Thanks to continuing low contract prices, U.S. growers who want to stay in tobacco are looking for alternative enterprises. And they are also looking for more economical ways to grow tobacco itself.
For flue-cured grower Edward Baskerville of McKenney, Va., wine grapes looked like a diversification possibility. But they didn't fit in. “With the amount of tobacco we grow now, the situation just is not conducive to grapes,” he says. “So we gave up on grapes altogether in 2007.”
Instead, he grew an extra 10 acres of flue-cured tobacco.
But that move required a drastic step to produce the tobacco at a low cost, and mechanization of the harvest process seemed like the best strategy. So he bought a mechanical harvester for the first time in 2007.
“It is a DeCloet multi-pass harvester, and it helped tremendously with the labor situation,” he says. “I harvested the full crop with only five H2A workers last season. In 2006 (harvesting by hand), I needed 10 workers on 80 acres.”
If he is in a position to make further tobacco investments in the future, Baskerville said the next one will probably be box barns to replace his rack barns, without really losing any efficiency.
The 2007 crop actually turned out reasonably well for Baskerville, considering the circumstances.
“We were fortunate,” he says. “We got some rain and had a fair crop. It was a little light (in weight), but the quality was fair. It sold better than I anticipated.”
But it was obviously a crop grown in harsh conditions. “We had more problems with the heat than with the drought,” he says. “You could tell it was sunbaked: It had a dull finish to it.”
Kevin Trent of Brookneal, Va., is also a tobacco grower who has tried wine grapes. He is continuing in 2008, though the returns have been disappointing.
But tobacco is still his main crop. Up until 2007, he grew all three of the major tobacco types: Burley, flue-cured and dark.
Last season, that came to an end when he gave up on flue-cured. To make a go growing that type, Trent would have had to increase the acreage he planted in it. That in turn would have required buying more barns, generating a major capital outlay.
“Without a large investment in curing facilities, the amount of flue-cured that we could grow wouldn't have been enough to justify itself,” he says. “We already had enough barns to cure more dark fire-cured, so we made the decision to put our resources into our dark tobacco.”
He wound up with about 32 acres of dark and 12 of burley in 2007. The latter did better than the former.
“Our burley was on bottomland and seemed to get a little more rain,” Trent says. “It got enough to fill out and made about 2,200 pounds per acre, which is acceptable for us.”
Most of his dark tobacco received less than one inch of rain all year. “It didn't have enough water and never got much size,” he says. “Our production was down perhaps 20 percent from normal.”
At the beginning of the year, Trent was apprehensive about tobacco in 2008. “Expenses have gone out of control, and there is very little profit in tobacco right now,” he says. “A lot of growers here are thinking about quitting.”
That thought has gone through his mind too.
“The price I was offered for my dark fire-cured crop was just 10 cents a pound more than 2007,” he says. “That isn't enough to cover the increased cost of production, let alone any cost of living increase for us. We were hoping for 28 cents a pound.”
If a better dark contract can't be found, Trent says he may quit himself. But he was planning to negotiate with two other companies that buy this type, and he was hopeful that he might obtain a better price from at least one of them.
The burley price wasn't much better. The company he has sold to offered a seven-cent a pound increase across the board, along with some incentives that could bring the increase up to a total of 15 cents a pound.
“But it would be hard to earn all the incentives,” Trent says.
Trent sees some irony in the fact that he may well make more money on corn and wheat/soybeans this year than on his tobacco.
“I don't want to quit,” he says. “But if we are locked into a situation where we have to have a perfect season to get even a modest profit on tobacco, that would be foolish.”
Baskerville isn't quitting either — not yet, anyway. “I am growing tobacco for at least one more year, but then I am going to have to think about it,” he says.