Tobacco''s Decade of Transformation

Source from:  Danville Register & Bee 12/09/2014

This fall marks the conclusion of tobacco marketing quota and price support program in Pittsylvania County, but that transition wasn't the last for the evolving industry.

The arrival of the last payments from the Tobacco Transition Payment Program came as no surprise. The program helped tobacco growers and quota holders transition out of the government support and into the free market.

For decades, the government subsidized tobacco growing through price support and market quota assistance. The buyout in 2004 allowed farmers to begin producing within a contract system with individual cigarette makers.

The transition lasted a decade, from 2004 through this year. Quota holders got $7 per pound and producers got $1 per pound.

The payment calculations were based off of 2002-04 production and quota figures of each individual applicant. It's estimated that $200 million in payments have been given to Southside Virginia.

There were about 3,800 contracts in Pittsylvania County administered by the U.S. Department of Agriculture's Farm Service Agency, FSA Pittsylvania County Executive Director W.P. Johnson Jr. stated. Individuals could hold more than one contract, and the usage of the funds was unrestricted.

"I think, as a general perspective, farmers paid down debt and then expanded their operation but if you were of the older generation and you were looking at retirement, maybe you set that money aside for retirement prospects," Johnson explained. "You could pay down debt, you could go on a vacation, you could expand your farm and operation."

Some payment recipients took the opportunity to leave the tobacco industry. Others added other crops or animals to diversify their holdings. Some simplified their leases and expanded acreage, continuing to grow tobacco.

"I think it's changed the county. I think it's made agriculture here in the county different because of the buyout. I don't know that it's worse off or better off," Johnson said. "The producers that I talk to really love the contract system and some really wish we could go back to the old quota system."

The changes have not stopped for the tobacco industry. The effects are reflected in figures.

According to the Virginia Cooperative Extension, Pittsylvania County has continually increased the number of planted acres of tobacco. The lowest year was 2005 with 4,318 acres. That year had a loss of about 1,700 acres - or a 28 percent decline. This year, there were 6,342 acres reported.

Stephen Barts is an extension agent for agriculture and natural resources in Pittsylvania County. Since taking the position in 2007, Bart's work has taken him out into the fields of growers and producers where he has seen firsthand the many evolutions of the industry.

"Most growers and purchasing companies - everybody involved in the industry - really did not know what the tobacco industry was going to look like on the other side of the buyout," he explained." They just had to wait for the market to play out and stabilize itself and see what the future held."

That stabilization process was a complex one with numerous factors influencing its new form. Barts explained that one element of change were new markets. These emerging markets have new buying power that benefits industry stakeholders in the Dan River Region.

"You've got an emerging middle class in several nations that purchase a lot of American tobacco" he said. "We are certainly operating under a global system."

The way tobacco is produced is changing too, Barts said. Energy-efficient and cost-saving methods are being researched and developed regularly, such as quality control measures like automated curing systems or electronic dampener moderators.

Overall, the practice has been made more efficient at every step.

"The free market system did produce growers that are high-quality producers of tobacco," Barts observed. "When the direct contracting system evolved, typically the purchasing companies wanted to deal with growers who were high quality leaf producers."

Most involved in Pittsylvania County's agriculture industry are used to a cyclical pattern for work, from the price of production to the level of profits at sales. The modernization is just one more change the industry has to weather.

"The price of corn has fallen three and a half dollars in a short amount of time," he commented. "That's certainly not unique to tobacco production, the cost of raising a crop and the profit potential of that crop are not what they were 10 years ago or even 20 years."

Pittsylvania County is uniquely positioned to continue in the tobacco industry. Barts explained that while the region's soil quality is poor, it allows flue-cured tobacco producers to accurately manage the crop's nutrients. This prevention of under- or over-fertilization develop a quality product.

"This region is known for the quality of tobacco they produce and it's a very desirable leaf," Barts said.

The distinctly flavorful leaf of Pittsylvania County will likely ensure tobacco from the Dan River Region remains a crucial part of the agricultural economy for the foreseeable future.

Back at the Farm Service Agency, loose ends are still being tied up for the transition program. Though final checks were sent out around the end of October and beginning of November, some recipients have died and payments must be recuperated. The heirs or estates of the deceased will have to reapply for the benefits. Enditem