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MORE GAP DATES FOR 2013

KENTUCKY TENNESSEE GAP MEETINGS

January 11, 2013: 9:30 a.m. At the Tobacco Expo.  Lexington Convention Center. Lexington Ky. Call (859) 221-2465 for information.

January 31, 2013: 5 p.m. Woodford County Extension Office.  Versailles, Ky..  Contact the office at (859) 873-4601 to reserve a spot.

February 1, 2013: 1:30 p.m. Following the East Tn./Southwest VA/Western N.C. Tobacco Expo, Commercial Building #2, Appalachian Fairgrounds, Gray, Tn. Call Paul Denton at 865-974-8839 or the UT Washington County Extension office at 423-753-1680 for more information.

February 4,  5:30 p.m.  Garrard County Extension Office.  Lancaster, Ky..  Contact the office at (859) 792-3026 to reserve a spot.

February 5, 2:30 PM. Following the Tn./Ky. Tobacco Expo, Robertson County Fairgrounds, Springfield, Tn. Call Paul Denton at 865-974-8839 or the Robertson County Extension office at 615-384-7936 for more information.

THE OUTLOOK FOR US TOBACCO IN 2013

A burley farmer in Brooksville, Ky., strips his crop as the industry debates whether significant expansion is realistic.

FLUE-CURED

Growers enjoyed the best weather and produced their best crop since 2009. Both quality and quantity improved over the weather-stressed crops of 2010 and 2011. The most recent USDA crop report estimates 2012 production to be 494.6 million pounds, up from 344.6 million pounds in 2011. It estimated yield at 2,376 pounds per acre. But Extension and industry sources place the 2012 crop at considerably smaller levels. For example, Universal Leaf Tobacco Company estimated in October that volume will be 450 million pounds.

With very good quality in the U.S. and strong demand for flavor-style flue-cured from any source, 2012 prices reached what may have been record highs. Average price for 2012 could be close to $2 per pound, up from the estimate of $1.68 in 2011. Farmers reported very good grades for their 2012 crop.

Good quality is one of several reasons for higher prices for the 2012 crop. Flavor-style flue-cured is grown mainly in the U.S. and Brazil, though Zimbabwe is re-emerging. Due to poor weather, Brazil and the U.S. had poor to mediocre quality in 2010 and 2011. Consequently, global supplies of premium style flue-cured tobacco are currently low even though overall supplies of flue-cured are up. If this is the only factor in higher prices, and if the 2013 Brazilian crop is of good quality and sufficient quantity, U.S. prices could return to lower levels in 2013. However, tobacco buyers indicate optimism for the flue-cured market beyond the 2012 crop. More than a few buying interests are actively seeking ways to both retain current growers and increase production.

Why the increased demand for U.S. tobacco? There are two plausible reasons. First, increased cigarette production in China, particularly of higher-end cigarettes, may be increasing the amount of flavor-style flue-cured needed in Chinese cigarettes. Second, the global trend toward banning flavorings in cigarettes may increase the amount of flavor-style flue-cured needed in blends to compensate for no flavorings. Also, it may be that Brazil has hit a ceiling on the amount of flavor-style flue-cured it can produce. If so, then increased demand for flavor-style flue-cured will have to be met with increased production in the U.S. and Zimbabwe.

But the outlook is tempered as global cigarette production outside of China continues to decline. The coming year will tell much about how serious buyers are about increasing or retaining U.S. flue-cured production. Curing infrastructure here is aging, and with much uncertainty in the tobacco outlook and strong prices for competing crops, growers have little or no incentive to re-invest in curing capacity. Reinvestment in curing infrastructure likely will require industry involvement in lowering per-unit curing costs and evidence of long term commitments.

BURLEY

The outlook for the U.S. burley has, at least in the very near term, improved considerably with a significant tightening of the world supply/demand balance, because of a large decline in African burley production along with smaller full-flavor crops in Brazil and Argentina. U.S. burley growers are believed to have produced and marketed a larger crop in 2012, and there is potential for expanded acreage in 2013. According to USDA's latest crop report, U.S. burley acreage in 2012 was up 14 percent from 2011. While the drought certainly impacted the 2012 crop, tobacco, being a dry weather crop, fared fairly well. Currently, USDA pegs the 2012 U.S. burley crop at 202 million pounds, 17 percent more than in 2011 and the third largest volume since the buyout. However, labor challenges, along with late crops that were susceptible to frost, may have constrained some growers from harvesting all their available acres.

Global burley production fell 25 percent in 2012, despite the gains in U.S. production, according to Universal Leaf. Very depressed prices for the 2011 crop caused Malawi burley production to plummet nearly 70 percent in 2012, down to around 140 million pounds compared to 450 million pounds plus in 2011. Poor weather conditions led to a fall in Brazil burley production from 245 million pounds to 187 million pounds -- its lowest level since 1998. Argentine burley production for this previous crop year was also down, by 16 percent. So the U.S. leaf market can certainly absorb the expected larger 2012 crop, and probably at an improved price. 

Look for U.S. burley prices to increase from last year's $1.75 per pound average [that's assuming curing conditions are acceptable the rest of the season]. The top quality burley contract grades for the 2012 crop are around $1.90 per pound with #2 quality generally in the low $1.80s. However, contract and auction prices could conceivably end up higher given current market conditions and the expectation that this will probe to be a very good quality crop.

A 20 percent increase in world burley production is forecast in 2013 as production rebounds in Africa and to a lesser extent South America. This is expected to put global burley supplies more in line with needs.

Look for U.S. contract requests to stabilize and perhaps even increase if the eventual size of 2012 marketings is less than anticipated. But will growers respond to this increase? As in 2012, the question becomes given other profitable options, concerns over labor and other regulations, dilapidated infrastructure, and increasing contract demands of the companies. Long-term, the outlook for burley hinges critically on the global regulations on flavorings which are currently a critical ingredient in cigarette blends containing burley tobacco.

DARK 

Dark growers continue to benefit from growing domestic snuff sales and limited foreign competition. U.S. snuff consumption has been increasing annually since the mid 1980s. Sales were up around four percent in 2011 and up a similar amount in the early part of 2012. On the supply side, dark tobacco acres have been adjusting the past few years in response to an excessive crop produced in 2008. According to USDA's October crop report, U.S. dark fire-cured production is three percent higher than last year, while dark air-cured production is down seven percent. The anticipated crop sizes are close to recent usage levels, indicating that the industry is moving toward ideal supply/ demand balances. Look for dark fire-cured prices to be slightly higher than last year's average of $2.56 per pound for dark fire-cured and $2.28 for dark air-cured. 

Condensed from a recent presentation by Blake Brown, N.C. Extension economist, and Will Snell, Kentucky Extension economist, on U.S. Tobacco Situation and Outlook. 

Do we have enough barn space to cure a bigger crop? Two more curing barn manufacturers have expressed their interest in providing barns for flue-cured growers this year if there is a demand for them:

• MarCo Mfg. of Bennettsville, S.C., hasn't built bulk barns in quite some time either but company owner Tom Pharr insists it hasn't forgotten how. Call him for more information at 843 479-3377 or see the website at http://marcomfgllc.us/.
• A new company on the American market, Tytun Ltd. of Simcoe, Ontario, in Canada is prepared to make barns to sell here but will need to receive orders soon. Contact Larry Huszczo [pronounced hooz jo], at 519-428-0044. Or see the company website  www.tytun.ca for more information.

GAP meetings begin: GAP training programs start next week, with the first N.C. meeting on December 10 in Snow Hill and the first Georgia program on December 11 in Douglas, and the first South Carolina program on December 12 in Florence. The schedule for N.C. programs appears below. Sponsors request that you call the phone number listed and pre-register at least a week before the program you want to attend. Except for the December 11 meeting in Goldsboro, all N.C. meetings begin at 10 a.m. Registration begins at 9:15 a.m...The first Georgia and S.C. meetings are timed to coincide with U.S. Tobacco Cooperative contracting meetings and will begin right after lunch at the Holiday Inn Express in Douglas, 1636 South Peterson Avenue, on December 11 and at the Pee Dee Research and Extension Center, 2200 Pocket Road, Florence, on December 12...There will be future Georgia and S.C. meetings in connection with events sponsored by R.J. Reynolds, Alliance One and Universal, and possibly with Altria, say J. Michael Moore, Georgia Extension agronomist, and Dewitt Gooden, S.C. Extension agronomist. But the arrangements haven't been finalized. Call Moore at 229-386-3006 and Gooden at 843-206 -4218 for more information. Watch for more GAP meeting details in the next issue of TFN or here.

  

• North Carolina GAP meeting dates  
• 12/10 Elaney Woods Farmers Market, 470 Hwy 13 So., Snow Hill, N.C. Phone: 252-747-5831. Starts at 10 a.m.
• 12/11 Wayne County Extension Center. 208 Chestnut St., Goldsboro, N.C. Phone: 919-731-1521. Starts at 3 p.m.
• 12/14 Jones County Civic Center, 832 Hwy 58 So., Trenton, N.C. Phone 252-633-1477. Starts at 10 a.m.
• 12/17 Forsyth County Agricultural Center, 1450 Fairchild Rd., Winston-Salem N.C. Phone: 336-703-2857. Starts at 10 a.m.
• 12/20 Cumberland County Agriculture Center. 301 E. Mountain Dr., Fayetteville, N.C.28306. Starts at 10 a.m.
• 1/3 The Farmers Market of Rocky Mount, 1006 Peachtree St., Rocky Mount, N.C. Phone: 252-459-9810. Starts at 10 a.m.
• 1/4 Green Hill Club, 252 Club Rd., Louisburg, N.C. Phone: 919-496-3344. Starts at 10 a.m.
• 1/7 Martin County Farmers Market, 4001 West Main St. Extension, Williamston, N.C. Phone: 252-789-4370. Starts   at 10 a.m.
• 1/8 Johnston County Agricultural Center, 2736 N.C. 210 Highway, Smithfield, N.C. Phone: 919-989-5380. Starts at 10 a.m.
• 1/9 Pitt County Agricultural Center, 403 Government Circle, Greenville, N.C. Phone: 252-902-1709. Starts at 10 a.m.
• 1/10 Wilson County Agricultural Center, 1806 Goldsboro St., Wilson, N.C. Phone: 252-237-0111. Starts at 10 a.m.
• 1/17 Caswell County Civic Center, 536 Main St E., Yanceyville, N.C. Phone: 336-694-4158. Starts at 10 a.m.
• 1/18 Lois G. Britt Agricultural Center, 165 Agriculture Dr., Kenansville, N.C. Phone: 910-296-2143. Starts at 10 a.m.
• 
  

Virginia GAP Meeting Dates

• January 17, 9 a.m. Blackstone VA. Southern Piedmont Center. Contact: Haley McCann (hmccann@vt.edu) 434-645-9315 or Lindy Tucker (tucker07@vt.edu) 434-696-8312.

• January 23, 4:00 p.m.  South Hill VA. Meherrin River Hunt Club. Contact: Taylor Clarke (cclarke@vt.edu) 434-738-6191 x4371.

• January 24, 4:00 p.m. Chatham VA. Old Dominion Ag Complex. Contact: Stephen Barts (sbarts@vt.edu) 434-432-7770.

•  February 5, 10:00 a.m. Scottsburg VA. Scottsburg Volunteer Fire Department. Contact: Halifax County Extension Office at 434-476-2147 or Stephen Barts (sbarts@vt.edu).

ADVERTISING N.C. FARM BUREAU  is The Voice of Agriculture®

Will new barns be available for flue-cured growers next summer?

Although apparently there is little existing inventory of new barns in stock, several manufacturers told me this week that they have capacity to build more.

•  Long Tobacco Barn Company LLC in Tarboro, N.C., has been building an average of only about 35 barns a year over the last five years, said Bob Pope, general manager. “With our existing barn line facility and dedicated machinery, we could build hundreds of barns for use next season.” For more information, call 252-824-3794.
• Taylor Manufacturing of Elizabethtown, N.C., hasn't built barns in nearly a decade. But Ron Taylor, owner of the company, said he could begin production again very quickly if orders start coming in. “We can also build flue-cured combines if needed,” he said. For more information, call 800-545-2293.
• An Italian company, DeCloet SRL, can provide bulk barn components for assembly in the U.S. if orders are received early enough, said Len Erdelac, the company's North American representative. His company also offers a multipass harvester and a last-over harvester that American farmers have shown interest in. Both could be available by harvest season. For more information go to www.decloet.it or call Erdelac at 519-983-0432 in Ontario.
• Look for more on barn availability in the December issue of Tobacco Farmer Newsletter, out soon.

THE PRICE JUST KEEPS GOING UP

Will the final price of the current crop bring back pleasant memories of 2004? Daniel Green, chief executive officer of Burley Stabilization Corporation (BSC), told Tobacco Farmer Newsletter that his organization has increased its price for 2012 contracted tobacco, with leaf graded T1 now priced at $2.08 a pound. 


A year ago, that grade was priced at $1.87 (including moisture adjustment). "This will finally bring many grower averages above prices they received under the old tobacco program," he said. "Our hope is this will generate interest in growing more burley in 2013."

The shortage of flavor burley won't be filled overnight. Green said that with an aging grower population and attractive prices for alternative crops, addressing the supply problem is going to take a while. BSC has opened its doors to excess production from this crop and is looking to contract more in 2013. It has already accepted a significant amount of 2012 leaf after opening its doors on October 15. That was a month earlier than normal, a response to requests from growers who cure their crop much earlier than the traditional opening dates. "But we can see that we will have some very late deliveries too," said Green. "I expect we will continue receiving until at least March 1."

The best quality flue-cured crop in a long time: Tommy Bunn, president of U.S. Tobacco Cooperative (USTC) said at the organization's annual meeting. "It was bright and clear leaf and one of the cleanest crops we have had," he said. "Our farmers did a great job of bringing it to market." Better still, much of it was the bright leaf the cooperative's customers are looking for. But the weight was down. "Bright tobacco generally does not yield as much as richer, darker tobacco," he said. "The yield per acre is down by perhaps a few 100 pounds, and we (USTC) are short." As a result, the cooperative is accepting excess production from its contracting farmers in certain grades, especially those in the "Chinese" style. 

But the cooperative still needs to substantially expand contracts for 2013, USTC chairman Albert Johnson of Gallivants's Ferry, S.C., said. "We need our current members to expand their contract pounds, and we need new members that will sign marketing contracts for enough production to satisfy our customers needs." Growers in all flue-cured states are welcome to participate, he said.

I have learned of two more burley warehouses that are holding burley auctions this season:
--Clay's Tobacco Warehouse, Mt. Sterling, Ky. For information, call Roger Wilson at 859-498-6722. 
--Big Burley, Lexington, Ky. For information, call Darby Montgomery at his cell number, 859-339-3922 or his office number 859-233-9944.
One other possibility: Eldon Ginn may conduct auctions at the Kentucky King warehouse in Maysville, Ky. But a decision had not been made as this was written. He can be reached at his office number 606-564-4242 or at his cell number 606-782-2477.

THE NEW LOOK OF LEAF MARKETING

Aggressive bidding at the Old Belt auction in Rural Hall, N.C.

A quality crop that is short of demand  is creating vigorous competition among buyers Auctions going at full speed. Old Belt Tobacco Sales warehouse in Rural Hall, N.C., has been auctioning tobacco each Tuesday since August 28, with good results. At its sale on October 29, a total of 265,000 pounds of flue-cured moved into the trade at an average price of just under $2.02 per pound. Many of the individual lots brought a very high $2.20 a pound, and there was substantially no ticket turning. "Hardly a bale 'went home' from this sale," said warehouse manager Dennis White. He plans several more weeks of flue-cured sales and will also sell any burley that is delivered to him. For more information, call White at 336-416-6262. There are burley auctions too: Farmers Tobacco Warehouse of Danville, Ky., held the first burley auction of the year on November 5. "We sold 195,000 pounds for $1.98:98 a pound at our opening sale," said owner Jerry Rankin. "It was as good a floor of tobacco as you could possibly want to see. The color was excellent, and the quality and texture was very good." There were no bid rejections by farmers. Rankin expects to move five million pounds before the season ends. For more information, call Rankin at 859 319 1400. Two new non-contract delivery stations in Kentucky: Brian Furnish, who served until recently as general manager of Burley Tobacco Growers Cooperative Association, has formed his own company, called International Tobacco Trading Group (ITTG). In association with Mac Bailey of Golden Leaf Tobacco of Keysville, Va.,ITTG is operating delivery stations this season Lebanon, Ky., and Cynthiana, Ky. "Next year we plan to offer contracts, but this season we are accepting leaf that needs a home, for whatever reason," Furnish told Tobacco Farmer Newsletter. "Small bales are acceptable, small lots are available, and in the three weeks we have been operating, we have offered the highest prices that have been offered for this crop." Farmers interested in an appointment should call Furnish at 859-298-0465. "I will meet you, weigh and grade your tobacco, and if you are satisfied with the price, give you a check on the spot." A change of direction for the leading burley cooperative: Pat Raines, a burley grower from Seaman, Ohio, was elected president of theBurley Tobacco Growers Cooperative Association on October 11, replacing Roger Quarles of Cynthiana, Ky. Raines had been the secretary of the cooperative. The first order of business for the new board will be replacing general manager Brian Furnish, who left the cooperative earlier in the year. Raines told Tobacco Farmer Newsletter that the cooperative has increased the prices that it will offer for tobacco from this crop and will be more aggressive in contracting next season. "There are a lot of new markets for burley now and we need to have tobacco to meet this new demand," he said. "It is going to be hard to be the leader if we are chasing someone else." Besides taking delivery of the burley it contracted for from this crop, the cooperative will be represented on all the burley auctions taking place this winter in Kentucky. Notes: Al Pedigo of Scottsville, Ky., was chosen to replace Raines as treasurer...Raines is the first president of the cooperative from a state other than Kentucky. Superstorm Sandy had little effect on tobacco: The Pennsylvania tobacco-growing area was as close to the storm's damage area as any leaf area, but Jeff Graybill, Pennsylvania Extension tobacco agronomy educator, said the impact was not great. "There was virtually no hail or storm damage, and no barns went down," he said. "No tobacco was still in the field. We'd had a hard frost on October 12, and harvest ended soon after that. Most had been harvested by the end of September. We had a week of bad curing weather (after Sandy), but the cure was far enough along that there probably is not much shed burn." He doesn't expect stripping to start till mid-November, and it may well be December 1 before it really gets going. "I would rate the crop good to excellent going into the barn," said Graybill. There was a blue mold scare in June but the hot dry weather burned it out. Very little of the flue-cured crop was still in the field when Sandy struck. Tim Hambrick, N.C. Extension tobacco agent in Winston-Salem, said, "There was quite a lot of wind, and it did get cool which affected curing, but farmers adjusted to it all." He added that this appears to be a very good crop. "The yield should be in in the 2,300-pound-per-acre range," he said. In Yadkin County, just west of Winston-Salem, flue-cured grower Mark Smitherman said, "We had a lot of dry weather, but the crop is very good quality. I was well pleased with the prices I got." In western North Carolina, the only effect of Sandy was snowfall, said Stanley Holloway, N.C. Extension area burley agent. "Almost everyone got two to three inches, and some got eight to 10 inches. Our burley was harvested and in barns by then. It could have been affected by intense cold, but it did not get cold enough to freeze." There had been killing frosts in early October, and most had been harvested by the middle of the month, well before Sandy. Holloway continues to be optimistic about the yield of western North Carolina burley. "It should be one of the best we have had in years," he said. In Tennessee, a lot of the burley crop was harvested the last two weeks of October, said Paul Denton, Extension tobacco specialist. Harvest labor was a problem. "But I think we got it all harvested by the end of the month. Except that a lot of it stayed out well beyond the four weeks we like to see it in the field after topping, we have a pretty good crop from Knoxville north and east." The state average yield is estimated at 1,900 pounds per acre but it may be higher than that. "We didn't get much rain from Sandy, and the wind wasn't too bad. There was snow at some higher elevations but that didn't have much impact on tobacco."   In Kentucky, burley harvest ran late for part of the crop. "We finally got it all in, I think," said Bob Pearce, Kentucky Extension tobacco specialist. "We had labor issues in the latter part of the season that really interfered with harvest. But our earlier crop is turning out really well. The color is good and what has been delivered is receiving good grades. But some of the later tobacco may have quality issues."

USDA PROJECTION: FLUE-CURED 495 MILLION LBS, BURLEY 202 MILLION

The U.S. Department of Agriculture issued the results of its last survey of the year of tobacco production on Thursday, and it continued to project an enormous increase in N.C. flue-cured over last season, as it did last month. In fact, it projected four million pounds more than in the controversial projection of September: 394 million pounds, up 58% from last season. But that level of production for Tar Heel tobacco remained questionable among many of Tobacco Farmer Newsletter's most reliable sources. Why? Because the Eastern Belt crop does not appear extremely large, while much of the good Old Belt crop is still in the field and could fall victim if there is an early frost. An estimate of 360 to 370 million pounds seemed much more credible to them. Among individual states and types, USDA projected:

FLUE-CURED

* All U.S. flue-cured--495 million pounds, 44 percent above last year.
* N.C.--394 million pounds, up 58 percent from last season.
* Virginia--48 million pounds, up 10% from last season.
* S.C.--28.2 million pounds, up seven percent from last season.
* Georgia--24.1 million pounds, down nine percent from last season.

BURLEY

* All U.S. burley production is expected to total 202 million pounds, according to the survey. That would be 17 percent more than last year and is up from the 195 million pounds projected a month ago:
* Kentucky--148 million pounds, up 15% from last season.
* Tennessee--30.4 million pounds up 34%  from last season.
* Pennsylvania--11.5 million pounds, up four percent from last season.
* Virginia--5.1 million pounds, up 35 percent  from last season.
* N.C.--3.6 million pounds, up one percent  from last season.
* Ohio--3.6 million pounds, up seven percent from last season.

OTHER TYPES:

* Fire-cured--53.2 million pounds, up three percent from last season.
* Dark air-cured--14.9 million pounds, down seven percent from last season.
* Southern Maryland--6.6 million pounds, up 11 percent from last season.
* Cigar types--8.7 million pounds, up 14 percent from last season.

Whatever the volume, N.C. flue-cured growers have produced a crop with exceptional quality, says Loren Fisher, N.C. Extension tobacco specialist. "The cooler weather toward the end may have helped." As of Friday, Fisher says harvest of the Eastern Belt crop will be complete very shortly. "A lot remains to be harvested in the Old Belt, but if we can get 10 to 14 days more from today (October 12), we should be in good shape," he says. "But a killing frost in that time period would be a problem." Yields are good but not excellent, largely because of all the rain.

A buyer who didn't meet his goals in the East. At Whitehall Trading Co.,  the new non-contract grading station in Seven Springs, N.C., less tobacco was delivered than expected. "We didn't get as much as we hoped," said Mack Grady, one of the principals at Whitehall, which commenced operations this season. "But we did enough business to do this again next year." Whitehall was founded as a place to sell flue-cured tobacco that doesn't have a home, and most of what was delivered this season was the lesser-quality grades, said Grady. Deliveries had for the most part ended by October 13.


A "live" auction for high Piedmont prices: In downtown Danville, Va., close to the banks of the Dan River, a warehouse is selling flue-cured by way of a conventional auction. Jim Eggleston, one of two partners running Piedmont Warehouse, says the sales so far this season have been going very well. "We are getting prices comparable to contract prices, and some grades are bringing higher than contract prices," he says. "There is a lot of demand. There must be a shortage somewhere." Piedmont has a sale every Friday, usually with five to seven buyers, and has been averaging around 200,000 pounds per sale. Farmers and buyers share in the per-pound cost. Farmers have the option of refusing a bid but Eggleston says there has been very little tag turning so far this season. This is the third season that Piedmont has operated. "We ran a silent auction for two years, but this year we went to a live auction. The farmers we deal with like the live auction better. There has  definitely been some dissatisfaction with contracting in this area." For more information on Piedmont Warehouse, which is located on Trade Street near US Highway 58 Business, call Eggleston at 434 489 4292 or his partner T.Y. Mason at 434 203 1404. Note: Eggleston says there is a great deal of tobacco still on farms in the Old Belt. An early frost could be a problem.

Hoping for a late frost too. Harvest is well behind schedule for dark tobacco growers in Kentucky and Tennessee are. "I estimate that we are are about 75 percent finished, where most years we would be 85 or 90 percent done," says Andy Bailey, Extension dark tobacco specialist. "Weather has held us up the last 10 days, and we have a labor shortage--we are cutting a lot of tobacco with fewer workers than usual."

Alternative markets increasing. There has been a dramatic increase recently in the number of what leaf dealer Rick Smith of Wilson, N.C., calls 'secondary' leaf markets. "And it's not a bad thing," says Smith, president of Independent Leaf Tobacco. "I consider this development not only desirable but inevitable." Some method of absorption into the trade had to be found for tobacco produced without a contract, or produced in excess of the contract amount, or produced with a contract but without meeting the contract's quality requirements. "Excess tobacco has and will find itself without a home, and sooner or later, some means had to be devised for it to enter the trade," he says. Smith has been cheered by the rise of conventional auctions in Kentucky, Virginia and North Carolina (like Piedmont Warehouse); sealed bid auctions in North Carolina; and grading stations that don't require contracts in North Carolina (like Whitehall Trading). That amounts to quite a few more marketing venues than growers had at the time of the buyout, and there may yet be more, says Smith. "In the leaf market of today, growers simply can't have too many outlets."

Dates to remember

•  Annual Meeting, Burley Stabilization Corporation. Starts at 9 a.m., October 22, at the corporation's office, 835 Bill Jones Industrial Drive, Springfield, Tn. Ends with lunch.
•  Annual Meeting, U.S. Tobacco Cooperative. Starts at 10 a.m., November 8, at Holshouser Building, N.C. State Fairgrounds, Raleigh, N.C. Ends with lunch.

IS THE PRODUCTION OUTLOOK FOR  FLUE-CURED REALLY THAT GOOD? A Tobacco Farmer Newsletter Special Report September 18, 2012   Since the USDA issued its September crop report last week (see "Outlook for current crop keeps getting better," Tobacco Farmer Newsletter, September 13, 2012), there has been considerable comment that the volumes predicted for flue-cured may be too optimistic. One of the most thoughtful responses was prepared by Graham Boyd, executive vice president of the Tobacco Growers Association, and published in the most recent issue of the association newsletter. Excerpts follow: Are flue-cured prospects really that good? By Graham Boyd The recent USDA crop report surveys growers in August and compiles data to issue a crop forecast on September 1. USDA has the crop projection at 490.2 million pounds of flue-cured. (But) our organization calculates this crop will be considerably less. The consensus is that the crop yield is expected to approximately 2200 - 2300 pounds. Locations east of Wilson County certainly will be less than that target. Excessive rainfall has washed out the crop in terms of weight per acre. However, the quality is excellent! Much of the crop is very ripe and has oil. It simply takes more acres to fill a barn. Another factor reducing the weight was storm damage, especially the straight line wind event that struck in early July. If that single event blew off an average of 2-3 leaves per stalk then that accounted for 10-15 percent of the potential harvest in a matter of minutes on a high volume of acres in 15 counties east of Edgecombe. In addition there was a significant amount of "blown over" tobacco that required re-standing. In late August we began to realize the impact of storm damaged stalks. The plant integrity has been compromised and the plant becomes increasingly more vulnerable to disease pressure. The challenge today is becoming how to save the crop. In many locations in the East, the crop is completely out of the field. By comparison, growers in the Old Belt report having not harvested all of the first pulling yet and are becoming nervous about early frost. Here's how we add it up. If N.C. planted 162,000 acres of flue-cured, and it averages 2,200 pounds we will only market 356.4 million of flue-cured. If USDA figures prove correct in the neighboring states--VA=48 million, S.C.=27 million and GA=25 million--then the crop total will be 465.4 million pounds. One positive for U.S. growers is the high quality of this crop. Markets seem to reflect it: During the first week of September. nearly every major contract company implemented price changes. The prevailing average value for a quality B1 grade of tobacco now ranges between $2.15 and $2.20. The pace of deliveries to the marketplace had been slower than usual for the first month of tobacco receiving. Much of that was attributed to the late season excessive rains that charged the plants with new nutrient uptake and "re-greened" the crop causing a slight lag in harvesting. Other factors were involved, including widespread wind events and accompanying high volume of hailstorms that damaged or even removed some of the scheduled harvest for many growers in the East. In the Old Belt, the crop was delayed in many areas waiting on adequate rainfall. The majority of growers report being very satisfied with how the crop is grading and selling. In general the crop is regarded by growers as a good quality crop for marketing. However, nearly every grower reports his crop is now anticipated to check up light in total pounds per acre.--Graham Boyd  Other opinions: To get additional perspective, I asked Extension agronomists in flue-cured states their take on the September crop report. Loren R. Fisherof North Carolina says, "I have asked around, and most people think that the USDA number is a little high based on current and expected harvest conditions of the crop. I think a 450 to 460 number is more realistic based on what I have heard, but it is very, very difficult to estimate the crop size now." David Reed of Virginia says, "The figure for Virginia is probably accurate. We still have quite a bit of the crop still in the field, but it is holding reasonably well at this time. We are probably at 40 percent or slightly higher on the harvest." The USDA acreage figures are on the low side, he says, probably by 1,500 acres...Georgia yield will likely be down from the good 2011 yield, says J. Michael Moore of Georgia. Acreage is down too, meaning there will be a substantial reduction in total production in Georgia in 2012. "Georgia production is up 0.96 million pounds since last month thanks to a 100-pound expected increase in yield, putting production at 23.04million pounds," he says. But any estimate these days must of necessity be shaky. "Without the old Market Reports and the estimates of the knowledgeable folks in the supply chain we used to depend on for information, the numbers thrown out this time of year have little chance of being representative of actual production," Moore says. Finally: How much burley will N.C. produce? The crop report projection for N.C. burley, as for N.C. flue-cured, raised eyebrows. It projected that at the beginning of September burley production in the state would be 3.515 million pounds, 30 percent more than it had projected at the beginning of August. I brought this to the attention of Stanley Holloway, N.C. area Extension burley agent, and he was a bit mystified too. "I don't have a good handle on what the crop is like in the non-traditional N.C. areas (in the flue-cured belt), but in the traditional area of western N.C., we would not expect to have improved 30 percent in such a short time." But he did say the weather and other conditions in western N.C. have been favorable and a good yield is expected. "In Yancey County, one farmer tells me that this looks like his best-ever crop," says Holloway. "He says he has never seen tobacco as heavy bodied on the hills. I think we will have a number of farm yields close to 3,000 pounds per acre, and maybe some as high as 3,500 pounds."  Editor's Note: You can review the original TFN coverage of the September USDA crop report, by going on the web to our blog at modtob.blog.spot. If you are not receiving Tobacco Farmer Newsletter and would like to, email me at chrisbickers@gmail.com. Write "Subscribe" and your tobacco type, town and state. For more information, call me at 919-789-4631 or email me at the above address. Watch for our next issue in early October--Chris Bickers, Editor. Note: If you can't see the photographs or ads, click above where it says "Having trouble viewing this email."  ADVERTISING TOBACCO WANTED--ALL GRADES Whitehall Trading Co. Farm Tobacco Only / NO Dealers Call Joseph Parker or Mack Grady 252-559-0061

TOBACCO OUTLOOK GETTING BRIGHTER?

Final harvest of flue-cured tobacco near Seven Springs, N.C., September 12. 

USDA issued its September crop report Wednesday showing that flue-cured production is up a projected 44 million pounds since its August report, for a total current projection of 490.2 million pounds. According to the report, which is based on a farmer survey asking about conditions as of September 1, all that increase took place in North Carolina, where plentiful--but for the most part not excessive--rainfall allowed growers to produce an extra 43.5 million pounds since the August report for a total for the state of 390 million pounds (up 57 percent over 2011). Among the other flue-cured states: The Virginia projection is down slightly from last month for a total of 48 million pounds (up 10 percent from 2012) while the South Carolina projection is about the same as last month at 27 million pounds (up two percent from 2012). Georgia is up 1.1 million pounds since last month thanks to a 100-pound expected increase in yield to 2,400, putting production at 25.2 million pounds (down almost six percent from 2012). Florida doesn't participate in the survey, but Extension tobacco specialist J. Michael Moore tells Tobacco Farmer Newsletter that thanks to Tropical Storm Debbie, production there will be substantially reduced. "About 300 of the original 850 acres planted could not be harvested. Also, the excessive water washed out nutrients so that the yield was off considerably. This is a very nitrogen-deficient crop. It didn't develop a lot of the normal characteristics." TFN will have an estimate of production in Florida as soon as it is available.


Burley production is up too, but not as much. It is expected to total 195 million pounds, up nine million pounds from the August report and up 13 percent from last year. Kentucky and Tennessee accounted for nearly all the increase in the last month. The projection for Kentucky was up 5.7 million pounds at 140.6 million pounds (up 10 percent over last year), while for Tennessee it was up about two million pounds at 30.4 million pounds (up nearly 35 percent from 2011). It seems a little hard to believe, but the crop report projected North Carolina burley production at 3.515 million pounds, which if true would be a whopping 30 percent more than was projected in August. The editor will research this point and try to substantiate it next month. Virginia, Pennsylvania and Ohio projected roughly the same as last month. No other burley states participate in the survey.


Among other types: Dark fire-cured is projected down two percent at 50.8 million pounds, dark air-cured down seven percent at 14.8 million pounds, Southern Maryland is up 11.1 percent at 6.6 million pounds and cigar types up 14 percent at 8.7 million pounds. 


More on alternatives to contracting...

Sealed bids for the best possible price? Big M Tobacco is now selling flue-cured tobacco by way of what it calls a "sealed bid" auction at the Liberty Warehouse in Wilson, N.C. Buyers inspect the bales, mark their bids on a sheet, seal it in an envelope and give it to manager Greg Ray. When all buyers have submitted their bid, Ray opens them, determines the high bid and informs the grower. He has the option of rejecting the bid, but Ray says that has very rarely happened. "We have competition with eight or 10 buyers at each sale, and the sealed bid gives the buyer a lot of incentive to make his bid at the highest level he can afford," says Ray. "We feel this system gives the farmers the best chance at getting the highest price." The warehouse can sell 200,000 pounds per sale. "So far this season we are selling once a week, but we will begin twice a week sales later," Ray says. "Last season, our volume was about 6.5 million pounds." Call Ray at 252-799-6061 for more information.
  

Where to sell tobacco that doesn't have a home: A new company in Seven Springs, N.C., is providing a new and completely legal avenue for tobacco farmers to sell tobacco that doesn't have a home. Joseph Parker and Mack Grady, who are both associated with the Cureco company in Seven Springs, have formed Whitehall Trading Co. It is already buying tobacco from the current crop (for now, flue-cured only). "The goal of Whitehall Trading Co. is to give the farmer an alternate method of marketing all grades of tobacco, including the lesser-quality grades," says Grady. "But it can't be wet or damaged. It should be in clean and dry condition." He notes that the program Whitehall is following complies with all pertinent regulations. "Our books are clean, and our customers' books will be clean as well." So far, Whitehall's early sales have all gone to a single tobacco company. But Grady and Parker expect there will be more purchasers before the season is over. For more information, call Parker at 252-559-0061.

******

TOBACCO FROM THE HISTORICAL POINT OF VIEW

Buy "A Brief History of North Carolina Tobacco" by Billy Yeargin, from History Press. The days when rural life revolved around tobacco planting and harvest are gone, but many fondly remember when North Carolina was the state of farming, planting and picking tobacco. In this book, historian Yeargin takes readers back to the days when communities were founded and built upon tobacco culture, and when traditions developed as industries were born. For a copy, send $21.99 to 112 N. Webb St., Selma, N.C. For more information, email Yeargin at tobhistry@aol.com. Also available: A companion work called "Remembering North Carolina Tobacco," also by Yeargin. Retail price is $19.99. Specify which or both books you want and send check or money order, made out to Billy Yeargin, at the above address. 

Auction sales of 2012 begin in North Carolina

Workers pick through flue-cured
leaf near Wendell, N.C.

The first leaf auction of the year took place on August 28 at the Old Belt Tobacco warehouse in Rural Hall, N.C., near Winston-Salem. The next is scheduled for Tuesday, September 11. "We sold 155,000 pounds, all flue-cured. Buyers and sellers were well  satisfied. "The first sale went real well," says Dennis White, who is manager of the warehouse.The bidding was very strong, and every lot on the floor attracted a bid. There was no ticket tearing." Top quality lugs brought $1.80 per pound, and second quality brought about $1.65. "There was very little real cheap tobacco," says White. "Any that had any color sold for $1.60. 'Dead' tobacco brought $1." There were six buyers, with Independent Leaf Tobacco and Bailey's Cigarettes particularly active. White plans on selling on each Tuesday for the rest of the season and is prepared to sell on as many additional days as necessary to move all the tobacco that farmers bring. The next sale will be on and White expects to sell 250,000 pounds. Later in the season, burley will also be sold.

  

Auction sales in Kentucky will get under way in November. "Our first sale will take place the second Monday in November," says Jerry Rankin, a burley grower/ warehouse owner in Danville, Ky. "We will have as many sales per week as we need to accommodate this crop. We can sell two or three days a week if necessary. We expect to move about half a million pounds per sale." No scheduling is required, but you can reach Rankin at 859-319-1400. "Bring it in and we will sell it," says Rankin. "No amount is too small." Other auctions are expected to be held in the Lexington and Mount Sterling markets and perhaps some others. Editor's note: If you are operating an auction warehouse in any state for any type, please send descriptive information to me at chrisbickers@gmail.com and I will run it in a future issue.

  

Watch for the next issue of Tobacco Farmer Newsletter in about a week, featuring an analysis of the September USDA Crop Report. Till then, following are some brief notes on the crop at this point:

  

There was an exorbitant amount of rain in North Carolina counties close to Wilmington late in August. "It rained 12 days straight at one point," says Alan Wooten of Currie. "And they were torrential." The crop can be saved but some yield reduction seems likely.

Tobacco in Mecklenburg County on the southern border of Virginia was affected by heat and drought. "I think the heat did us more harm than the dry weather," Bruce Hall, a farmer who grows about 80 acres of tobacco, told the Richmond Times Dispatch. He said his crop looks good on balance, but "those 100-degree days really affected the tobacco, and I'm thinking it is going to cut the yield maybe 10 percent on some of it."

An odd year in Kentucky, says Bob Pearce, Kentucky Extension tobacco specialist. "Basically our burley looks pretty good, and we should have at least an average crop, maybe a bit better than average in some places. Our production should be close to USDA projections." Roughly 50 percent of the state's burley had been harvested through Labor Day, and farmers were just getting into curing, he said. Unirrigated burley in the west part of the state was showing some effects of drought.

The burley crop in Tennessee may be slightly above average, says Paul Denton, Tennessee Extension tobacco specialist. "There is a little black shank, a little drowning, but for the most part it looks good," he says.

About 40 percent of the Georgia crop remained to be harvested at the Labor Day break, says J. Michael Moore, Georgia Extension tobacco agronomist. "It is holding up pretty well," he says. Harvest of the Debby-damaged Florida crop is complete, says Moore.