Virginia's Tobacco Acreage to Be Lowest Since 1860s

Source from:  Richmond Times - Dispatch rednova.com 08/05/2005

Virginia's tobacco crop has plunged to its smallest acreage on record in the first growing season after a government support program was eliminated. The state's tobacco farmers will grow about 16,727 acres of tobacco this year, a 44 percent decline from last year's harvest of 29,646 acres, according to data collected by the Virginia Farm Service Agency. As recently as 1997, Virginia farmers grew more than 50,000 acres of tobacco, still the state's largest single cash crop despite falling acreage. Tobacco produced about $113 million in cash receipts for Virginia farmers in 2004, but production has plummeted in the past eight years as U.S. growers have lost buyers to cheaper, foreign-grown leaf. The U.S. Department of Agriculture estimated in April that U.S. tobacco farmers would grow about 316,860 acres this year, a 22 percent decline from 2004. The same report forecast Virginia's total acreage at 18,900. The recent, lower state figures are based on acreage reports farmers submit to local FSA offices. Although not all farmers are necessarily reporting their tobacco acreage, "probably 95 percent of them are," said Nelson Link, farm programs manager for the state FSA. A drop in acreage was expected this year. Some industry observers predicted that more than half of farmers would quit after Congress voted in October to dismantle the federal tobacco program, which was established during the Great Depression to stabilize the fluctuating U.S. tobacco leaf market. Price supports and supply controls were eliminated this year, giving buyers such as cigarette manufacturers sole power to set prices through contracts with individual farmers. Congress also approved an industry-financed buyout of U.S. tobacco quotas. The buyout will channel $9.6 billion to hundreds of thousands of U.S. farmers and tobacco-quota owners over the next 10 years. Virginia growers will get about $660 million from the buyout, and many are expected to use the annual payments to move out of the business. "A number of older growers are exiting the industry," said Todd Haymore, a spokesman for Richmond-based Universal Corp., the world's largest tobacco leaf merchant. "You have got some folks who did not receive contracts [to sell tobacco] for one reason or another that have chosen to exit the industry." Production of flue-cured tobacco, the main type of leaf grown in southern Virginia and a primary ingredient in cigarettes, is expected to be about 13,774 acres, down from 22,921 acres in 2004. Burley tobacco, a type of leaf grown mainly in Southwest Virginia, will drop from 5,940 acres to 2,607 acres, according to the FSA figures. Overall tobacco acreage this year will be the smallest since the 1860s, said Kevin Harding, a statistician with the Virginia Agricultural Statistics Service. Virginia grew as much as 242,000 acres in the 1920s, when per-acre yields were far lower than today. Acreage slowly declined during the 20th century, and it plunged in the late 1990s. Growers who decided not to plant this year include Jim Jennings, a farmer for 33 years who has grown up to 100 acres on his Mecklenburg County farm. This year, Jennings rented out his land. "I have a big garden; I had to watch something grow," he said. But Jennings hasn't gotten out of the tobacco business entirely. He's now focusing on a small cigarette company he founded last year, U.S. Grown Leaf Inc. The company's new brand of cigarette, Adventure, is made in Southside Virginia. Jennings has found a distributor to expand the sales market, which includes the Richmond area. Jennings said rising fuel, labor and fertilizer costs have made it difficult to justify growing tobacco. With the federal program gone and no geographic restrictions on where the crop can be grown, production "is going to gravitate to the lowest-cost area in the next four or five years," Jennings said. The lowest cost of production, as growers say, is "East of I- 95," especially in the coastal plain of North Carolina, where tobacco farming can be mechanized more easily than in the hills to the west. Tobacco acreage in North Carolina won't decline as much as in Virginia this year, according to USDA estimates. Production is expected to be about 130,500 acres, down from 151,400 in 2004. In eastern North Carolina, the estimated drop is from 89,000 acres in 2004 to 83,000 acres this year. Several major cigarette companies and leaf merchants contract with farmers to purchase tobacco. Richmond-based Philip Morris USA bought tobacco from 1,500 farmers in Virginia in 2003, spokesman Bill Phelps said. He said he could not comment on the extent of the company's contracting this year because it is still signing up farmers. The company will operate two receiving stations in Virginia -- in South Hill and Danville -- for growers to deliver their crops. Enditem