A soft place to land, P. 2: Alliance One to the rescue

The U.S. Growers Direct debacle has been resolved, at least to some degree. Aliance One International decided this morning to offer to accept delivery of all tobacco contracted by USGD. It will use its own price schedule and will pick the tobacco from the USGD buying station at which it was contracted. USGD staff will be retained to buy and handle the leaf, and these individuals will be supervised by Alliance One personnel. But USGD growers will have the option of selling to any other buyer they may want to, with no penalty. Jeff Griffin, Grower Affairs manager for the leaf department of Alliance One, told an emergency meeting in Wilson, N.C., of the Tobacco Growers Association of North Carolina (TGANC) this morning (September 15) that his company just decided to take this step earlier in the day. "It is effective immediately, but growers should not deliver their tobacco to their buying station until they receive instructions from the agent they have dealt with," he said. The 100 or so farmers who attended the meeting were delighted by this news (and to tell the truth, so was I). Graham Boyd, executive vice president of TGANC, said that the Alliance One decision amounts to a "rescue" of USGD growers, and it will benefit the market as a whole. "It means this tobacco won't have to hunt for a home," he said. "It gives a formal method for this tobacco to enter the marketplace." I have more details but I will hold them so I can get this out. I wrote this rather quickly so please forgive any typos.

Looking for a soft place to land

A story is told about the great boxer George Foreman. He once fought another boxer of lesser talent. When the opponent entered the ring and realized he was in great danger of getting knocked out, he asked his trainer for advice. The trainer replied, "Start looking for a soft place to land!" If I had substantial tobacco contracted to U.S. Growers Direct, looking for a soft pace to land is exactly what I would be doing now, because I am losing hope that this company can mount a leaf-buying campaign as ambitious as the one it contracted for with growers. I was hoping to tell you in this newsletter that USGD stations have opened. But as best I can tell, USGD has still not begun receiving leaf. I say this with some uncertainty, because every time I have called their central office, I get put on hold until a recorded message comes on saying I should hang up and call again. That is par for the course for these people. In fact, I have to say this whole experience has been very humbling to me. In the 33 years that I have been reporting on tobacco, I have many times been misled, avoided or lied to by companies who had something to hide. But this is the first tobacco company I have ever dealt with that doesn't recognize that I exist!  Well, enough about my wounded ego. I have been reliably informed that the Douglas, Ga., station did not open Friday, as was planned, while another reliable informant told me the Louisburg, N.C., station had not opened by mid day Friday which makes me think it unlikely that it opened at all. I don't know about the other stations--which I believe are in Clarksville, Va.,  Wilson, N.C., Goldsboro, N.C., and Lake City, S.C.--but I am guessing they didn't open either. I am told that a small amount of tobacco had already been sold at the Douglas station, apparently to a single buyer, but that the station ceased buying right after that. By the way, if anyone can correct me on any of this, feel free to call or email me at the numbers below...I can't tell you how much I hate to say this but it is beginning to look like Hurricane Irene was the best thing to happen to the 2011 crop. Thanks to storm losses, I am already hearing that some major buyers have little hope that they will be able to meet their needs from their contracted growers. There will certainly be more of a market for excess tobacco than usual. In my next issue, out in about two weeks, I will provide a list of secondary markets you could turn to. If there is anyone out there who wants to be on that list, email me at chrisbickers@gmail.com, or call me at any time at (919) 789-4631. Alternative markets might just turn out to be the "soft place" you need to land on. Late note:  I just called USGD to give them one more chance to set the record straight. I was referred to a woman. I asked if any of their stations had began purchasing tobacco. She said yes. I asked which ones. She said she would have someone call me. I said I needed to hear from her in an hour. That was two hours ago. What a surprise. [Since that time, I have learned that the Douglas, Louisburg and Wilson stations opened Monday.]

The rundown from Irene




Hurricane Irene damage in North Carolina fell mostly from Wilson east to the coast, says Sandy Stewart, N.C. Extension tobacco specialist. "The farther east you went the worse the effect." When plants are beaten around like they were, they produce ethylene, the chemical involved in ripening. Eventually, the leaf begins to deteriorate and the condition and quality is much in question. The damage will be varied across the state. Some counties, particularly in the Sand Hills and Piedmont, will not have any damage at all, while some in the east will lose 80% to 90% of their crop. But he thinks it will be several weeks before a reliable number can be derived for damage statewide. "But I was encouraged to talk to a grower in Sampson County on September 8 who says he was pleased with the quality of the leaf he had harvested since the hurricane," he says. "He had been able to harvest it soon after the event, and that makes a big difference." Tobacco harvested more than 10 days after the hurricane will probably not fare so well. In Virginia,farmers continued harvest as they tried to salvage their crop, according to the weekly state crop report. Tobacco was blown down in some areas, but those producers seem to think it will be okay, the report says. In Nottoway County, Extension agent Jimmy Gantt says 

Irene blew approximately 60% of the tobacco crop into a moderate to heavy lean. "Wind damage to the leaves was only 5% to 10%," says Gantt. "The main problem will be the inability to use mechanical harvesters in a large portion of the flue crop."

Georgia and Florida didn't get any wind or rain from Irene, says J. Michael Moore, Georgia Extension tobacco agronomist. "We could have used a little of that rain to revive things. There is a lot of green still in the leaf." But there are some very good yields in Georgia, despite the extreme heat in July and August. Some of the tobacco is thin because of the drought, and the scorching heat has lead to some burning on leaf edges. The yield will probably be better than last year, maybe 2,400 pounds per acre, he says. "The buyers are saying there is some good tobacco out there. This looks like a good year for us." Florida has a good crop too. Much of it is irrigated, so drought was not a big consideration.Moore expected that harvest would be finished the week starting September 11. The Georgia harvest probably will take at least another week.

Fire-cured tobacco in Kentucky and Tennessee could be the best since 2006. "We have been lucky to receive timely rains," says Andy Bailey, Kentucky-Tennessee Extension dark tobacco specialist. "The yield will probably be a little higher than normal, maybe 3,600 pounds per acre compared to the average of about 3,400 pounds per acre." About half the dark tobacco-both fire-cured and air-cured--has been harvested, Bailey says.

Burley in Kentucky is extremely variable, says Bob Pearce, Kentucky Extension tobacco specialist. In central Kentucky, there was good rain, but not far west of Lexington there were significant problems of dry weather. This week, Kentucky received some rain from remnants of Tropical Storm Lee. In some areas it was as much as four inches. Since then, it has been overcast and misty, stalling harvest to some extent. Again the conditions were drier in the western part of the state. "The moisture and humidity had a positive effect on curing quality," says Pearce. "We are not currently seeing a lot of problems with quick curing."

The best way to try to avoid unfavorable curing conditions for burley is by harvest timing. In general, says Paul Denton, Kentucky-Tennessee Extension tobacco specialist, the best curing conditions occur early in the growing season, when the temperatures are still warm and relative humidity is still high. "Harvest as much tobacco as possible before late September so that the yellowing and browning phases are completed before the middle of October. The cooler and drier conditions that typically occur in late October and November are less favorable for good curing." The current issue of the newsletter for the Center for Tobacco Grower Research includes an article by Denton on how to enhance burley quality in the curing process. To read it, go to www.tobaccogrowerresearch.com. And you will be able to learn more from Denton when the Burley Stabilization Corporation holds its annual meeting September 26 at its new office on 835 Bill Jones Industrial Dr., Springfield, Tn. Speakers will include Denton, Ky. Extension ag economist Will Snell and FDA Advisory committee member Arnold Hamm. The meeting will begin at 9 a.m. and end with a free lunch. Call (615) 212-0508 for more information.