Tobacco Crop to Plunge in '08

Source from:  Monte Sonnenberg SIMCOE REFORMER Wednesday December 19, 2007 12/20/2007

Could be as small as 20 million pounds; marketing board facing its own financial loss Tobacco fields were notably scarce in Norfolk last year due to the ongoing contraction of the crop. The trend will continue in 2008 as growers have been asked to prepare for a crop in the range of 20 million pounds. That's down from 32 million pounds last year, which in itself was tiny when compared with the 85-million pound crop in 2005 and the crops surpassing 100 million pounds in the 1990s. Tom McElhone of Waterford, chair of the Ontario Flue-Cured Tobacco Growers Marketing Board, confirmed this week that the 20-million pound figure has been circulated. However, he denied the board has proposed a price less than $2 a pound. "These discussions are preliminary," McElhone said. "We're not prepared to speculate about what the end result will be." McElhone said the board is working with industry stakeholders to "extract" costs from the system as a mean of keeping leaf prices down. He would not respond to reports that this will include a significantly reduced role for the board, which lost $650,000 on operations last year and is expected to lose even more in 2007. "The deficit will probably be higher," McElhone said. "With the difficult time farmers are facing, the board felt we could not raise the marketing fee. I will not speculate about this beyond that." The extent of the board's losses this year will be revealed in June in the board's annual report. The reduced crop size, coupled with the board's mounting losses, has raised the possibility of manufacturers bypassing the board and contracting directly with growers. This would replace the marketing of tobacco through the auction exchange in Delhi. At a meeting of growers in Langton Dec. 7, District 2 board director Stan Symons, of Burford, confirmed that contract buying is on the table. Brian Edwards of La Salette, president of Tobacco Farmers in Crisis, said this week that the tobacco economy has crumbled so badly that the board can no longer justify itself financially. "The auction system doesn't work at this crop size," Edwards said. Celia Stone, a research assistant with the Tobacco Transitions Program in Simcoe, said yesterday that her contacts at the Canada Revenue Agency and the provincial Farm Products Marketing Commission have been speculating about the move to contract buying since July. "The contract thing has been the buzz," Stone said. "It wasn't even an option. For them, it was a done deal." If manufacturers are allowed to contract directly with producers, the estimated number of growers needed next season ranges from 50 to 100. About 600 tobacco growers remain, mostly in Norfolk. Some growers have heard that the proposed price per pound is less than $2. It costs a typical grower about $2.10 to produce a pound of cured leaf. Enditem