Asset management is the direction we should be headed in.”
There used to be one certainty in the American Tobacco Belt, DuRant says, and that was that tobacco was king. DuRant reminded the conference that it was not so long ago that local school systems would routinely delay the beginning of the fall term if tobacco was still in the field needing to be harvested.
Now, tobacco has lost its priority everywhere, and farmers are not sure how to gauge the future. But DuRant said growers can rise up to the challenge.
“There are uncertainties and, yes, fears accompanying those uncertainties. But we are not the only industry that faces fear and uncertainties in the future.
“We have an advantage over our competitors. Our tobacco belt region is unique. The quality is there — it is distinct and not duplicated (anywhere else), and worthy of a premium. With efficient management, we (growers and manufacturers) can both profit.”
If expansion in flue-cured production occurs anywhere, it will do so despite the exodus of perhaps more than 50 percent of the farmers who were growing flue-cured before the buyout, said North Carolina Extension Economist Blake Brown and South Carolina Extension Agronomist DeWitt Gooden in a report prepared jointly.
If any expansion occurs in 2006, it is most likely to occur in eastern North Carolina and South Carolina, Brown and Gooden said.
But there is no guarantee that production would get back to 2004 levels. Flue-cured production in South Carolina in 2005 fell 22 percent from 60.8 million pounds in 2004 to 47.2 million pounds, according to the USDA Crop Production report.
Plantings were 23,000 acres, about 20 percent fewer than in 2004. Yields were down 200 pounds at 2,050 pounds per acre.