Farmers Switch to Other Crops as Market for Tobacco Shrinks

Source from:  Sunday, Jul 20, 2008 By JOHN REID BLACKWELL TIMES-DISPATCH STAFF WRITER 07/21/2008

Tobacco plants have given way to grapevines on the rolling hills of the Williams farm in Pittsylvania County. The green swath of vines growing on a 9-acre plot represent an investment in a future that increasingly looks tobacco-free for Joe Williams. "We have three children and they have families of their own, and everybody is investing," in the vineyard, said Williams, who grew tobacco for more than 30 years but began a transition to grapes three years ago. "This is something that we came up with that everyone could get something out of and still be on the farm." Williams and his grown children, who also have jobs off the farm, now grow four varieties of grapes that they sell to Virginia wineries. The changes on Williams farm are just one example of how the landscape of Southside and Southwest Virginia has changed as production of tobacco -- once the state's top cash crop -- has declined over the past decade. Virginia farmers produced more than 53,000 acres of tobacco in 1997, the year before the nation's largest cigarette companies signed a landmark legal settlement and agreed to pay $206 billion to 46 states, including Virginia, over 25 years to cover smoking-related health-care costs. This year, Virginia farmers will grow an estimated 19,500 acres of tobacco, down from 20,600 acres last year. Though production had been declining for decades, it plummeted in the years after the settlement and has not recovered. Several factors contributed to the decline, including a shift in tobacco companies' leaf purchases away from the United States to countries such as Brazil. In Virginia, lawmakers anticipated that the settlement and other changes in the industry would have a catastrophic effect on communities in Southside and Southwest that had long depended on tobacco income. In 1999, the General Assembly passed legislation to channel half of Virginia's annual payments from the settlement back into the state's tobacco-growing regions. To date, almost $236 million of Virginia's settlement money has gone back into the hands of about 44,000 tobacco farmers and quota owners, people who held government allotments to grow the crop and leased the poundage to active farmers. The 31-member commission that distributes the money to farmers and quota owners has not tracked how recipients have used the money. Farmers were not required to get out of tobacco to receive payments, but the declining production of the crop suggests that many farmers have used settlement money, combined with payments from a $10 billion industry-backed buyout of tobacco quotas in 2004, to retire or switch to other crops as demand for tobacco slumped and profit margins thinned. "I would probably still be growing tobacco," said Williams. "But there was no profit there for me." Other growers, such as Don Anderson of Halifax County, have adjusted to the changes and continue to grow tobacco. "There has been a lot of consolidation," said Anderson, who raises 100 acres of tobacco. "To a great extent some of the assets in tobacco production have not held their value very well -- the older barns and planters and equipment. Certainly those tobacco-settlement monies helped to soften that loss of value." The tobacco commission has put about $6.7 million into various agribusiness initiatives, aimed at jump-starting alternative crops for farmers. Some have seen success, such as efforts to develop better cattle-sales opportunities in Southside and Southwest Virginia. Other attempts to develop alternatives for farmers have not succeeded, such as an attempt to grow tobacco that was genetically engineered to produce pharmaceutical ingredients. The jury is not yet in on others, such as an effort to grow switchgrass for biofuels. Jim Jennings, a tobacco grower in Mecklenburg County, dropped out of tobacco for one year in 2005, but is now growing the crop again. "Some people have gotten out and the ones who have stayed have gotten a little bigger," said Jennings, who said he has avoided putting settlement payments back into his tobacco operation. "I have used it to educate children, though," he said. Contact John Reid Blackwell at (804) 775-8123 or jblackwell@timesdispatch.com. Enditem