HOPING FOR BETTER NEWS ON CONTRACTING
Outlook glum: I didn't hear the optimism about contracting volume that I was hoping to at the Southern Farm Show last week. Indeed, some of my most reliable sources were dejected about the prospects. From what I could gather, a reduction in contract pounds of no more than 10 percent would be a moral victory at this point. That's for flue-cured--burley might get treated a little better because of its huge shortfall in 2015, I learned. More on this in my next issue, roughly.
Indirect benefit of lower fuel prices: Since gas prices have dropped by nearly half since last year, consumers should have more discretionary spending money in their
pockets," said Tim Yarbrough of Prospect Hill, N.C., outgoing president of the N.C. Tobacco Grower's Association, at its annual meeting on February 5. "As conveni-ence stores are a major point of sale for cigarettes one pack at the time, so it is reasonable to expect domestic sales for pre-mium brands to see a slight increase. If this holds true, it could be a glimmer of good news for domestic leaf used in premium blended pro-ducts." On the other hand, imported leaf is cheaper with a strong dollar. "So we have to work to market our premium leaf on its merits and the real value of its quality characteristics."
Balancing supply and demand: Universal Corporation George C. Freeman III continues to be optimistic that world leaf supplies are approaching balance with demand. The El Nino weather pattern has reduced crop production levels in Brazil and may also affect African crops, he says. "We believe that production declines resulting from this weather pattern, combined with reduced plantings in some origins, will bring markets largely into balance in fiscal year 2017."
How much of a decline? Universal is now forecasting an 11 percent decline in flue-cured crops produced outside of China in 2016 and a six percent decline in burley crops, compared to 2015.
Insects on organic: If you're setting in a field that is high risk for soil insects, plan on having extra plants, says Hannah Burrack, N.C. Extn. entomologist. "Many new organic tobacco growers are planting in fields that have not previously been in tobacco," she says. "We do not know what the potential is for soil insect damage in these fields, but organic tobacco growers should be aware of potential risk." Fields previously planted in grasses or pasture may especially foster higher wireworm populations, she adds. There are no effective organic insecticides to manage soil insects, so pre-transplant treatment is not recom-mended. "Instead, organic growers planting into recent grass or pasture land should be aware of potential damage and be prepared to fill in plants if necessary to ensure a good stand."
New marketing center in Southside Virginia: The U.S. Tobacco Cooperative has announced it will open a marketing center in La Crosse, Va., this season. It will primarily service the Cooperative's flue-cured growers in Va. and N.C. The 161,250 square foot facility is located near the intersection of Interstate 85 and U.S. Hwy. 58.
The marketing season in the Bluegrass turned out reasonably well. "It was a good marketable crop," says Roger Quarles, a grower from George-town, Ky. "I can't say anyone was really pleased with the season as a whole. 'Relieved' might be a better word." Good tobacco sold at an acceptable price, especi-ally near the end of the season, and although there was an obvious shortfall in yield, farmers seem to have done a little better in filling their contracts than might have been predicted, he said.
Another new float tray steaming unit is on the market this year. Carolina Greenhouses, Kinston, N.C., is selling the Steamerator tray cleaning system. With a capacity of 840 trays, it has doors at each end for loading without driving through. It takes 30 minutes at most to reach a temperature of 176 degrees, and it takes 90 minutes to run a cycle, according to the manufacturer. For more information on the Steamerator, call Carolina Greenhouses at 800-635-4532.
Watch for more news from the Farm Show in the next issue.
NEW GAP RECERTIFICATION MEETINGS
NORTH CAROLINA (Burley)
Monday, February 8, 2016
Wednesday, January 27, 2016
A new float tray sanitation system from Long Tobacco Barns of Tarboro, N.C., will be on display at the Southern Farm Show. The "Steaming Eagle" has the capacity to sanitize 1,029 two-inch high trays or 729 2.5-inch high trays per steaming cycle. It can be cycled several times per day and is designed to handle trays for 100+ acres per day.
The Southern Farm Show will take place at the North Carolina State Fairgrounds in Raleigh, N.C., from , through . It will be held at the North Carolina State Fairgrounds in Raleigh, N.C. There is no charge for admission or parking. The annual meeting of the Tobacco Growers Association of N.C. will take place from 10 to 1. A list of exhibitors with displays of particular interest to tobacco growers appears below.
How to explain the market downturn for flue-cured in 2015? Large inventories and large changes in exchange rates seem to be the prime factors, says Blake Brown and Will Snell, Extension economists in N.C. and Kentucky respectively. "Inventories accumulated in 2014 after larger production and unexpected lower demand in a number of markets," they wrote late last year. Then, the U.S. dollar strengthened against currencies like the euro. At the same time, the value of the currency of Brazil, the biggest competitor to U.S. flue-cured, fell. "The rising dollar and falling Brazilian Real mean that Brazilian products are much cheaper in the world market than U.S. products," they say.
Stability for burley? Looking forward to 2016, it appears burley is in a much better global supply/demand balance compared to last year, wrote Blake and Snell. Following a 17 percent drop in world burley production in 2015, Universal Leaf iscurrently projecting stable global burley leaf output for 2016.
What are the key factors affecting US burley and dark leaf production in 2016? Snell points to:
--An improved balance of global supply and demand as the year begins may minimize changes in contract volumes;
--Slowing sales of snuff should result in stable production of dark this season;
--A drop in the value of Kentucky tobacco to below $350 million in 2015 and 2016 seems likely after the post-buyout high of $448 million in 2014.
What are the major challenges facing American flue-cured in 2016? Brown suggests the following:
--Unfavorable exchange rates, particularly with the Brazilian reale;
--Continued erosion of cigarette consumption in developed countries due to health concerns.
--Hostile regulatory and tax environment for cigarettes in the EU and U.S.
--Changes in nicotine delivery technology to products that use less flue-cured than conventional cigarettes, such as e-cigarettes.
The final count for 2015: USDA issued its summary report on tobacco production in the season just ended on January 12. As in previous USDA estimates for this crop,volumes were down substantially for the two major types, and down to some extent for all other types except the cigar types of the Connecticut River Valley, although the fire-cured and dark air-cured types were down only slightly... The estimate for flue-cured is 482 million pounds, 16 percent less than last year and up three percent from the last USDA forecast in October. For burley, it is 145 million pounds, 32 percent less than last year and down five percent from the last forecast. Among individual states:
- NC: 374 million pounds, down 17 percent.
- VA: 49 million pounds, down eight percent.
- GA: 32 million pounds, down six percent.
- SC: 26 million pounds, down 21 percent.
- KY: 104 million pounds, down 36 percent.
- TN: 19 million pounds, down 20 percent.
- PA: 10 million pounds, down 15 percent.
- OH: 3.6 million pounds, down 16 percent.
- VA: 2.4 million pounds, down 17 percent.
- NC: 1.8 million pounds, down 30 percent.
- Fire-cured was down seven percent at 55 million pounds.
- Dark air-cured was down only 2.5 percent, at 17 million pounds.
- Massachusetts and Connecticut cigar types were up seven percent, at 4.5 million pounds.
- Pennsylvania seedleaf was down 21 percent at 3.7 million pounds.
- Southern Maryland light air-cured was down 25 percent at 3.5 million pounds.
Good news from Wall Street...sort of: "We expect favorable cigarette volume trends to continue next year," says Bonnie Herzog, Senior equity research analyst with Wells Fargo. "Cigarette volume trends should continue...to down around two to three percent." That is above the historical average decline.
Tobacco lost two good friends in the last 30 days.
- Joe Priest, a native of Hoke County, N.C., attended N.C. State University, graduating in 1967, and began a 48-year career with the U. S. Department of Agriculture and N.C. State. Among many accomplishments in that period, he is remembered particularly by his colleagues for serving for more than 20 years as coordinator of the regional Tobacco Growth Regulator Committee, which facilitates and plans plant growth regulator research in the flue-cured tobacco states. "He always did more than expected and did it correctly," says W.K. "Bill" Collins, his longtime co-worker. "He inspired the respect of the people he worked with."
- Eddie Baker, also a native of Hoke County and also a graduate of N.C. State, was president and founder of Cross Creek Seed, Inc., of Raeford, N.C. By the end of his career, Cross Creek was producing tobacco seed, pelletizing tobacco seed, growing tobacco transplants, sanitizing tobacco greenhouse trays and producing tobacco leaf. "He founded and developed a full spectrum company for the tobacco world," remembers his son Ed. "This wide view approach gave my father the insight and experience to better serve the farmers of tobacco world, of which he was a happy member. Combining all this under one roof, Eddie did what no other U.S. seedsman has done. And of that he was proud."
TOBACCO-RELATED EXHIBITS AT
THE SOUTHERN FARM SHOW
Listed by location on the N.C. State Fairgrounds
Jim Graham Bldg.
- 221 Taylor Mfg. Curing barns, wood furnaces.
- 222 Evans Mactavish Agricraft.
- 227 Kelley Mfg. Co. Agricultural equipment.
- 704 (also 8131) Agri Supply. Agricultural materials.
- 807 Mechanical Transplanter Co. Transplanters, seeding equipment.
- 808-9 BulkTobac (Gas Fired Products). Curing equipment and controls, poultry brooders, pig heating, space heaters.
Kerr Scott Bldg.
- 1002 TriEst Ag Group (Formerly Hendrix and Dail). Fumigation supplies.
- 1005 Flue Cured Tobacco Services. Curing controls.
- 1015 Yara North America. Fertility products.
- 1104 GoldLeaf Seed Co. Tobacco seed.
- 1114 Transplant Systems. Greenhouse systems.
- 1116 Cross Creek Seed. Tobacco seed.
- 1121 AAA Scale Co.
- 1201 Carolina Greenhouse & Soil Company.
- 1202 Reddick Equipment Company Inc.
- 1302 Mid-Atlantic Irrigation.
- 3127 (also 8611) Benchmark Buildings & Irrigation Inc. Pre-fabricated metal buildings, transplanters and irrigation equipment.
- 3135 Southern Container Corporation of Wilson. Bale sheets and packaging.
- 3522 First Products Inc. Fertilizer boxes for cultivators and tool bars.
- 3605 MarCo Mfg. Tobacco machinery.
- 3714 (also 8615) Cureco, Inc. Curing controls.
- 5007 ABI Irrigation. Irrigation equipment.
- 5023 Walters Air Assist Plant Release System. Plant release system.
- 5110 Britt Technical Services, Inc. Rotem Curing Controls.
- 7025 Drexel Chemical Company. Sucker control chemicals.
- 7323 Berger. Plant growing mixtures.
- 7327 Teeterville Garage & Weighing Systems. Moisture controllers for tobacco barns and weighing scales.
- 8035 Equipmax. Tobacco spray equipment.
- 8122 Carolina Tobacco Services. Curing barns, mechanical harvesters, heat exchangers.
- 8204 Wilson Manufacturing. Farm trailers
- 8217 Granville Equipment. Tobacco Machinery.
- 8301 World Tobacco. Bulk fertilizer handling equipment. Curing barns.
- 8323 De Cloet SRL. Tobacco machinery.
- 8546 Kelley Mfg. Co. Agricultural equipment.
- 8604 First Products Inc. Fertilizer boxes for cultivators and tool bars.
- 8705 Evencure Systems. Curing controls.
- 8701 Tytun Ltd. Bulk flue-curing barns.
- 8712 Long Tobacco Barn Co. Bulk tobacco curing barns.
Sunday, January 17, 2016
Three or four is better than one or two when it comes to harvesting. Some N.C. flue-cured growers were forced to cut reduce their number of harvests the last two seasons because of black shank or Granville wilt pressure. Vann urges three or four harvests this year if at all possible. "A once- or twice-over crop is not going to sell very well in the current leaf market," he says. "And non-tobacco material is also going to be a problem." He says an emphasis on quality is going to be N.C. Extension's focus in winter education programs.
A way to avoid tray washing: David Sanderson, farm manager, WF Partnership, Newton Grove, N.C., experimented with 600 Trilogy plastic float trays in 2015 and will do so again this season. The black trays offer one definite advantage over styrofoam trays, he says. They are much easier to clean, and you don't have to steam them. "It cost me about 25 cents each to steam clean our styrofoam trays, so there is a definite savings," he says. The performance of the Trilogy trays is quite satisfactory. "They wick very well, better than our styrofoam trays, and the quality of the plants is equal," says Sanderson. Matthew Vann, N.C. Extension tobacco specialist, says Trilogy trays could offer some benefits. "Plastic trays should be easier to sterilize than styrofoam trays, and there is a longevity issue. It has been predicted that the black trays will last 10 to 15 years, possibly 20 years, which is much longer than styrofoam trays." There may sometimes be wicking issues with styrofoam trays but they occur mainly when they are brand new, he adds. For more information on Trilogy trays, call Ray DeBruhl at 919 610 7896. Or visit www.PlasticFloatTray.com.
Steam it yourself: Long Tobacco Barns has developed a system to sanitize greenhouse float trays. Called the Steaming Eagle, you can see it in operation at an open house Friday, January 15, from 10 a.m. to 2 a.m. at Long's manufacturing facility in Tarboro, N.C. The location is manufacturing facility located at 401 W Hope Lodge St. For more information, call 252 641 4796.
In search of a plant pathologist: The position of N.C. Extension plant pathologist with responsibility for tobacco is currently open. The new pathologist will divide his/her time between tobacco and other row crops that have not yet been identified but may well include cotton and corn. Mina Mila, who held the position for a number of year, is still on the NCSU staff as a teacher and researcher.
A vote on export promotion: Flue-cured growers in the Carolinas will vote on January 27 whether to continue their support of Tobacco Associates, the organization that uses grower check offs to fund export promotion and expansion programs. It must be revalidated in North and South Carolina in a referendum every three years. The check-off amount in N.C. is one fifth of one cent per pound, or 20 cents per 100 pounds. The S.C. amount is higher: one half cent per pound or 50 cents per 100 pounds. But board members have pledged not to actually collect more than 20 cents. The referendum will be conducted at county Extension offices. Allen Wooten of Burgaw, N.C., the farmer chairman of Tobacco Associates, urges growers to vote yes. "With domestic consumption declining, we depend on exports to hold our market where it is today," he says. And there have been successes. "We have had a very active program with Vietnamese companies since trade relations were normalized in 1996. Sales were zero then--now they are up to 500 tons a year."
The Southern Farm Show begins Wednesday, February 3, and ends on the following Friday. It will be held at the North Carolina State Fairgrounds in Raleigh, N.C. Entrance free. The annual meeting of the Tobacco Growers Association of N.C. will take place Friday from 10 to 1. Following is a list of tobacco-oriented exhibitors appears below. Note: This list may not be complete. Additions are welcome and will appear in the next issue. Submit via firstname.lastname@example.org.
Jim Graham Bldg.
Kerr Scott Bldg.
UPCOMING GAP RECERTIFICATION MEETINGS
All beginning times are EST except as noted.
Sunday, January 10, 2016
Friday, December 18, 2015
About 300,000 pounds of burley from North Carolina plus a little from Tennessee were sold at auction on December 14 at Planters Tobacco Warehouse in Asheville, N.C. But the results weren't as good as hoped. "The price range for most tobacco offered was $1.10 to $1.50 a pound," said warehouseman Billy Anders.
"The farmers were gene-rally discouraged."One likely reason for the low price was the preponderance of carryover from 2014 on the floor. Anders estimated that about 60 percent of the leaf was carryover, and it didn't find favor with buyers. More new crop burley had been expected but dry conditions over the previous 10 days made it difficult to strip leaf from the stalk and bale it. Now, substantial unsold burley remains on farms in western North Carolina, Anders says. "If there is enough interest, we may hold another sale at the end of January." For more information, call Anders at 828 777 8577.
A quarter million pounds were sold at this week's sale at the Big Burley Warehouse in Lexington, Ky., says manager Darby Montgomery. The practical top was $1.73 per pound for good cherry tips, he says, while low-quality tobacco from last season brought $1 or less. His rough estimate of the average price is $1.40 a pound, with a lot selling for $1.50 to $1.60. "If you had good quality, you did all right," he says. He expects to have much more tobacco to sell after Christmas.
Flue-cured auctions ended well. "Some sold as high as $1.97 a pound, and some sold for as little as 20 cents," says Mann Mullen, owner of Big M Warehouse in Wilson, N.C. "We moved quite a bit of tobacco, and everyone seemed satisfied with the price.
All tobacco received a bid, and all was sold." Some of the flue-cured brought to Big M was grown without a contract, says Mullen, but more of it was excess tobacco left over after the grower had achieved the "crop throw" requirements on his contract. "We heard time and again that once a farmer hit the crop throw, then the company didn't want any more," he says. "I am sure farmers with tobacco that fell out of crop throw were glad to have an auction." Thanks to weather, top quality just was not there. "This was a domestic crop," he says.
Going against the grade: A grower who sold at the recent auction at Planter's Warehouse in Asheville says he had only 2014 carryover left to sell. It was still on the stalk, and he didn't think it feasible to pay $10 an hour or more to get a crew to work it off. Instead, he decided to strip it into one grade, which he could do himself. With the sale behind him, he thinks now he did just fine. "You can't afford to grade tobacco if you're paying $10 an hour for stripping," he says.
A lesson learned: The 2015 flue-cured grown in eastern North Carolina was a dry weather crop that was hard to cure, says Peyton McDaniel of Whitakers, near Rocky Mount. In retrospect, he thinks planting earlier might have helped. "There were times when we couldn't harvest because of the weather and then we had a hard time getting our tobacco in before the rains came in September." That was particularly a problem on the organic tobacco he grows with brother Billy McDaniel and cousin Phillip
Watson. "We will start setting our organic tobacco a little earlier in 2016 so we can harvest earlier and still get it fully mature," he says.
Growers to meet: The annual meeting of the Council for Burley Tobacco will take place January 16, at the Owensboro Convention Center during the Ky. Cattlemen's trade show. The annual meeting of BTGCA will take place the day before at 1...The annual meeting of the Tobacco Growers Association of N.C. will take place from 10 a.m. to 1 on the last day of the Southern Farm Show (see next item).
Show time! The S.C. AgriBiz and Farm Expo is scheduled for January 13, and 14, 9 a.m. to 4 p.m., in the Florence Civic Center. The Southern Farm Show will take place February 3, 4 and 5 at the North Carolina State Fairgrounds in Raleigh, N.C. It will end on February 5. Watch for advance coverage of both shows in January issues of Tobacco Farmer Newsletter.
Winds that twisted stalks made sucker control difficult on burley in the Bluegrass, says Jerry Rankin, a farmer and auction operator in Danville, Ky. "We couldn't get in some fields with high boys to spray MH because the tobacco was so tangled." Some tobacco didn't get any MH at all, he says.
UPCOMING GAP RECERTIFICATION MEETINGS
NORTH CAROLINA (Flue-Cured)