Tobacco Farmers Face Uncertainties
LOUISVILLE, Ky. (AP) -- Having overcome a quota drop followed by a drought, tobacco farmers face new uncertainties when burley markets open Monday against the backdrop of a cigarette industry losing customers and under siege in courtrooms.
Farmers and tobacco warehouse operators are unsure of the tobacco companies' buying mood for a burley crop that endured a prolonged dry spell that hurt development in summer and hampered curing this fall.
But anxiety goes beyond this auction season, which starts a week later than usual and continues through late February, with an extended Christmas break.
``The farmers are deeply concerned more about the future of this business than they are about this crop,'' said Bob Ammerman, who with his son grows tobacco and owns and operates tobacco warehouses in Cynthiana and Paris.
Ammerman said unrelenting pressures on tobacco companies have dampened the enthusiasm that once accompanied the opening of Kentucky burley markets.
``We just hate to see all these lawsuits against these tobacco companies,'' he said. ``I think we're being picked on. It's just the nature of our business, I guess.''
A 29 percent quota cut this year, and fears of another big drop next year, have some farmers worried whether they can afford to keep raising tobacco, said Ammerman, who grows 80 acres of burley in Harrison and Pendleton counties. Quotas are the amount of tobacco that farmers can sell each year.
``We have some who don't want to get out, but they feel like they are going to be forced out financially,'' he said.
Uncertainties about the burley crop's overall quality also raised questions about the prices farmers will get.
``Given the growing and curing season, there's a lot of concern about the quality of the crop this year,'' said Will Snell, a University of Kentucky agricultural economist. ``And as a result, I think we'll see a pretty wide variation in prices.''
Last year, burley sold for an average price of $1.90 per pound. With 638.6 million pounds sold in the eight-state burley belt, the leaf brought in $1.2 billion. Kentucky, the leading burley producer, grew 475 million pounds.
This year, farmers are expected to deliver between 500 million to 550 million pounds to auction warehouses across the growing region. But demand by tobacco companies may be in the 400 million to 450 million pound range, meaning a large amount may go into the grower-owned cooperative surplus pool.
Snell said prices may not reach last year's average.
``I think the safe bet, given the anticipated quality of this year's crop, is it will be very difficult to achieve the $1.90 per pound average that we observed last year,'' Snell said.
Snell said the highest-quality tobacco could fetch $2 per pound. But lower-quality leaf may not even attract the price-support price and could wind up in the surplus pool, he said.
``I think there's no doubt that good quality tobacco will sell well in this year's market,'' Snell said. ``But the question the (tobacco) companies have is how much of that good type tobacco do we have out there.''
Ben Crain, a tobacco warehouse operator in Lexington, said some much-needed rainfall and accompanying humidity in October aided burley curing, and allowed much of the crop to gain the darker color desired by tobacco companies.
``This crop is turning out to be better from a quality standpoint than what we all thought it was going to be in early October,'' he said.
Crain said burley deliveries to his two warehouses had picked up in recent days, but said the tobacco was still coming in later than normal, reflecting the difficult curing conditions this fall.
Crain predicted a ``buyers' market'' this auction season, but said there remains a great deal of anticipation about the opening of burley markets, despite the many problems hanging over the industry.
``A (tobacco) farmer has, in essence, one pay day a year,'' he said. ``The closer we get to that pay day, the better off we are, and certainly the more anticipation that we all have.''