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State’s tobacco crops may have mixed futures
By
Laura Skillman
MURRAY, Ky., (Jan. 16, 2008) – Kentuckians once looked to burley
as the tobacco crop to bank on, but today that has shifted to
dark tobacco. Dark air- and fire-cured tobacco crops are
traditional crops of western areas of the state.
High fertilizer costs, high and somewhat uncertain labor,
opportunities outside tobacco and less than stellar production
contracts may make it hard for burley production in 2008 to
reach the level of 2007, said Will Snell, an agricultural
economist with the University of Kentucky College of
Agriculture.
"Even though it appears we have opportunities to expand burley
use, it’s pretty tough to get a lot of excitement out there
right now,” he said.
Since the tobacco buyout, exports and domestic use of burley
combined for about 300 million pounds while production has been
about 200 million pounds. Companies have been relying on their
inventories to make up the difference. Snell said there’s going
to come a time when inventories are going to be tight and
companies say they need more tobacco, but prices so far are not
encouraging more production.
Snell said he does not expect to see any increase in burley
acres in 2008 and some growers may opt out. His views were
reflected in a show of hands during the Western Kentucky Tobacco
Expo at Murray. Many of the farmers say they will reduce or quit
growing burley and concentrate on their dark tobacco production.
Burley acres have been increasing in western Kentucky since the
federal tobacco buyout while acreage has been declining in east
and central areas of the state. Burley production dropped
substantially following the federal buyout but had leveled off
in the past couple years.
With strong dark tobacco, corn, soybeans and wheat prices
western Kentucky farmers may keep with these crops and not add
more burley, he said.
“If they don’t get the acres here, I don’t think they are going
to get the acres in central Kentucky,” he said.
Dark tobacco is enjoying 20 years of ever increasing demand and
prices that reflect demand. Prices for burley are likely to be
around $1.70 per pound in 2008 with incentives and assuming a
good crop, while dark air-cured tobacco prices are closer to
$2.25 per pound and dark fire-cured at $2.50 per pound.
Most dark tobacco is produced primarily in Kentucky and
Tennessee, and production versus use is more stable than with
burley. Snell said he expects dark tobacco acreage to increase
10 to 15 percent this year.
“It’s a good situation,” he noted. “There’s growth in this
industry. The companies have been loyal to you and there is
money in growing this crop.”
There’s still a chance tobacco companies may increase prices and
incentives for burley growers in the 2008 contacts as they’ve
done once before. That could encourage growers to continue but
it’s no guarantee, Snell said.
Economics, he said, are going to play a major role in the future
of tobacco production. Farmers have to be efficient with labor
and more proficient with yield, especially in burley.
“It will be a struggle to maintain profits given the current
price schedules and increasing costs of production,” Snell said.
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Contact: Will Snell, 859-257-7288
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of Agriculture, through its land-grant mission, reaches across
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to enhance the lives of Kentuckians. |
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