What is in this article?:
- What tobacco farmers can expect in 2014
- Lessons to learn
- Most U.S. tobacco growers experienced a roller coaster ride in 2013.
- The low point was excessive rain and resulting yield losses.
- The peak was high prices when there wasn't enough leaf to go around.
FARMERS WILL BEGIN seeding tobacco greenhouses soon, and they all hope to produce plants as healthy as this one grown in a previous crop by Jay Head, left, nd George Marks, burley and dark growers near Clarksville, Tenn. But how much should they grow?
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.