There is a little more mystery surrounding the 2014 tobacco season than one normally expects, said the outgoing president of the Tobacco Growers Association of North Carolina at the organization's annual meeting Feb. 7.
Growers should think of themselves as explorers entering “uncharted territory,” said Brent Leggett, who grows flue-cured and fruits and vegetables near Nashville, N.C.
Speaking at the meeting, which takes place as part of the Southern Farm Show in Raleigh, N.C., Leggett said that the last vestige of the federal tobacco program will come to an end this year.
“The reality [is] that the tobacco program buyout funds have reached maturity,” he said. “The final buyout payments are occurring now, which means this will be the first year in a decade we have produced a crop that will not have the benefit of buyout payment assistance following the season. How will this dynamic affect the stability of the market moving forward?”
Another imponderable is the effect that weed seed found in U.S. flue-cured will have on market prospects. “We learned late last season that China has detected the presence of certain quarantined weed seed in some U.S. tobacco shipments,” he said. “Of particular concern is Palmer amaranth (pigweed). This alarm bell is an uncharted area for us. Could it result in lost exports to China?
“We must be assertive in developing necessary solutions and assurances to maintain the confidence of our customers.”
That is especially significant this year because of China's new marketing initiative. “China is emerging this season with its own direct buying presence and is issuing contracts to U.S. growers,” he said. “This too is uncharted territory. Realizing that China represents the largest cigarette consumption market in the world, we must understand all of the dynamics this new activity indicates.”
But it is not just China farmers U.S. growers should have on their minds. “As farmers, we value every customer—existing, emerging and prospective,” Leggett said. “Attention to quality and being consistent with a product that is uniform and reliable has never been more critical than it is in 2014.”
What will future tobacco policy be?
Which way tobacco policy? “The Obama Administration is still attempting to carve out or even develop a position of safe harbor for tobacco in the Trans Pacific Partnership trade agreement,” said Leggett.
It would be unprecedented to discriminate against a legal and legitimate agricultural commodity in a free-trade agreement.
“The danger could reach far beyond tobacco to eventually include any number of other products: peanuts, poultry and pork, just to name a few,” he said. “We must continue to oppose this action and seek to make certain those farm families who produce it are not discriminated against.”
Leggett took a moment to recall that in 2013, N.C. tobacco farmers encountered several things that had never happened before in the business of growing and marketing tobacco
Most notably, he said, “It was the first time many of us had ever recorded over five feet of rainfall in the peak months of a single season,” he said. “It was the first time many can remember not recording at least one 100+ degree temperature day in the summer. And, it was the first time many growers had ever recorded an average price greater than $2 per pound.
“Parts of North Carolina recorded in excess of 50 inches of rain since the crop was set in the ground. There was a lack of root formation for nutrient uptake coupled with the circumstance of available nutrients leaching from the reduced root zone. All this contributed to a very short crop supply,” he said.
N.C. Extension economist Blake Brown told the meeting he doesn't expect an average price for flue-cured in the range of $2.15 per pound again in 2014, unless there are supply problems in competing countries.
“Good yields (if we get them) will likely mean that prices will not be as high as 2013,” he said. “I think our exports will go back up as supply goes up.”
He said he thinks that we will continue to see strong demand globally, with particularly robust demand from China. He did note that companies seemed to have pulled back on contracting in the weeks preceding the meeting.
“We have seen supplies improve, and that is why there is a bit of slacking in contracts right now,” he said. “We had an early out the gate on contracts this year, (and) a lot were trying to sign early. But things are slowing down a bit now.“
Tim Yarbrough of Prospect Hill, N.C., was elected to succeed Leggett as president of the association.