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Snell: Burley tobacco market still profitable
Farm World Editor

LOUISVILLE, Ky. — Due to the fallout of federal buyout legislation, challenging growing conditions and other factors, the burley tobacco business is changing, said Will Snell, a tobacco industry economist with the University of Kentucky.

Snell addressed members of the Burley Tobacco Growers Cooperative Assoc. and others during Tobacco Farmer Day at the National Farm Machinery Show in Louisville, Ky. last week.

“After the first year of the buyout, we’re still facing an awful lot of adversity,” Snell said. “Again, it’s going to be a transition period. We’ve probably lost about half of our growers in the past year.”

He added that approximately 30 percent fewer acres produced burley tobacco last year when compared to 2004. Snell said the federal buyout legislation, which ended the quota system, was not the only reason for the drop-off.

“Most farmers needed a 2,100-pound (per acre) yield to break even in the post-buyout era,” Snell said. “Due to this past year’s challenging growing conditions, a lot of farmers didn’t realize that 2,100-pound yield.”

As a result, he added, tobacco companies also didn’t get what they wanted in 2005. He said tobacco companies had a demand for 300 million pounds of burley tobacco, but only 250-280 million was produced. He explained that this could be a good sign for 2006.

“Companies are going to need more tobacco to meet the present demand,” Snell said.

“They are looking at you all, but they are also looking at non-traditional burley tobacco areas.”

He said burley production in North Carolina could double, or perhaps triple. Also, production will increase in non-traditional burley states such as Illinois, Pennsylvania and Maryland.

Snell expects burley production costs to increase from 5-7 percent in 2006.

Still, he said, there is enthusiasm for growing the crop, and new export markets could be opening for local growers.

“There continues to be interest in growing this crop,” Snell told the burley tobacco growers. “Tobacco is still a moneymaker in this state. It’s still a moneymaker for a lot of you on your farms.”

He hopes tobacco companies will come back with incentives and price supports to encourage growers this year.

“I think a lot of us are cautious about increasing our acreage in the climate we have today,” Snell said. “All-in-all, though, I am cautiously optimistic about the future of this crop in this area.”

Kentucky Farm Bureau President Marshall Cole said his organization is lobbying federal lawmakers for migrant worker provisions in anticipated bills on immigration reform. “Migrant workers are crucial for this crop,” he said.

This farm news was published in the February 22, 2006 issue of Farm World.