Virginia's Tobacco Acres Inch up, Reversing Trend

Source from:  Monday, July 30, 2007 07/31/2007

It's a modest increase, but Virginia's first cash crop is seeing its second straight year of growth after a long decline, according to a report in the Richmond Times-Dispatch. Farmers have planted more than 20,100 acres of tobacco in the state this year, up slightly from 19,690 acres last year, according to new figures from the Virginia Farm Service Agency. That's still well-below historical levels -- with a recent peak of 53,000 acres in 1997 -- but it's a turnaround from the steep declines in production seen so often in the past decade. The rise in plantings partly indicates an improved competitive position for U.S. tobacco in world markets, as well as a smaller number of farmers growing more leaf since a government-support program was eliminated two years ago, said Don Anderson, a Halifax County farmer. "I think the economics of it now is profit margins are so tight that you have to have more acres," he said. Tobacco production plunged in the late 1990s as U.S. growers lost buyers to cheaper, foreign-grown leaf. In Virginia, acreage hit a record low of 17,104 in 2005, the first growing season after Congress eliminated a support program for the crop. Cigarette companies also financed a 10-year, $10 billion buyout to compensate farmers for the value of lost production quotas, prompting some growers to retire or stop raising tobacco. Production has rebounded somewhat in the past two years as the remaining farmers adjust to the new system, though acreage is still below the pre-buyout level. "The growers that are left are probably growing more tobacco now than they did prior to the buyout," said Jim Jennings, a Mecklenburg County farmer. With more acreage, "they have got better utilization of their assets, which in turn makes the profit better." Jennings said he did not grow tobacco in the year after the buyout, but he planted about 100 acres this year. "I am doing what I know how to do and what I have done all my life," he said. "It is a hard crop to grow, but a fun crop to watch grow." The state figures are drawn from reports submitted by farmers to county FSA offices. Precise figures are not available because not all growers submit their acreage. "I would say less than 5 percent did not report," said Nelson Link, farm programs chief for the Virginia FSA. The U.S. Farm Service Agency last month estimated total tobacco acreage nationwide at 355,670 acres, an increase of about 5 percent from 2006. In Virginia, the growth is in flue-cured tobacco, a variety of heat-dried leaf grown mostly in south-central counties. Production of burley tobacco, an air-dried variety mainly grown in Southwest Virginia, appears to be declining. Cigarette makers such as Henrico County-based Philip Morris USA contract with farmers to buy tobacco. Philip Morris spokesman David Sutton said the company does not comment on its tobacco-buying plans, but it is committed to the U.S. market. "High-quality U.S. tobacco is the backbone of our brands," he said. In North Carolina, the top tobacco-growing state, production is forecast to rise about 5 percent to 167,000 acres. "This is in line with what we expected with deregulation, and lower prices, and U.S. tobacco being more competitive worldwide," said Blake Brown, a North Carolina State University agricultural economist who follows the tobacco industry. Enditem