Tobacco growers take a hit
For most Kentucky tobacco farmers, the future appears as cold and bleak as an overcast February day.
For those who grow burley tobacco which makes up 90 percent of the stateâ€™s tobacco crop Feb. 1 was an especially dark day.
Thatâ€™s when the U.S. Department of Agriculture announced that the burley quota the amount a farmer may grow for the 2000 crop year would be only about half the 1999 amount.
Kentuckyâ€™s 1999 crop is expected to be 378 million pounds. Next yearâ€™s will likely be a little less than 200 million pounds. USDA wonâ€™t release exact quota amounts until the middle of next month.
The 45.3 percent quota cut is based on manufacturersâ€™ buying intentions, the amount of leaf in storage and export amounts. It is a blow that has knocked the wind out of tobacco growers who count on the leaf as a principal part of their income.
It comes on the heels of back-to-back quota cuts of 9 percent in 1998 and 28.5 percent for 1999. That means growers this year will be able to produce only about 20 percent of their 1997 amount.
With annual sales of about $1 billion, tobacco has been Kentuckyâ€™s largest agricultural commodity, accounting for half its crop income.
Consequently, the cut in quota will be felt not only by the farmer but by businesses across the state. Daviess County farmer Rod Kuegel, president of the Burley Tobacco Growers Cooperative, has estimated the reduction will pull $15 million out of the Owensboro area economy alone.
It is going to leave a gaping hole in the whole state, and thereâ€™s just nothing left to fill it, said Kendal Clark, one of four owners of Newton Seed a tobacco seed company near Crofton in northern Christian County.
Thereâ€™ll be little kids next year without shoes on their feet, predicted Bruce Cline, another Newton Seed partner. What theyâ€™re going to do is make Appalachia out of this whole state.
Western Kentucky tobacco farmers will be cushioned a bit because many of them also grow dark tobacco. Burley is used in cigarettes, while dark is used for smokeless products and for cigar and pipe tobaccos.
Aside from Christian and Daviess counties, top burley producing counties are mostly in central Kentucky. Dark production is mainly limited to Western Kentucky.
Cline, who this year grew 135 acres of tobacco, 50 of it burley, said there are really no other crops to replace tobacco.
Kentucky could no doubt be a player in the vegetable industry, he said, but hereâ€™s my argument those folks in Georgia, Florida, Arkansas and California, theyâ€™ve been real good about not growing tobacco.
Cline, 42, said he didnâ€™t feel he could switch to vegetables without taking market share away from those people.
Iâ€™d feel real bad about misplacing one of my farmer brothers in another state, he said. And thereâ€™s not a shortage of tomatoes.
Daviess County farmer Keith Riney includes 10 to 20 acres of vegetables tomatoes, corn, green beans, squash, peppers and pumpkins in a diversified farming operation of more than 500 acres at West Louisville.
Competition for markets is so tough, Riney said, that he has considered quitting vegetables.
But that may not be an option now. Riney also grew 20 acres of burley this year.
It really devastated us, he said of the cut. I really donâ€™t know what weâ€™ll do.
Not all landowners who have tobacco quotas actually grow the crop. They lease their pounds to others, and for the first time this year, Kentucky growers will be able to lease quotas from landowners in other counties.
Will Snell, a University of Kentucky tobacco economist, said burley pounds from small allotments in eastern Kentucky might shift to Western Kentucky, where they can be raised more economically in larger operations. Classified ads are cropping up in newspapers across the state from people looking for pounds to lease.
Riney said he, too, was tinkering with trying to pick up pounds from other places, but I donâ€™t think it will happen because everybody is in the same boat.
The demand for leased quota is expected to boost lease prices to levels where growers do little more than break even. This year, most burley quotas could be leased for about 40 cents a pound, Snell said. Already this year, he is seeing ads from farmers offering 50 or 60 cents.
He doesnâ€™t think lease prices can go over 60 cents a pound for the leaf, which this year sold for an average of $1.90 a pound. Assessments charged at the auction warehouse usually drop the price paid to farmers to around $1.80, he said.
Out of that, he said farmers on average have 85 cents a pound in production costs and should figure 25 cents a pound for their labor and 25 cents for depreciation of barns and equipment. Including the warehouse commission, that means the producer has about $1.50 in the pound of tobacco, which sells for $1.90, before paying a quota lease.
For a small farmer, or for a larger one who is heavily dependent on tobacco, Riney said income from the crop will probably determine whether he can continue to farm.
Tobacco, year in and year out, it does decent, he said. It can handle a lot of variations in weather. You always make something. Thereâ€™s hardly ever a complete failure.
Thereâ€™s no other crop that youâ€™re going to get the same kind of income from that you have with tobacco, echoed Walter Hazelwood, who farms 1,100 acres, including 20 acres of burley, in Henderson Countyâ€™s Hebbardsville community.
He said the burley, with an additional five acres of dark tobacco, represented 60 percent of his net income. If he canâ€™t pick up additional pounds by leasing other peopleâ€™s quota, the cut will cost him 40 percent of his tobacco income.
Some people, he suggested, may have to quit raising because they donâ€™t have enough pounds left to be profitable.
If you were raising a couple of acres two years ago, now youâ€™re down to a half-acre, he said.