Wednesday, May 19, 2010

As smoking declines, cigarette makers continue cutting back on contracts with tobacco growers

As more Americans quit smoking, tobacco farmers are again feeling the effect of decreased demand for their crop. The brunt is being borne by Kentucky, which long had more tobacco farmers than any other state and is the nation's largest producer of burley tobacco, a major ingredient in cigarettes. Will Snell, a University of Kentucky agricultural economist specializing in tobacco, tells Bruce Schreiner of The Associated Press that the state could lose a fourth of its tobacco contracts this year.

"Many contracts also have been lost in North Carolina, South Carolina, Tennessee and Virginia as smoking continues to decline in the U.S.," Schreiner writes. "The cutbacks mean farmers who've lost contracts might not be able to pay mortgages and rural communities could lose jobs and income as farmers have less money to spend." Jess Burrier, a Cynthiana, Ky., tobacco farmer, recently received a postcard from Philip Morris International, which he had sold tobacco to for several years, thanking him for his contributions and telling him his service wasn't needed this year. Burrier told Schreiner the amount of tobacco he grows under contract shriveled from about 600,000 pounds two years ago to 20,000 pounds this year with another leaf buyer.

Peter Daniel of the Farm Bureau in North Carolina, the country's largest tobacco producer, reports "contracts for flue-cured tobacco, another cigarette ingredient, are down about 10 percent from last year," Schreiner writes. The U.S. Department of Agriculture reported in March that farmers in the eight burley-growing states, which include North Carolina, intended to plant 97,800 acres, down 4 percent from a year ago. Some farmers will still plant the crop without a contract, hoping to sell it at a limited number of auctions this year. Even after losing his contract, Burrier told Schreiner he doesn't blame Phillip Morris, which "is doing what they should do as a business. They're taking care of their stockholders. If they did any differently, they wouldn't be in business." (Read more)

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