Sunday, April 22, 2012

Can U.S. Growers Direct make a comeback?

You don't expect leaf companies to rise from the grave, but it looks like one is doing it, or at least trying to. As of Friday, U.S. Growers Direct, the company that launched an abortive attempt to contract 100 million pounds last season, was taking the last corporate steps needed to offer current-crop contracts to flue-cured farmers. It is expected to complete this process in a matter or days and has already begun discussions with interested growers with the hope of signing contracts soon. No matter how soon, it is obviously going to be very late to contract tobacco for 2012. But USGD vice president Jimmy Lee told me Friday he is confident the company will be able to acquire enough leaf to have an impact on the market this season. One wonders where. Transplanting is just beginning in Southside Virginia and that area might be the best possibility. But Extension specialist David Reed says there will be no great surplus of plants left once the crop currently committed is planted. At the other end of the flue-cured belt, transplanting in Florida and Georgia is substantially complete. It might be agronomically possible to grow a crop there this late, but Extension specialist J. Michael Moore says that in the current economic climate, he is very dubious that anyone would want to try. The experienced leaf man Bill Barker of Virginia will operate the buying stations on a day-to-day basis USGD through his company USA Leaf. Farmers will have more contact with USAL than USGD, I am told. Other developments:

  • The company's efforts will be more limited than last year. It will operate only two delivery points--Louisburg, N.C., and Douglas, Ga.--instead of the six of 2011.  The company is not exactly a leaf dealer but will definitely be oriented to foreign markets.
  • Its primary target market will still be China. That explains why only flue-cured is being contracted: Chinese consumers almost exclusively smoke 100-percent flue-cured cigarettes.

The question to be asked is: Can any state accommodate a substantially larger planted acreage this late in the game?Because Georgia farmers responded so vigorously to USGD contract offers last year, they might seem like good candidates. But setting of the previously contracted crop ended this past weekend, except for a few stragglers, and there are very few plants remaining. "I expect we will plant all the plants we have and then we will be finished," he says. Florida is well past transplanting. The crop is up now and looks very good, says Moore. At the northern end of flue-cured production, transplanting in Virginia, has begun on just a few flue-cured farms. Reed expects transplanting to get going in earnest Monday. Despite quite a few diseases in the greenhouses, Virginia plants were satisfactory in quality, he says, but the supply is tight.