Kentucky Tobacco Acreage Could Stabilize

Source from:  By BRUCE SCHREINER, Associated Press Writer Mon Jun 5, 5:28 AM ET 06/06/2006

Savoring a mild spring day, Ray Tucker didn't seem to mind that he had some long days of work ahead to get his biggest burley tobacco crop in the ground after a rainy stretch. The sixth-generation tobacco farmer put his crew to work setting young burley plants in a 15-acre field before he headed off to prepare a nearby plot for the next day's planting. Tucker, 30, cut back his lawn-care business so he could triple burley production to 40 acres. He's putting his faith in a free-market system that replaced Depression-era production and price controls after Congress passed a $10.1 billion tobacco buyout in 2004. "To me, it's a matter of being happy, doing what I love doing," he said. Last year, Kentucky burley farmers raised 143.5 million pounds of leaf on about 70,000 acres, the state's smallest burley crop since 1927. Prices averaged $1.56 a pound, according to the Kentucky field office of the National Agricultural Statistics Service. They were about $2 a pound when price supports existed. During the heyday of Kentucky's burley industry, growers produced 470 million pounds in 1997. In March, agricultural forecasters projected burley acreage would drop to about 58,000 acres in 2006, but that was before Philip Morris USA, the nation's largest cigarette maker, came out with price incentives to entice its contract leaf growers to boost burley production. The strategy seems to have changed some minds. "I think the incentives have encouraged some growers to increase (production) and some growers not to get out," said Paul Hornback, another tobacco farmer and Tucker's father-in-law. University of Kentucky tobacco production specialist Gary Palmer has predicted 72,000 acres of burley acreage this year, based on a survey of county agricultural extension agents. He said the price incentives helped spur some production. Philip Morris spokesman Bill Phelps wouldn't give details of the incentives but said the company was pleased with the number of contract signups and was interested in recruiting more farmers. R.J. Reynolds Tobacco Co. spokesman David Howard said the company had signed enough contracts to meet its anticipated burley demand. He also wouldn't disclose his company's contract offers. Tucker said he made money off last year's crop, thanks to irrigating to offset a dry spell, and he has high hopes for his latest crop. He doesn't miss the safety net of the government price supports, in part because it came with production limits. Under that system, some farmers had to pay high lease prices to obtain the right to non-growers' production quotas — a cost that no longer exists. "If it wasn't for the buyout, probably we would have still been raising the same amount that we were," Tucker said. "There's just more room for profit margin." Tucker acknowledged that the buyout puts farmers at the mercy of tobacco companies. He worries whether the companies will take all the leaf grown under contract in years of bumper crops. He said the uncertainties facing growers put a premium on sound management to limit costs and the ability to grow quality leaf the companies will want. "I just feel like there's always going to be tobacco grown, and there's always going to be a demand for it," he said. Tucker said he would have upped his production this spring no matter what, "It just makes it a whole lot easier with the incentives." For him, it was a lifestyle decision. "I was born and raised a farmer," he said. "It's in my blood." Some of the land he farms has been owned by his family since 1849. He seemed unfazed by a string of cool, rainy days that forced him to adjust his planting schedule. On a recent day of planting, Tucker and his field hands worked under clear blue skies. He was already thinking ahead to a few months when the tobacco plants, now just a few inches tall, would be head high. "It gives you a good feeling at the end of the year that you made that plant grow," he said. "It's almost like watching my kids grow up." Enditem