Tobacco growers learning to adapt

The profit potential for the two major types of tobacco — flue-cured and burley — has dropped precipitously, and that has set growers to looking for a substitute crop.

Some have found a surprising alternative: Other types of tobacco! Two have been especially appealing this season — existing types of tobacco grown in an organic program and the dark tobacco types. Because products made from these tobaccos are growing in demand, manufacturers are offering a premium for them.

The biggest growth area in U.S. tobacco production has not been an individual type but instead a category — organic tobacco. Production has skyrocketed in recent years, and the main reason is the high grower price: Organic tobacco companies usually pay a price of about two times that of conventional leaf.

By far the largest organic tobacco product manufacturer and the pioneer in this category is Santa Fe Natural Tobacco. It more than doubled its contracted production from 2007 to 2008.

“We expect to have over a million pounds planted in the U.S. this year,” said Mike Little, vice-president of operations for Santa Fe. “It will be grown by 60 growers on a total of perhaps 800 acres.”

The company is expanding its production area. Most of Santa Fe's farmers grow flue-cured in the North Carolina and Virginia Piedmont with a little in the Coastal Plain of North Carolina as far east as Wilson, said Little.

“But now we are going farther south to areas like Lumberton and Fayetteville, N.C., and east to Kinston and Goldsboro, N.C. We may soon move into South Carolina.”

It also has a few flue-cured growers in the Canadian province of Ontario.

In addition to flue-cured, Santa Fe uses some organic burley, and it contracts for it with growers in Kentucky, along with a few more in Wisconsin and Pennsylvania.

Santa Fe is not the only buyer of organic tobacco in the U.S. A new company, Organic Smoke Inc., has 30 farmers under contract who will grow up to 400,000 pounds in 2008, said Sun Butler, one of the owners of the company. That would be more than twice their 2007 production.

Eleven of Organic Smoke's growers are flue-cured growers, and 19 are burley growers. Organic Smoke also grows a little organic cigar filler and dark air-cured tobacco in Pennsylvania.

Where does all this tobacco go?

Santa Fe offers a full flavor and a light organic cigarette, along with an organic full flavor roll-your-own mixture.

Organic Smoke introduced a new organic pipe tobacco mixture this spring. It is made entirely of flue-cured tobacco and is called Organic Pipe Dreams.

Organic Smoke also provides the leaf for three new organic roll-your-own products manufactured by D&R Tobacco of Smithfield, N.C., and introduced this spring. They are called Vengeur Natural, Rowland Natural and Windsail Natural. All are line extensions of popular existing brands.

“The outlook for organic tobacco products appears very positive,” said Micou Browne of Organic Smoke. “Any tobacco without pesticide residues is more attractive than conventional in the current market.”

Among the conventional types, the dark types have proved to be a good alternative this year and appear headed for a boom season.

An indication of just how attractive dark tobacco is at current prices is that in the traditional dark-producing area of central Kentucky and Tennessee, a number of burley farmers have converted part or all of their operations from burley to dark air-cured. This is made easier by the fact both types can be cured in the same barns.

“Buyers were offering four or five cents a pound more on this year's contracts. At that price, these types are very appealing,” said Kenneth Smith of the Eastern Dark Fired Tobacco Growers Association in Springfield, Tenn. Prices for the last crop in Kentucky and Tennessee averaged around $2.44 per pound for fire-cured and $2.20 per pound for dark air-cured.

The USDA projected in March that nationwide, plantings of dark fire-cured tobacco, grown in Kentucky, Tennessee and Virginia, will increase 19 percent, while dark air-cured tobacco, grown in Kentucky and Tennessee, will increase by 47 percent.

But those estimates could be conservative. Growers reportedly wanted to raise substantially more this year, said Smith.

Virginia Extension Tobacco Specialist David Reed said in June that plantings of dark fire-cured in the state might be up 25 percent over the 400 acres grown in 2007.

“We are not sure exactly how much acreage we will have, since the contracts generally allow farmers to plant as much they wanted,” he said. “We might see an additional 100 acres or more.”

Another motivation for increased dark plantings is that the drought of 2007 weighed very heavily on all the dark types. Many growers came up well short of their yield goals and think the best way to recoup their losses is to grow more dark.

Dark tobacco is used primarily in smokeless products, said Smith. “It is too heavy to burn well, except in some cigars and in Egyptian water pipe mixtures.”

Recently, there has been a wave of new smokeless products, and this is no doubt the reason for the high prices offered now for dark tobacco.

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