McKinney Departing Burley Cooperative

Source from:  BRUCE SCHREINER Associated Press LOUISVILLE, Ky. 01/04/2007

The Burley Tobacco Growers Cooperative Association on Tuesday announced the departure of its chief executive officer, Danny McKinney, who watched the tobacco sector undergo drastic changes while leading the group that represents burley producers in Kentucky and four other states. McKinney worked with the co-op for 19 years - an era in which tobacco's status as an agricultural staple in Kentucky declined amid anti-smoking campaigns nationwide that curtailed demand for leaf. In a statement, the Lexington-based co-op said McKinney had retired. Doug Stephan, an attorney for the co-op, said in an interview, however, that the co-op's board voted last week to seek McKinney's resignation. "It wasn't something that had been in the works for a long time," Stephan said. Asked the reason for seeking the resignation, Stephan said, "I think each individual board member had different views." The co-op announced that Scott Althauser would assume the duties of acting director. Althauser has spent 14 1/2 years with the cooperative and has handled its leaf operations as a vice president. McKinney did not return a call seeking comment. Althauser declined to comment on McKinney's departure. "I'm working directly with the board and the executive committee to continue our course and look forward to the future," Althauser said in an interview. The co-op, which was formed in the early 1920s, promotes the marketing of tobacco for its members. The co-op represents burley farmers in Kentucky, Ohio, Indiana, Missouri and West Virginia. A successor to McKinney will be chosen by the co-op's board. The co-op also said that Daniel Green will assume the duties as secretary-treasurer - another role that McKinney had filled. Daviess County tobacco farmer Rod Kuegel, a former co-op president, praised McKinney as a steadfast supporter of burley producers. "He was instrumental in every decision that's been made in tobacco in the last 15 years," Kuegel said in an interview. "Tobacco farmers across the state will owe him a whole lot for a long time. Without Danny, I'm not sure that we would have been successful with the buyout." The group's role was altered drastically after Congress approved an approximately $10 billion tobacco buyout in 2004 that ended the Depression-era federal tobacco program that set production and price controls. For years, the burley co-op played a key role at tobacco auctions across the burley belt. But the tobacco program's demise - along with the rise of contract growing, in which farmers sign up to raise leaf for a particular company - led to the near-disappearance of tobacco auctions. Limited auctions have been held in Kentucky this marketing season, and the co-op has been among the buyers picking over the leaf. The co-op has a policy of supporting an alternative to contract growing. The co-op was traditionally the buyer of last resort at auction. The leaf would be placed in the co-op's reserve pool. The tobacco was bought with government loans repaid when the co-op sold surplus stocks. Currently, the co-op has about 4.2 million pounds of burley tobacco from the 2004-2005 crop years in its inventory, Althauser said. That's just a fraction of the burley stocks the co-op had in its reserve pool in the high production years before quota cuts and the tobacco buyout. During McKinney's tenure, the co-op helped open the potentially lucrative Chinese market to U.S. leaf. "We've initiated the conversation, and they've not only bought burley tobacco, they've also bought some flu-cured tobacco," Althauser said. "That's a major step." Kuegel said the co-op still has an important role as an advocate for tobacco farmers. That lobbying effort in Congress is an even greater challenge now because of the declining number of tobacco producers, he said. "We're 25 percent in numbers of what we were before the buyout," he said. Enditem