No PM tobacco contracts for Georgia, Florida

The future of tobacco production in Florida and Georgia — hammered already in recent years by decreasing demand and poor crops — took another blow recently when Philip Morris USA announced it no longer would be purchasing tobacco from the two states.

Philip Morris USA officials held a meeting on Oct. 14, in Alma, Ga., with more than75 growers from Georgia and Florida attending. Growers were informed of the decision by Philip Morris USA to “no longer offer contracts for the purchase of tobacco in Georgia after the 2009 season.”

Growers who are operating on a one year contract will not be offered a new contract for 2010. Growers who hold three or five-year contracts will continue to be able to produce and sell tobacco until the completion of their contracts, if they have met the requirements of their contracts and continue to have contracts in good standing.

The location of a buying point for the remaining production after 2009 was in question with the current receiving station not currently under contract for use. Three other Philip Morris USA buying points located in Lumberton, N.C., Wilson, N.C., and Danville, Va., will continue to buy tobacco from growers in those areas.

Since that meeting in Alma, there have been no updates from Philip Morris USA, says J. Michael Moore, University of Georgia Extension tobacco specialist. “Growers and grower groups are working with other concerns that might have an interest in purchasing Georgia tobacco,” says Moore, adding that he has heard talk of a possible interest form JTI, Japan Tobacco International Leaf Services, which is establishing a burley and flue-cured processing plant in Danville, Va.

JTI Leaf Services, which is the international tobacco unit of Japan Tobacco, Inc., produces two of the top three worldwide cigarette brands — Winston and Mild Seven. Its other brands include Camel and Benson & Hedges. JTI recently announced it plans to spend $19.5 million to build the plant, creating 39 full-time jobs and 150 seasonal jobs when fully operational.

Nothing is for certain at this point, says Moore, and it’s too early to tell what Philip Morris USA’s competition might do. The three other buyers of Georgia and Florida tobacco include R.J. Reynolds Tobacco, Alliance One International and U.S. Tobacco Cooperative.

“North Carolina had a tremendous crop this year with an abundance of tobacco left over. Some companies are saying they won’t buy above what they contracted for, but some are buying at a cut-rate price,” says Moore. “Storage facilities could be filled to capacity going into next season which will affect demand. We hope other companies will step in and buy Georgia tobacco.”

Many growers remain undecided as to how they’ll approach tobacco production in 2010, he says, especially considering that some have seen bad crops in recent years.

“Even before the Philip Morris USA announcement, one producer — after having three bad crop years in the last five — decided to sell his barns and equipment and put in more than 100 acres of blueberries. They figured they could produce blueberries with less labor and fewer headaches than they could produce tobacco. More growers will probably consider whether or not to continue in tobacco production if they don’t get any contract offers through January,” says Moore.

Philip Morris USA was purchasing 40 to 50 percent of Georgia’s tobacco crop, he says. Georgia tobacco sales totaled $69.56 million in 2008.

This year’s crop was hammered by, among other things, tomato spotted wilt virus.

“Thirty to 35 percent of the state’s plants showed symptoms of the disease, and yield reductions were in the 15-percent range. That was over and above the damage incurred by not getting the crop transplanted on time due to excessive rain during the spring. Once the crop was transplanted, an additional flooding rain damaged it further, causing more losses.”

Coffee County is the largest tobacco county in Georgia, producing about 2,000 acres of it each year. That county’s Extension director, Eddie McGriff, says, “We figured something was up because they were grading tobacco hard this year. A lot of quality tobacco they were down grading, and we were concerned about that.”

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TAGS: Tobacco
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