|By TIM THORNBERRY
LEXINGTON, Ky. — In the second year of a free market for burley tobacco growers, producers planted 73,000 acres, up 3,000 from last year and just the opposite of what many agriculture experts thought would happen.
Some early estimates placed burley production for 2006 to be down as much as 17 percent. As of March 1, only 58,000 acres were projected to be planted, but thanks to late incentives by tobacco companies including Philip Morris, and to those growers who saw 2005 as one of their most profitable years, many farmers opted to stay in production at least for another year.
University of Kentucky Tobacco Economist Will Snell said the state’s crop looks good so far.
“Acreage is up, and would have been up more if not for transplant supply being tight in some areas and the concerns over immigration reform and higher energy prices,” said Snell. “The revised production/price incentives offered by the companies in March were helpful, but may have been somewhat late to encourage additional production.”
Snell also said that with the increase in planted acres coupled with an average yield, Kentucky burley production could top more than 160 million pounds this year versus 143.5 million pounds in 2005. But even with the possibility of belt-wide production exceeding 225 million pounds (an increase of more than 20 million pounds from 2005) it still may not be enough to meet industry demands.
“Despite increased production expected, supplies will still be less than anticipated demand,” said Snell. “The question then becomes will the companies boost imports or attempt to provide greater price incentives for U.S. growers for the 2007 crop.”
Last year, the U.S. exported more tobacco than was grown (more than 200 million pounds) during the year leaving tobacco companies to pull from existing inventories and pools from tobacco cooperatives and leaving tobacco stocks depleted, a situation that could be beneficial to domestic growers.
Snell estimated that prices for this year’s crop may average in the mid to upper $1.60s a pound and even exceed $1.70 per pound if a grower produces a top quality crop and maximizes production incentives offered by tobacco companies. Based on these prices and a 2,300-pound to 2,500-pound per acre yield, UK budgets indicate an economic return to operator labor and management of $1,000 to $1,500 per acre.
“With prices more competitive and quality leaf worldwide in short supply, there is some cautious optimism for expansion of burley production in the bluegrass for the first time in many years,” said Snell.
University of Kentucky Agronomist Gary Palmer also sees reason to be quietly optimistic despite concerns over blue mold.
In a statement issued to tobacco industry representatives last week, Palmer said, “We have a big crop in Kentucky that has a good root system and the potential to produce high yields. Blue mold is strong and projected cooler temperatures and rain for this weekend may escalate the damage. However, producers are spraying and may keep the worst in check. Recent heavy rains caused some localized damage, but relieved drought stress in other areas.”
That rain and milder temperatures for this week will likely spur the continued spread of blue mold but recommended preventive fungicide programs should keep the disease under control.
While more than half of state growers watched from the side line in 2005 during the first post buyout production year, those left in the game saw a mixture of results that left the state with the lowest production numbers in years with dollar figures coming in at under $300 million, the lowest since the 1970s. This year however, seems to be brighter, even if no one is saying it out loud, yet.