Flue-cured tobacco difficult to replace in the Southeast

“Why don't you just grow something else?” If you're a tobacco producer, you've undoubtedly been asked this question at least once or twice in recent years. And, if you live in a small, rural county that depends on tobacco production for economic stability, you know the situation isn't as simple as just growing another crop.

In Georgia, flue-cured tobacco has been a major source of farm income since the mid-1930s. It has contributed millions of dollars to farm gate income, resulting in higher economic activity in areas where it is grown.

This past year, tobacco was ranked third among major individual row crops in Georgia in order of cash value. This ranking comes despite the fact that Georgia's tobacco quota has been reduced by 44 percent since 1997. Statewide, this has resulted in an estimated $176.6 million reduction in lost farm income since 1997.

And this year, it's estimated that Georgia growers will plant 27,000 acres of flue-cured tobacco or 13 percent less than in 2000. This will mark the sixth consecutive year of declines in the state's tobacco acreage.

According to an analysis presented by the University of Georgia's Bill Givan and J. Michael Moore, tobacco is of paramount importance in the state given that the approximately $117 million of farm receipts it generated in 2000 was grown in a small portion of Georgia's counties by about 1,500 growers. Further, it generated returns to about 3,000 quota owners, whether they personally produced the tobacco or rented out the quota.

The effects of the declining tobacco industry in Georgia have been widespread, say the authors. In the case of tobacco, many farm input dealers sell supplies to growers. Hopefully, these growers will realize a profit and buy consumer goods for their families. Also, those operating tobacco warehouses benefit from the sale of tobacco when the crop is auctioned in their facility.

The magnitude of the quota loss especially has been felt in five of the major tobacco-producing counties in the state. Each of these counties experienced a minimum loss of $1 million in tobacco receipts this past year. During the past three years, tobacco receipts in these five counties were an accumulated $45.5 million less than they would have been had the quota stayed at the 1997 level.

“Given that flue-cured tobacco generates $3,500 to $3.750 gross receipts per acre grown, and that acreage in Georgia has declined from about 43,000 acres in 1997 to about 30,000 acres in 2000, we had better realize just how much income has been lost,” say Givan and Moore.

And, given that tobacco growers have large investments in specialized equipment and quota, and that the crop is grown in a relatively small number of counties, attention has been paid by various entities to the economic plight currently facing these farmers, states the report.

Both tobacco companies and the U.S. Congress have provided some funds to help these growers through their current economic dilemma. And, while these funds have been essential to allowing some farmers to pay their annual expenses, the continued annual income that would have been generated by the lost quota has not been replaced.

So, what are the alternatives to growing tobacco? Any tobacco alternative is difficult to assess, as there are no official figures to estimate their profitability, say Givan and Moore. But whenever there's talk about alternatives to tobacco, vegetable production usually is mentioned.

“After all, gross receipts from vegetables in Georgia have more than doubled during the past 10 years. But this doesn't give an indication of profit from any of these crops. Onions and tomatoes show relatively high gross per acre income — but there is no indication of profit,” according to the report.

Given that vegetables have no type of built-in risk reduction mechanism, most growers who venture into this area start out small. The learning curve for vegetable production is long, and the marketing mechanism has many “bends and turns,” say Givan and Moore.

It has been said many times in the past and it still rings true today, “the alternative to tobacco is tobacco.”

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