By TIM THORNBERRY
Kentucky Correspondent

FRANKFORT, Ky. — Tobacco, in all of its controversy, has long been an economical engine, particularly in the South. In the early days of Virginia and Maryland, the crop was literally money in the bank and was raised in any cleared area colonists could find.

Thomas J. Scharf, author of History of Maryland: From the Earliest Periods to the Present Day, wrote in his 1967 work, “Tobacco was the safest and most stable currency that the Chesapeake colonies had or could have, and it always had a value in exchange for gold.”

At one point in Kentucky, tobacco represented 25 percent of agriculture receipts. Those days have passed, and the end of a long era seems to be in sight as government control has taken over and a volatile market has reduced the amount of tobacco being grown. Today, tobacco accounts for only about 10 percent of farm receipts in the state.

Kentucky burley tobacco growers have always been a hardy breed of sorts, many having been in the business since childhood. Mike Spencer, a producer from Franklin County, has raised his own crop since his early teenage years and undoubtedly grows one of the largest in the area, at 90,000 pounds.

Spencer said the past growing year was one of his most challenging. It was the same for many producers, as a terrible curing year created problems, and many have stated they won’t be back for 2011 growing, added Spencer. Most of his tobacco is grown under a contract, although he did sell a portion on the open market. But even with contracts, many farmers have lost money this year because of low prices for poorer-quality tobacco.

Spencer said he thought it was as much the moisture content in the tobacco this year as the color. But he has kept his tobacco in the barn as long as possible, helping with the color issue. “We try to strip it as dry as we can and keep it as dry as we can,” he said.

Before 2004, producers grew tobacco under a federal quota and price support system. Spencer said at least there would have been some kind of price guarantees for a year like 2010, had that system remained intact.

“At least with the price support system, if you had a year like we had this year, you had a backup that you knew you were going to get. This year you’re just out in the cold,” he said.

While Spencer still has tobacco to sell, for the most part his crop has seen fairly good prices up to this point. If growers have had a hard time of it, it might seem tobacco companies would be having an equally tough year – but that is not the case at least for one, according to Altria Group, Inc. spokesman Ken Garcia. Altria is the parent company of Philip Morris (PM) USA.

He said PM has been happy with their growers’ efforts in 2010 and sees little in the way of changes for the 2011 growing season. “From talking to the folks in our leaf procurement department late last year as deliveries were being finalized, they were getting the quality they had expected and asked for with their contract growers, and saw the volumes that they had looked for and had contracted for,” he said. “Philip Morris USA was pleased to see that and as such, as we head into the 2011 growing season, we are pleased to announce that contract volumes will not decline over the 2010 contract volumes.”

Garcia added that select growers would be provided an opportunity to increase their contracted volumes over last year based on past performance.
“Our pricing this year, as always, will continue to emphasize high quality tobacco,” he said.

Garcia also said even with the decline in the cigarette industry over the past two decades, Kentucky and U.S.-grown tobacco remains the backbone of PM’s flagship cigarette, Marlboro.

“We’ve bought and will buy millions of pounds of Kentucky-grown tobacco from thousands of Kentucky farmers this year,” he said.

“Kentucky tobacco is a key part of the cigarettes we make.”

He noted that contracts for dark tobacco will also remain strong for the coming season.
That should be good news for growers, but they are certain to remain cautious – as the changing market conditions continue to do just that.