Danny McKinney is a vocal opponent of tobacco contracting. But when a farmer asks him straight out whether it's best to sell tobacco on the auction floor or contract with a company, he has little choice but to say the latter, all the time “knowing what's going to happen” down the road.

“There's more money in the growers' pocket if he goes to contracting,” says the CEO of the Burley Tobacco Growers Co-op. “Instead of taking home $2 a pound, he'll take home $2.10 a pound.

“How do you argue with that?” McKinney says.

Tobacco has faced many foes from the outside, but the problem now is going to come from within, McKinney explained to a group of farmers at a conference in Panama City Beach, Fla. He also talked about the presidential tobacco commission's report.

In regard to the contracting, he says, the prices won't last. “After about three years of this, when contracting is the way to go and we're out of the auction business, then we're left with the companies paying us what they want to pay us. And we know that tobacco is going to go from $2 a pound to $1.20 a pound just as sure as ‘God made little green apples.’ Every one of my farmers know that.

“But God, it's hard to turn down that extra 10 cents because every one of them is just like me, they've got a farm mortgage to pay,” McKinney says.

In the end, contracting will be one of the things that destroys most tobacco farmers in this country, the Kentuckian believes.

The other issue is imports from smaller countries like Malawi. “Imports are killing us, and they tell us that we've got to compete,” McKinney says. “I cannot compete with 25 cents an hour labor that one farmer in Zimbabwe told me he pays for 10 hours of work.

In its final report issued in May, the presidential tobacco commission outlined the problems and offered some proposals to address health and economic issues affecting tobacco.

Two of the most controversial: Giving the FDA regulatory authority over tobacco and increasing the excise tax on cigarettes, McKinney says.

“After about three years of this, when contracting is the way to go and we're out of the auction business, then we're left with the companies paying us what they want to pay us…”

“We think FDA should have some regulation in tobacco…but we want to have some input,” McKinney says. Philip Morris has also said they support FDA regulatory authority. Other tobacco companies disagree, saying regulation, which would include advertising, would make the largest U.S. cigarette manufacturer more competitive than it already is and would cut them out of the picture. Philip Morris controls 52 percent of the cigarette market in the U.S., McKinney says.

The health side of the tobacco argument has created a situation where tobacco folks are in bed with health folks. “We're keeping one eye open,” McKinney says.

The presidential commission's mandate was to examine tobacco issues, find ways to improve the economic well being of tobacco dependent communities and prevent children from smoking.

In Kentucky, McKinney's group has worked with health concerns and the state legislature to pass laws aimed at decreasing under-aged smoking.

How best to help tobacco-dependent communities survive is also a critical issue, McKinney says.

Opening his remarks with a story about a neighbor who answered every bit of bad news with the phrase, “Could be worse,” McKinney told about the man's bad luck with his barn burning down, his cow being struck by lightning and his wife running around with every man in town.

To each misfortune, the man responded, “Could be worse.”

He explained to his neighbor that he had two other barns that didn't burn down and more dairy cattle that didn't get hit by lightning.

“Well, now, his neighbor was really getting ticked off and aggravated, so he went to him and said, ‘John, I hate to be the one to mention it, but your wife is fooling around with every man in town.’

“John looked down at the ground and said, ‘Every man?’

Jim says, “yeah.”

John asks again, “Every man?”

“Yeah,” Jim says.

“Well, it could be worse,” Jim says.

“Now, how could it be worse?” his neighbor asked.

“We could live in a bigger town,” John says.

In telling this story, McKinney reiterated that things are bad, but they could be worse.


e-mail: cyancy@primediabusiness.com