Thursday, March 15, 2012

A budget tool designed for tobacco:

A new web-based tobacco budgeting system will help you generate a budget and much other information on your computer. Called the "Tobacco Budget System", it is now available from the Center for Tobacco Grower Research (CTGR). The system provides an interactive budget tool to calculate current costs of production. It is database driven so you can customize it with access to the prices of common chemicals and machinery. It has applications for burley, dark, flue-cured and cigar wrapper tobacco. Among many other things, it can help you keep records for GAP compliance. Best of all, it's free. For more information, go to http: //tobaccogrowerresearch.com and click on "Tobacco Budget System."

  
No avalanche of increased acreage. There were opportunities for growers to increase acreage this season and perhaps some contracts were left on the table. In the big flue-cured county of Wilson, N.C., plantings will probably be about the same as last year, says Extension agent Norman Harrell. "Some growers have increased their acreage a little, but one large operator stopped growing flue-cured altogether. I am anticipating our flue-cured acreage will be about 9,200 acres, which is what we had last year. Most of our growers are at their capacity and would have to acquire more land or equipment to produce much more tobacco." There will be no increase in burley plantings in Wilson County, he is sure. "We will have 100 acres or less," says Harrell. There was one producer growing dark air cured in Wilson County, but he is not planting it in 2012.
   
After a very good crop last year, burley acreage in western Kentucky and Tennessee is going to be up, says Andy Bailey, Ky.-Tn. Extension tobacco specialist. "I would expect an increase of around five percent, maybe as much as 10 percent. There could be an increase in dark plantings too. That would more likely be fire cured rather than air cured." Growers have just begun seeding their greenhouses. "Transplanting in this area generally starts around May 1," he says. "We had a mild winter. We may not have had enough cold weather to knock off insect populations."

  
What makes up today's cigarette blend? Counting all countries except China, the main elements in the modern cigarette blend is 65 percent flue-cured, 18 percent burley and eight percent oriental, said Herbert Weatherford, Alliance One International, at the recent annual meeting of Tobacco Associates in Wilson, N.C. China, which has traditionally consumed all flue-cured cigarettes, now uses 97 percent flue-cured, 1.5 percent burley and 0.7 percent oriental, he said.


Exports up nine percent. Flue-cured exports totaled over 285.2 million pounds last year, said Kirk Wayne, president of Tobacco Associates. They were valued at over $638 million, a volume increase of almost nine per cent over 2010. "The significance of the export market remains solid and is clearly absorbing over 60 percent of U.S. flue-cured production," he said. "In projecting demand trends, it is undisputed that the export market will be providing the stability and any potential for growth in future sales."


The Brazilian flue-cured crop nearing the end of its marketing season is substantially lower than in 2011, perhaps by as much as 20 percent, says Blake Brown, N.C. Extension agricultural economist. Also, the quality is said to be mediocre. "With a small 2011 U.S. crop and a smaller 2012 Brazil crop, the supply of premium style flue-cured tobacco is substantially reduced. While global supplies of flue-cured tobacco remain large, the portion of this supply that is of premium quality is small. Cautious optimism is warranted for the 2012 crop."

  
World burley supplies are likely ample, but the current Brazilian crop was disappointing, says Will Snell, Ky. Extension Economist. In addition, several recent U.S. crops have been smaller than expected. The net result has been continuing tight supplies of higher quality leaf available to buyers. The continued depressed dollar relative to the Brazilian currency and a more stable environment of domestic use and export demand, set the stage for increased contract offerings earlier this year, at least to some growers. But it is not clear yet how many takers there were, given profitable opportunities in other crops and livestock.


The future of H2As: As more domestic workers find job opportunities in the nonfarm sector, it is likely that more farmers will choose to rely on the H-2A guest worker program. The 2012 Adverse Effect Wage Rate is $9.38 for Kentucky and Tennessee and and $9.70 for North Carolina and Virginia. That is 4.3% higher for N.C. and Virginia, but 1.1% lower for Kentucky and Tennessee. Learn more about how growers are handling the H2A program in the March 2012 newsletter of the Center for Tobacco Grower Research (http://tobaccogrowerresearch.com/budgets.html).
 

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