TIM THORNBERRY
Kentucky Correspondent

LEXINGTON, Ky. — Normally, this time of year, Todd Clark is busy planting close to 85 acres of burley tobacco on his Fayette County farm. That equates to more than 200,000 pounds.

Last year he saw a change coming and dropped to about 60 acres. But these are anything but normal times in the tobacco market, and last February Clark was notified that his contract was not being renewed. The action came as a surprise even though he suspected he would face another decrease in contracted pounds this year.

Clark isn’t alone, as tobacco companies are cutting back on the amount of leaf they are buying because the demand for tobacco products has dropped and the worldwide market has changed.
“Hopefully this is a short-lived kind of thing,” he said. Burning bridges is not something Clark wishes to do, and feels opportunities will arise again with tobacco companies.

“Certainly at the time I learned about this, I was a little bit in shock, literally, but since then, I’m looking at other things I was already working on,” he said. “You have to evaluate where you are and what your next steps are, and you try to make moves to the future that, unfortunately, tobacco might not be a part of.”

Clark is not ready to give up on tobacco. He will grow a crop this year, has found a contract for 40,000 pounds and will grow additional acreage and sell it through other means. His eggs are definitely not all in one basket, however; the farm supports a hay and straw operation, a greenhouse in which tobacco plants are grown for other producers and a stocker cattle operation.

Clark is also looking at a pasture-to-plate cattle business, as well as poultry and sheep. Many of these ventures are a first for him and he recognizes that none can replace tobacco at this point.
“Some of these were things I was looking to do before any of this happened anyway. It seemed like a logical next step,” he said.
Clark has used agricultural development funds to help with the hay and stocker operations and said he is lucky because financially, the farm is stable and his wife works off the farm. His thoughts turned to his fellow producers who aren’t so lucky.

“It wasn’t a case where one day I was a tobacco farmer and the next day I wasn’t. I’ve heard of some other people whose situation was more catastrophic,” he said. “We are blessed.”

Clark has learned from the events of this season. Most importantly, perhaps, is to grow the best quality tobacco he can. With a quality product, there are other avenues in which to sell.

The Burley Tobacco Growers Cooperative is one of those options. Brian Furnish, the co-op’s general manager, said the contract situation is tough but noted not all producers faced cuts.

“There is a combination of things happening. Some people got increases and some people got cut and we will be buying tobacco, but our board won’t determine how much until November, until we see what we sold from last year’s crop,” he said. “We’ll still be buying tobacco and helping farmers move as much as they can.”

In 2009, the co-op launched the U.S. Growers Tobacco Co. (USGTC) to give farmers an option in selling their crop when more conventional means are not suitable. Furnish said it is a last option for producers to sell their tobacco but it is there, nonetheless.
The company grades, processes and stores the tobacco while producers wait for prices to become more favorable or a “home” is found for it. In return, tobacco owners will pay USGTC 10 cents per green pound for the services, plus the normal storage and processing fees. Owners will be paid once their tobacco has been sold and processing and storage fees are deducted.

“That program went well this year. We didn’t get a lot of tobacco but we got some, and we’ve already sold about half of it and the farmers have been paid and they are pleased with that,” said Furnish.

He added while USGTC creates a new opportunity, the company is limited in funds, which limits what it can buy. But new markets – especially overseas venues – are being found and for the first time, the co-op sold to a domestic company, something that reflects the changing tobacco market.

As far as growers relying on alternative means to sell their tobacco, including the handful of auctions that are still around, it’s a gamble that depends on how much tobacco will be grown.

“Last year we thought there was going to be a lot of overproduction but all the good tobacco found a good price and a good home either through auctions or some other method. It’s all determined on how big this crop is and how Mother Nature cooperates,” said Furnish.

“You had some people who didn’t get financing, so they’re not going to raise a crop, so I just don’t know how much is going to be there.”

He also said the new market should make producers grow a better crop since it is a world market now and is not protected, instead governed by supply and demand.

Clark intends to keep tobacco a major part of his farm as long as there is a market, but he will proceed with caution. “I think it is important to have options. There are so many small manufacturers all around the world and I’m excited about what the co-op is doing to penetrate those markets,” he said.

He intends to plant 35 acres, 10 of which will be “unspoken for” and will have to be sold through alternative markets – but he’s planting and that is the main thing.

“I’m focusing more on quality than I ever have before because I feel like if it is excellent quality, it will sell for a profit,” he said.
“A year from now if the tobacco companies increase their purchase intentions, I think Kentucky growers will step back up quickly, but I would be concerned if I were the companies. Every time they do something like this, I see us diversifying more and more away from tobacco to the point that eventually, we may not ramp back up, and be into other things.”