Tobacco Businesses Also Feeling the Pinch

Source from:  Jeff Helsdon STAFF WRITER Monday March 19, 2007 03/21/2007

Unknowns facing the tobacco industry are already taking a toll on local businesses. Although tobacco farmers are hinging their hope on an exit package, the time has arrived where they must start preparing greenhouses if a crop is to go in the ground in 2007. While it's obvious farmers will need to plant if there isn't an exit package, such a package still might allow some production for short time in the future. The big question is how much tobacco will be needed. Although the number being speculated on for domestic manufacturers' demand is in the 35 million pound range - which equates to 63 per cent of the 55.5 million 2006 crop - local businesses are reporting larger reductions in orders. Seedcoat Technologies owner Andrew Gilvesy estimated his tobacco orders to date are 65 per cent of last year's. Seedcoat specializes in coating seed for precision seeding and is the only Canadian company to offer this service. With a longer lead time, seed can be palletized in California. Gilvesy said earlier this week it's starting to get late for orders. "We'll see some orders come in this week and after that it will simply become too late," he said. Jonathan Sebok, president of Underhill Farm Supply, said the company's tobacco seed orders aren't half of what's been seen in the past. "I think it's just a result of so many question marks," he said, adding it's still possible to order seed to sow greenhouses the old-fashioned way. Sebok said he has to make commitments for crop protection substances now. If there ends up not being a flue crop, or if he overordered, Sebok said there is no other market for sucker control. He also has to make commitments for fumigants, but other farmers can use those if tobacco farmers don't need them. Phil Esseltine, president of Agrospray, said tobacco sprays and fertilizer are his main business, although he has been trying to diversify for several years. He noted a definite decrease in business over the last six years as tobacco declined and a decrease in orders of about 20 per cent this year. "It's probably not a good indication," he said, adding it's still a little early. Esseltine has been out trying to get orders since the first of the year. "Everyone is a little reluctant to give orders," he said. "These aren't firm commitments, just forecasts." Esseltine said it's not just growers who need to diversify, but suppliers also. "We're all in the same boat right now," he said. The situation wasn't as bad across the board. Sharon Balcom, owner/operator of Davis Seed Co., said her sales are down a "little bit" from last year. Davis Seed is one of three companies in Ontario providing tobacco seed. Balcom's customers include farmers as well as farm supply retailers. She said one of the big questions she is asked by farmers is what will happen to the deposit on seed orders if they decide not to grow. Balcom said she would still refund their money. She also noted how depressed farmers seem to be. "Everytime you talk to a farmer, they seem to be down," she said. Asked what the deadline for ordering seed is, Balcom said it can vary slightly. "My father always said if you don't have the greenhouse sown by the 10th of April, you're behind the eight ball," she said. Enditem