Drought threat­ens to­bacco mar­ket

Farm­ers pre­pare to sell crops to cig­a­rette mak­ers

The Covington News - - AGRICULTURE & OUTDOORS - By Bruce Schreiner

LOUISVILLE, Ky. - From start to fin­ish, south­ern Ken­tucky farmer Al Pedigo en­dured dif­fi­cul­ties in get­ting his bur­ley to­bacco crop ready for mar­ket.

A se­vere drought stretched from the sum­mer grow­ing sea­son to be­yond har­vest — when long, bulky to­bacco leaves dan­gled in barns to cure.

Pedigo’s anx­i­ety grew as he pre­pared his first batch of bur­ley for mar­ket this week.

Ken­tucky bur­ley grow­ers see this sell­ing sea­son as a tell­tale sign to gauge how to­bacco com­pa­nies will treat them with­out the fall­back com­fort of a fed­eral safety net.

This was the most chal­leng­ing grow­ing year, they say, since the free mar­ket re­placed fed­eral pro­duc­tion and price con­trols fol­low­ing the 2004 fed­eral to­bacco buy­out.

“The qual­ity is prob­a­bly not as good as the com­pa­nies would like,” Pedigo, a grower in Allen, Mon­roe and Bar­ren coun­ties, said Mon­day. “We’re all anx­ious to see what they do with this crop. All of our in­put costs have gone up. It’s hard to take less for the to­bacco, even though the qual­ity is down a lit­tle.”

Shelby County farmer Paul Horn­back, who grows to­bacco un­der a con­trac­tual ar­range­ment with Philip Mor­ris USA, thought the to­bacco gi­ant passed the test, at least for now.

Horn­back said he was pleased with the price he fetched Mon­day — the open­ing of sales — for the first 35,000 pounds of leaf he de­liv­ered to a Philip Mor­ris re­ceiv­ing sta­tion in Frank­fort. It was some of his best bur­ley this year, he said, and the leaf sold for an av­er­age of $1.55 to $1.56 per pound. That base price was a cou­ple of cents per pound be­low a year ago, re­flect­ing the lesser qual­ity of this year’s drought-stressed crop, he said.

“I did think they were very le­nient on what I brought in,” said Horn­back, who re­ceived in­cen­tives amount­ing to an­other 12 to 13 cents per pound for meet­ing pro­duc­tion goals.

At an­other Philip Mor­ris re­ceiv­ing sta­tion at Car­roll­ton in north­ern Ken­tucky, farm­ers sold about 400,000 pounds of bur­ley Mon­day, about the same as open­ing day a year ago, said em­ployee John Rothen­burger. The over­all crop was fair, he said, and farm­ers re­ceived an av­er­age price in the range of $1.53 to $1.56 a pound, not in­clud­ing the pos­si­ble pro­duc­tion in­cen­tives. The base price was down about a penny per pound from a year ago.

“Af­ter to­day, I think their con­cerns are go­ing to be re­lieved,” Rothen­burger, a Shelby County to­bacco farmer, said of fel­low grow­ers. “They would all like to have more money, but they know the qual­ity of the crop that we have. They’re be­ing pretty re­cep­tive to it.”

The big­gest ob­sta­cle for many grow­ers was the mostly dry and hot cur­ing sea­son, lead­ing some leaf to cure too fast, Horn­back said. As a re­sult, it didn’t ac­quire the deep red­dish-brown tint de­sired by cig­a­rette mak­ers.

Bur­ley to­bacco is no longer the king of Ken­tucky agri­cul­ture, and many grow­ers gave up on the la­bor-in­ten­sive crop fol­low­ing the to­bacco buy­out. But oth­ers have ramped up pro­duc­tion, in­vest­ing in ad­di­tional barn space, ac­quir­ing more land and hir­ing ex­tra work­ers.

Horn­back, who still has about 200,000 pounds of leaf to take to mar­ket, has dou­bled pro­duc­tion since the buy­out. The price he gets for his bur­ley is about 25 to 30 cents be­low what he got un­der the to­bacco pro­gram, he said.

Since then, some costs have risen but one big ex­pense has dis­ap­peared.

Un­der the to­bacco pro­gram, he had to pay non­pro­duc­ing quo­ta­hold­ers up to 70 cents per pound to “lease” their quota so he could grow more leaf. That ex­pense is gone.

Now he can pro­duce as much to­bacco as he wants, pro­vided he can get a con­trac­tual agree­ment with a com­pany to pur­chase it.

But fer­til­izer costs have sky­rock­eted and la­bor costs are higher, he said.

“We’ll find out how bad the com­pa­nies re­ally want the to­bacco, and how will­ing they are to sup­port the pro­duc­ers in a bad grow­ing sea­son,” Horn­back said.

Univer­sity of Ken­tucky to­bacco econ­o­mist Will Snell said there are “a lot of vul­ner­a­ble grow­ers” still weigh­ing whether to make a long-term com­mit­ment to to­bacco pro­duc­tion.

One ad­van­tage for farm­ers, he said, is that de­mand from to­bacco com­pa­nies, es­pe­cially Philip Mor­ris, ex­ceeds cur­rent bur­ley pro­duc­tion.

“I think the com­pa­nies are go­ing to try to work as closely as they can with pro­duc­ers, to make sure they re­tain their in­ter­est in grow­ing the crop,” Snell said.

Philip Mor­ris USA spokesman David Sut­ton said the na­tion’s lead­ing cig­a­rette maker re­al­izes that bur­ley qual­ity will vary from year to year, based on grow­ing con­di­tions.

Sut­ton said the com­pany ex­pects to meet its bur­ley needs from this year’s Ken­tucky crop.

Pedigo, who ex­pects to take about 330,000 pounds of bur­ley to mar­ket, said his crop isn’t as good as pre­vi­ous years. But he’s hope­ful that Philip Mor­ris In­ter­na­tional, his con­tract buyer, will re­al­ize it’s due to the long dry spell.

“All this was be­yond our con­trol,” he said. “I hope the com­pa­nies will step up this year and pay the farm­ers all they can to en­able us to keep grow­ing more.”

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