Monday, February 13, 2012

What farm leaders think about the coming season

A penny per pack increase in the price of  cigarettes could really help tobacco producers: At least, that's how Craig West (right), a flue-cured grower from Fremont, N.C., figures that a one-cent increase in cigarette prices could rescue the farm economy. "One pound of tobacco makes 20 packs of cigarettes, and the average price of cigarettes now is $5.50 pack. On our farm (he farms with his brother Brad), we grew 900,000 pounds of tobacco last year, so we produced the tobacco for 18 million packs worth $99.9 million. We got $1.70 a pound for it. At that price, a pack has about six cents of tobacco in it. If the companies would add one cent for the farmers, that would equal a 25 cents a pound in the farmer price. You can't quantify what that would do for farmers, and I don't see how one cent a pack would affect consumption much." 

West proposed the price increase at the annual meeting of the Tobacco Growers Association of N.C. on February 3 as he was ending a two-year term as president. The organization elected a new slate of officers: President Brent Leggett of Nashville, Vice President Tim Yarbrough of Prospect Hill, Secretary Clay Strickland of Salemburg and Treasurer Stan Biconish of Fuquay-Varina.

Contracting came early for everybody this year, it appears. As far as West can tell, all flue-cured growers in his area of eastern North Carolina are completely signed. "Most growers are generally pleased," he says. "Some got increases in acreage, but the increase was not a general one. The price was up, generally about five to seven cents a pound."

The contract price paid by US Tobacco Cooperative was also up, says President J.T. "Tommy" Bunn. "The board of directors increase prices based on world demand with the idea of trying to keep farmers in the business of tobacco production," says Bunn. "The cooperative's leaders were very anxious that the price rise enough to reflect the increase in cost of production.They also increased contracted acreage." 

The sales effort went well over the winter. ChinaSoutheast Asia and some markets in Europe were the best customers. Besides stripped leaf, the cooperative had some success exporting its products, though most are sold domestically.
Roughly 80% of the burley crop was sold by February 3, says a cooperative leader. "About 20% is still out there...I hope," says George Marks (right), president of Burley Stabilization Corporation (BSC) and a burley and dark grower from Clarksville, Tn. It was a short crop,Marks says. "The wet spring made it late, then it was very dry from the end of July though August." Fortunately, the curing season was excellent over most of the burley belt, and leaf quality was good. 

Broadening the buy: BSC, located in Springfield, Tn., is expanding its service area. It bought burley in Kentucky the past two seasons, and in 2012 it plans to buy in Pennsylvania, Wisconsin and Missouri, says Daniel Green, BSC's chief executive officer. The cooperative's traditional states have been Tennessee, Virginia and North Carolina.

American growers should change the way they look at the value of their product. Quality, stability of supply and price are still factors, but new concerns based in part on social responsibility, environmental concerns and regulations, says Mike Ligon, vice president for Universal Leaf. Those would include best manufacturing practices, good agricultural practices, wise use of crop-protection agents and elimination of non-tobacco-related materials and TSNAs. "[Production] areas that are able to address the new definition of value and to satisfy other industry demands will gain market share," he says. Ligon was the keynote speaker at the Tobacco Growers Association of N.C. meeting.
Projection for 2012: U.S. production up, Brazil down. On February 2, Universal estimated that U.S. flue-cured production will rise substantially in 2012, to 500 million pounds, up about a third from the 372 million pounds produced in hurricane-stricken 2011. Brazil on the other hand, has been projected down by a quarter, from 1.5 million pounds in 2011 to 1.25 million pounds in 2012. American burley production is projected at 187 million pounds in 2012, up seven percent from the 174 million pounds of 2011. That would put it 11 million pounds over Brazilian burley production for 2012, projected by Universal at 176 million pounds, down 27 percent from the 244 million pounds Brazil produced in 2011.
How much can you spend on new equipment? Bob Pope of Long Tobacco Barn Company LLC says, "It's hard to consistently produce the quality that companies demand now if you are using old barns. I see farmers renovating old barns, and you may be able to do that for $4,000 to $5,000. But that leaves you curing in a barn an old heat exchanger, worn boxes and leaks." A tight new barn can be obtained for a price in the mid $30s, he says. Long Tobacco Barn Company is the relatively new entity that has taken over manufacture of Long barns. New innovations include reinforced box backs, 30 percent more insulation, a tobacco viewing door and a re-designed control panel. The factory and sales office remain at Tarboro, N.C. The phone number is 252 641 4796.

 Upgrading agricultural skills: A group of young Tar Heel tobacco growers and young agriculture professionals participated in the "Skills for Tobacco Growers" short course in Raleigh. "Since our industry continues to face continuous change, we need to make sure our younger farmers are able to focus on how to attain efficient, quality tobacco production," says Bill Collins, a retired N.C. State tobacco extension specialist who coordinates the short course program. The course was designed to help reach that goal. Participants were introduced at the TGANC meeting. Farmer participants were: Steven Lawrence of Colerain,  Justin Murphy of Albertson, Kevin Mitchell of Bunn, Travis Nelms of Louisburg, Jason Harris of Kittrell, Mick Harris of Butner, Alex Watkins of Creedmoor, Taylor Caudle of Farmville, Luke Blizzard of Snow Hill, Royce Mitchell Boyette of Clayton, Cliff Cobb of McLeansville, Shepard Barbour of Angier, Caroline Hines of Selma, Jamie Lanier of Wendell, Robert Glover of Bailey, Randy Willliams of Nashville, Nicholas Perry, Josh Robbins and Dale Winstead, all of Spring Hope, Isaac and Jacob Draughn of Mt. Airy, Jason of Walstonburg, Ryan Beamon of Stantonsburg, Gerald Jr. and Donny Tyner, both of Elm City, Adam Speaks of Traphill, Alan Williams of Oxford, Mitchell Bryner of Greenville, and Rod Dickerson of Oxford.  The remaining eight participants were Grady Hartley and Delvin Jones of the USDA/Risk Management Agency; County Extension agents Ray Thagard of Greene Co. and Charles Mitchell of Franklin Co., consultants Hill Homewood and Zach Horvath of Carolina Precision Consultants, Dianne Farrer, NCDA&CS agronomist and Jeremy Wyche of the Warren Co. FSA Office.