John Oncken: Rules Have Changed for Tobacco Growers

Source from:  madison.com By John Oncken  06/20/2005

Wisconsin's tobacco growing industry is in the midst of major change. Some folks will say "hurrah," others will wonder what to do to replace a crop that over the years has paid for a good many tractors, pickups, washing machines and farms. My guess is that hardly anyone in Wisconsin ever paid much attention to, or even knew, that tobacco has been raised in our state for nearly 100 years. Except of course for that small group of farmers (many of Norwegian heritage), who raised the cash crop in Dane, Rock and Columbia counties in southern Wisconsin and in Crawford and Vernon counties a hundred miles to the northwest. Nevertheless, the labor intensive, back-breaking crop has been a tradition, and a money maker, for the few who have raised it. The market and price were a bit shaky until a federally-sponsored quota program to bring supply and demand in line was initiated many years ago. The result was a cutback in acreage and consolidation of acres into fewer hands. Many of the small growers who had their acreage cut back to an unprofitable level leased their acres to others. Thus, the big growers got bigger and the small growers got out. While tobacco is a minor crop in Wisconsin, it's big time down South. But the big tobacco states saw that growing the crop was an anachronism: There were few willing to do such hard work, ever-increasing imports, and a growing anti-tobacco sentiment nationally. Last fall Congress passed the Tobacco Transition Payment Program, commonly called the Tobacco Buyout. In simple terms, the buyout paid tobacco allotment holders and producers to get out. The payments are made over 10 years on the basis of their 2002 allotments. The allotment holder (landowner) and producer must sign up to get the transition payments. And the last day to sign up this year is Friday, June 17. If an eligible grower or allotment holder misses that date, he also misses the first of the 10 annual payments. The USDA Farm Service Agency is administering the buyout and expects everyone eligible to sign up. After all, there is really no downside because signers will be paid considerable money and the allotment program ends anyway. Roger Johnson, executive director of the Dane County FSA, says his office has tracked most everyone eligible and has 1,850 signers so far. Sharon Gretebach, program administrator, says the county FSA has a list of allotment owners who raised tobacco in 2002-2004 (the eligible years) but may have missed a few growers who moved and weren't found. So the tobacco allotment program has ended, now what? In southern Wisconsin, tobacco planting is in progress as most of the traditional growers are still in business. Most growers signed a contract for a given number of pounds of tobacco with Swedish Match, the state's primary tobacco buyer/processor. They will be receiving $1.60 per pound for their contracted production. That's 15 cents a pound less than the crop sold for in the past few years. But growers are no longer paying rent for allotments and they're raising the crop on their own land instead of on rented acreage. At the moment, southern Wisconsin growers will get that big tobacco check after the crop is in. So far, so good. But rumor has it that not all of the traditional growers in southern Wisconsin were offered contracts. And without a contract, a farmer has no market. Who knows about next year. It depends on what Swedish Match (or possibly another company) will buy. That's a combination of supply and demand on a world market. Crawford and Vernon county tobacco growers are in big trouble - they have no one interested in buying their tobacco. Thus, the 450 or so acres that were grown in those counties are not being planted this year. "This will hurt our economy," says Sharon Hoyum of the Northern Wisconsin Cooperative Tobacco Pool in Viroqua. "Many of our growers are small, with under three acres, and can't easily replace the tobacco dollars." Pool manager George Nettum agrees. "Many of our growers feel left out," he says. Crawford and Vernon county growers have seen the possibility of a no tobacco economy coming, and efforts have been made in Vernon County to find another cash crop. Vernon County UW-Extension agent Tim Rehbein has obtained grants to look into growing grapes as a possibility. Although some acreage has been planted, it's a new and experimental crop and won't soon replace tobacco. Thus, it appears Vernon County tobacco growers will have about $1.5 million less to spend in 2006. (This will be partially offset by buyout payments.) Meanwhile, back in this area, Larry Oberdeck of Oberdeck Farms, Inc. planted 8 acres of tobacco on his land near Edgerton. "We raised 13 acres years ago," he says. "But the quota was cut back to four acres and then raised to the current acreage." Oberdeck invited me to make a couple of rounds with his planting crew after I had made an unannounced stop upon seeing the crew preparing to plant. Nowadays most tobacco farmers use two-row planters. In contrast to the longtime one-row planters - the kind I grew up with - these really move along. The planting crew - high schoolers Michael Murphy, Chris Patera and Steve Oberdeck and friend Tammy Mathews - fed the young plants into a revolving wheel that precisely places the plants in the soil. At Oberdeck Farms, the plants are raised in a greenhouse on the farm. Most growers buy plants from commercial growers, many located in Michigan. Although there were four planters and Larry, the tractor driver, it reminded me of those long ago days when three of us Onckens planted those long rows of tobacco. A friendly family affair. The rules have changed in the tobacco business. But for this year, tobacco is still a big money crop in Dane and Rock counties. And a no-money crop in Vernon and Crawford counties. As to the future, who knows? Enditem