Outlook bright for dark tobacco crop

The end of federal involvement in tobacco production in the United States has thrown growers of nearly all types of leaf in North Carolina into marketing limbo.

But there is one exception: The dark fire-cured and air-cured types grown in Kentucky, Tennessee and Virginia are enjoying a stable and in some cases growing demand for their product.

That is because the end product — moist snuff — has experienced increasing popularity among consumers since the 1980s.

“Smokeless tobacco consumption, especially moist snuff, has increased in 18 consecutive years,” said Will Snell, Kentucky Extension agricultural economist, at the Tobacco Workers Conference in Charleston S.C., in January. “As a result, dark tobacco has not experienced as much of an adjustment as burley and flue-cured in the post buyout era. Also, there is not as much competition from overseas producers.”

Unlike burley, relatively few dark growers have gotten out of tobacco production.

“There has not been as much of an exit of dark tobacco growers, and we didn't see much of a price adjustment: Dark tobacco was selling at about $2.50 to $2.55 a pound before the buyout. Now, top quality dark fire-cured is selling for $2.30 to $2.35 a pound.”

The smokeless tobacco companies provided enough of a price incentive that dark fire-cured tobacco (Types 22 and 23) plantings actually increased last year to 12,120 acres from 11,020 the year before. Dark air-cured (Types 35 and 36) acreage fell, but only slightly, to 4,040 acres from 4,200 the year before.

There is a smaller dark tobacco production belt in the southern Piedmont of Virginia where dark fired and dark air-cured leaf has been grown for centuries. The dark fire-cured type (21) experienced a drop in acreage of about half in 2005, but growers there think they may have a chance to rebound in 2006.

“The contracts offered to our dark fire-cured growers were probably the best contracts out there for tobacco in 2005,” said Stan Duffer, Virginia Department of Agriculture tobacco marketing specialist. “I get the feeling the companies will be fairly constant on that level in the foreseeable future. So we still have a dark fired industry, just not as big as it was. But we are glad to have any at all.”

Acreage went down in 2005 to about 350 from 710 the year before, according to the USDA. “Our production was also about half what it was in 2004 — about 700,000 pounds as compared to 1.4 million pounds the year before that,” said Duffer.

But air-cured production disappeared from the Southside of Virginia once the quota program ended. There had been a tiny production of an air-cured type called sun-cured Virginia, grown almost entirely in one county on the north shore of the James River near Richmond. But once quotas were gone, the interest in growing this type disappeared.

An agronomist who works with dark tobacco growers in Kentucky and Tennessee thinks the USDA planting estimates for those states may have been a little too conservative.

“I think we had on the order of 17,500 for the fire-cured and air-cured together,” said Andy Bailey, Kentucky-Tennessee Extension tobacco specialist. “Our dark fire-cured and dark air-cured acreage has been stable. We had a few more acres in 2005, unlike burley which went down considerably.”

Auction sales disappeared with the program, as these types went exclusively to contract marketing in 2005. But this did not require a lot of education, since these growers had a long tradition of selling part of their crop “from the barn door”, i.e., direct to the buyers.

“I think the companies were generally satisfied with what they got,” said Bailey. “It was a tough season as far as growing conditions were concerned, particularly in the western areas. There were some short crops out there. But we had some good areas in the east.”

Bailey is looking for about the same acreage to be planted in 2006.

“The future looks bright right now,” he said. “It is probably one of the brighter spots in the tobacco industry right now. Other types are losing acres, but we have gained a few. Compared to burley and flue-cured, we feel pretty optimistic right now.”

There seems reason for optimism farther down the road. Snell said the demand outlook for the next few years is more optimistic for dark fired and dark air than for burley.

And there could be a major demand development. Executives at both Philip Morris or Reynolds American have hinted recently that they may soon introduce smokeless products of their own, perhaps through acquisition of an existing smokeless product maker.

“I would not be surprised if one or more cigarette companies diversify into smokeless products,” said Snell. “There is no doubt that companies are always looking for market opportunities. There has been a lot of envy in the tobacco business of what has been happening in the smokeless sector. So it is not surprising some of the cigarette companies are looking at this sector.”

There is no guarantee that this segment will continue to have the growth in the future that it has had in the past, said Snell. “But if it could just stay stable, that would make it attractive to manufacturers. In cigarettes, we have been seeing two to three percent annual declines.”

The smokeless industry has been good at marketing its products, he said. “Put that marketing ability together with a well-known manufacturer on the cigarette side, and you might have a product with some appeal, not just to the consumer base but to potential stockholders as well.”

One way or another, it is hard to imagine moist snuff consumption declining any time soon. “We are in a society that is obviously not going to totally ban tobacco products,” said Snell. “But consumers are looking at products that have lower health risks. Those will be the products that will be sustainable in the future.”

And moist snuff products made from Kentucky, Tennessee and Virginia dark tobacco will be among them.

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.