By TIM THORNBERRY
Kentucky Correspondent

FRANKFORT Ky. — Ronnie Monroe has raised 45 tobacco crops in a row, but the 67-year-old Franklin County farmer isn’t sure he’ll make that 46, as 2010 has proven to be one of the toughest he has faced when it comes to raising and selling his crop.

Monroe is a contract grower and said he wouldn’t have dreamed of raising tobacco without one, but 4,500 pounds of last year’s crop was rejected at a Philip Morris International (PMI) receiving station because of its bad color caused by unfavorable curing conditions.

For the second year in three, producers here have had to navigate through less than ideal curing conditions caused by dry weather. Monroe said he knew his crop was less than perfect, but was surprised when all of the PMI contracted tobacco was turned down.

“I thought they would buy some of it,” he said. “I can take it to a warehouse, but you’re going to lose money, and you can’t eat it.”

Monroe thinks there is a combination of factors affecting the buying trend of tobacco companies this season, including an overabundance of leaf and looming federal regulations governing the tobacco market. Kentucky alone has seen a drop in the number of tobacco farms over the last decade from more than 40,000 to fewer than 8,000 because of changing global markets and a loss of the federal quota-price support system in 2004.

There are still many auction warehouses available to farmers in Monroe’s shoes or for those who don’t grow under a contract, or those who have extra tobacco to sell beyond what they are contracted to grow.

One tobacco auction warehouse operator who wished to remain anonymous said he is seeing more rejected tobacco making its way to his facility, which generally sells for much less than tobacco purchased under contracts. He also said that on any given day he is seeing anywhere from 30-60 percent of contracted tobacco being turned away this season.

That situation could be compounded if crop insurance companies don’t honor their original terms of policy payments, something the operator said a handful of companies may do by setting a value on the tobacco using a grading system, as opposed to paying the true value of what price the crop will bring.

Once king of crops in Kentucky, tobacco now comprises less than 10 percent of Kentucky agricultural sales, compared to nearly 25 percent in the 1990s, according to information from the University of Kentucky (UK) College of Agriculture. To give an example of just what kind of money producers are losing, good quality tobacco this season may bring $1.74 a pound in some instances, while rejected tobacco may only get 40 cents to perhaps $1.25 per pound at an auction.

“Tobacco was a way of life. It sent kids to school, made house and farm payments and now you’ll be lucky to get your money back this year,” said Monroe.

His situation is typical of many tobacco farmers in the state, having once grown 20 acres, a number that has been cut by more than half. While Monroe has endured tough growing and curing years before, this being the worst he has ever seen, it is the uncertainty in the industry that is causing the biggest problems.

“You just don’t know which way to turn,” he said. “I’ve had five good years with the contracts, so I really can’t grumble. This one has sort of caught us in a trap but I’m not going to lay it all on to the companies. They have regulation to meet, too.”

As with so many agricultural sectors, the tendency has been to get big or get out, something Monroe feels is happening to tobacco.

Will Snell, an extension professor in the Department of Agricultural Economics at UK, said despite the tough year, he feels there is still room for both kinds of growers – but there are drawbacks for both, as well.

“The disaster this season is a combination of ample world burley, declining domestic and international demand in response to concerning regulations and lower product demand and a poor quality crop,” he said.

“I still believe quality small producers can survive, as large poor-quality growers are very vulnerable to be cut out of the system. But I think in a heightened regulatory environment, the companies would like to deal with fewer growers, which makes the smaller ones vulnerable.”