Wednesday, August 14, 2019

Kentucky-based tobacco cooperative is investing in hemp

The cooperative founded to help farmers of burley tobacco, a key ingredient in cigarettes, is facing a declining market and worsening finances, and at least one of its leaders thinks it should go out of business. Instead, it is putting $1 million into hemp, which the state agriculture commissioner, son of that leader, says is "a high-risk crop."

The Burley Tobacco Growers Cooperative Association, formed in 1921, has almost $35 million in assets, but "has struggled to find a role since the ending of the federal support program in 2005," Janet Patton reports for the Lexington Herald-Leader. "It is now sitting on thousands of pounds of unsold tobacco in a declining market and is operating at a loss, losing almost half a million dollars a year since 2014," according to a report the cooperative commissioned.

Former co-op chair Roger Quarles, who is still a director, proposed last month that the co-op dissolve itself and distribute its assets to members "before the money dries up," Patton writes. In a July guest editorial in The Farmer's Pride, the state's agricultural newspaper, he suggested burley farmers could each get up to $14,000 if the co-op dissolves now.

Instead, the co-op's executive committee voted to buy up to $1 million worth of hemp from Kentucky farmers, have it processed by its Tennessee counterpart into hemp oil. Directors to whom Patton spoke declined to discuss specifics, but Chairman Pat Raines "said that they already have a buyer who wants to purchased the potential oil," Patton reports.

Agriculture Commissioner Ryan Quarles, son of Roger Quarles, is a big advocate of hemp but declined to comment on the co-op's move. "I always say it's a high-risk commodity," he told Patton. Amid a surge of permits to grow hemp, there is concern about oversupply, which plagued tobacco until Congress created the federal program of quotas and price supports in 1938.

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