US: Growing Tobacco is Not Easy, But It is Still a Tradition for Many Kentucky Farmers

Source from:  KyForward.com 06/21/2013

Tobacco may not generate the revenue it once did, but Kentucky's crop is still worth nearly $400 million annually in spite of changes in the market and government regulations. And that number is likely to remain steady and may climb if the crop is good and prices stay strong this season.

 
Burley growers alone are expected to increase production by as much as 4,000 acres over the 2012 crop, according to information from the National Agricultural Statistics Service.
 
Last year burley growers grew 152 million pounds, an increase of 19 percent over 2011 levels with average yields crossing the 2,000 pound per acre mark.
 
But raising tobacco has never been easy and over the last decade has become even harder due to declines in demand, foreign competition, Food and Drug Administration oversight, up and down tobacco company contracts, just to name a few.
 
It is no wonder many tobacco farms have vanished or became something else through diversified operations. There was a time, however, when tobacco was the one and only crops grown on many Kentucky farms. Now, it shares acreage with grain crops and produce.
 
Randy Smither, a producer from Franklin County has been raising a tobacco crop for 21 straight years and has weathered these tobacco storms.
 
Still, he said tobacco is the one thing he enjoys the most on the farm even though he raises 1,100 acres of corn and soybeans to go along with this year's 125 tobacco acres.
 
While Smither continues the tobacco tradition, he also runs the farm like a business and knows you can't put all the proverbial eggs in one basket.
 
Most operations are like that now. But some tobacco producers decided to plant corn just because of high prices. Smither said he thinks $8 corn is always nice to see but he thinks high corn prices may be hurting in some ways.
 
"What $8 corn does, it puts more producers raising corn, and one or two years of $7 and $8 corn drives the price up on fertilizer, seeds and land rent and when it goes back to $5 in the next four or five years, you're still paying the same for land rent, which is not going to get cheaper," he said. "One or two years of good high prices sets the tone for four or five years of average prices and high land rent."
 
And that's a big deal to producers like Smither who rents all the acreage he uses for crops including barn space for his tobacco crop.

Get big or get out

In 2004 when tobacco buyout legislation passed, it was no secret that many small producers would leave tobacco behind to retire or move on to other crops and burley tobacco would move to the western portion of the state to bigger farms. That was the case to a large extent. The number of tobacco farms in the state had already decreased and by the 2007 ag census, some parts of the state saw more than an 80 percent reduction in the number of tobacco farms.
 
With those declines came a deterioration of the tobacco infrastructure, mainly barns.
 
"When the buyout came through, you lost all your small farmers," said Smither. "They quit the upkeep of the barns. If you own a farm now and don't raise tobacco, there's no sense in spending a bunch of money every year on your barns. Every time a storm comes through and tears one up, it's not getting replaced."
 
Smither said he tries to rent good, sound structures but they are getting harder to find.

"In a year like this when the demand for tobacco is high and people are going back into tobacco that haven't raised it in 10 years, and those raising four or five acres are now raising 25 acres, the (amount) of barn space is going to be limited," he said.

Smither has increased his production of burley this year by 25 acres but did it based on the number of barns he could rent, a decision made over the winter.

Growing one crop helps another

With increases in tobacco production, much debate has been made this year over a new crop insurance rule that states if acreage has been used in the past two years to grow tobacco, it can't be used the third year if that crop is to be insured and all farmers know the need for crop insurance after the 2012 drought left much of the corn crop in ruin.

While many tobacco producers have not embraced the new crop insurance rule, Smither said he thinks it's one of the better changes to take effect related to growing tobacco.
 
"Insurance on tobacco gets a little higher every year and if we can get people into rotating their crops and get rid of these diseases, then that has to help on the increases," he said.

Smither is able to utilize acreage used for corn production to increase tobacco production when necessary saying the corn ground is good for his tobacco crop.

"If we can find enough barns to raise 140 acres of tobacco the next year that is pretty much what we will do. We'll just take the land back out of the corn rotation and use it in tobacco for a year or two," he said. "And, where we raise so much corn, we feel like the corn will really build back up the tobacco ground. It's simple for us, we can take any land out of corn and put it back into tobacco and still have a good crop."
 
Smither also said all of his tobacco has access to irrigation, yet insurance prices are the same for him as for someone who doesn't has access to water. Smither thinks that crop insurers should compensate for that fact because the chances that he will have a claim are very slim. He said in all the years he has grown tobacco, he has only had one insurance claim.

A matter of tradition

Smither said in the 1990s before the buyout, he thought tobacco would be gone in the coming decade, a thought that kept him from investing in greenhouses to grow plants at the time. But today he said the industry is as strong as ever and once the again the idea of building those greenhouses to grow plants for next year's crop has come back.

Thinking ahead to next year must sound good to the remaining tobacco producers across the state since most have only wondered if they would even raise a crop from year to year. But Smither said he is of the old school and loves growing the crop even though he knows his corn and soybeans could make up the difference if tobacco takes another nose dive.

"Four or five years ago, we dropped down to about 20 acres (of tobacco) and put the rest back into grain and cattle and I'm not too sure if I didn't make just as much money as when I had 100 acres," he said. "But I would probably go stir crazy if I didn't have tobacco. My children are at the age where they are learning about it. It something I've done all my life and it's tradition." Enditem