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Tue May 27, 2014
Growing Tobacco in North Carolina
Even though tobacco remains the number one cash crop in North Carolina, there's been a significant decrease in the amount of farmers growing tobacco in the past decade. We'll explore the future of the state's tobacco industry.
Agriculture is big businesses in North Carolina, and especially in the eastern part of the state. It’s a 78 billion dollar industry and accounts for 640,000 jobs statewide. Public Affairs Director Brian Long says 17 percent of North Carolina’s total income comes from agriculture, with tobacco, soybean, corn, cotton, and greenhouse/nursery plants the major cash crops.
“When Hurricane Irene hit in 2011, we saw such a heavy impact on crop production for these crops because so much production was concentrated in the eastern part of the state and of course that’s where Irene did most of the damage.”
Long estimates that 75 percent of these cash crops are grown here in eastern North Carolina. According to the most recent statistics released in 2012 by the Department of Agriculture, tobacco is the state’s number one cash crop, generating 754 million dollars annually.
“For many years, tobacco had been trailing the greenhouse nursery stock as the top cash crop but thanks to exceedingly good yields in 2012, plus a really good price for the crops, it was able to jump back into that top spot, which it’s something North Carolina was known for years and years was known for tobacco farming. It I guess shouldn’t come as a surprise that it should jump back up.”
North Carolina has always been the largest tobacco producer in the country. But over the past decade, there was a significant decrease in the number of tobacco farms operating in the state. In 2004, there were nearly 8,000 tobacco farms in the state. Ten years later, that number is about 1,600. The cause of the decrease, the Tobacco Buyout Program. For decades, there were limits on how much tobacco could be grown by individuals owning allotments. Executive Vice President of the Tobacco Growers Association of North Carolina Graham Boyd says many local farmers stopped growing tobacco when the Federal Tobacco Quota Program was phased out in 2004.
“As we had absentee land ownership occurring, the quota belonged to more and more people that were no longer growing tobacco through various trends and attritions that were occurring as people moved away from the farm. So, with the success of what is known commonly as the Tobacco Buyout, it decoupled that arrangement, and thereby allowing tobacco to be grown absent of the quota system program.”
The Fair and Equitable Tobacco Reform Act of 2004 was enacted, implementing the buyout program in which farmers were compensated for the tobacco they were no longer allowed to grow. As a result of the legislation, many farmers decided to grow alternate crops and lessen their dependence on tobacco. As a result, there’s been a decreasing amount of tobacco growers in the state, but the remaining farmers are growing more leaf. Now, the average tobacco farm in North Carolina is 100 acres, or four times the size of the average tobacco farm a decade ago. North Carolina Department of Agriculture and Consumer Services Public Affairs Director Brian Long.
“There’s a well-known saying in North Carolina that the only thing more lucrative than an acre of tobacco was another acre of tobacco. It used to be a very stable, lucrative crop for farmers and it did not require a lot of acreage to grow it.
Many of the growers that decided to stay with tobacco farming used the buyout money to invest in their facilities and expand their operations.
“In 2005, which was the first year after the quota program ended, ever since then, acreage and production have been on the rebound, in fact last year, in 2013, our farmers harvested almost 182,000 acres of tobacco and that is the most since 1999. And this year, farmers have indicated they plan to plant more than 183,000 acres of tobacco.”
Long says the reason why the tobacco industry has stabilized is because North Carolina tobacco is more competitive in a worldwide market.
“The export market for North Carolina tobacco is very strong. The state exported 766 million dollars of tobacco in 2012.”
Much of the tobacco that North Carolina grows is sent to the Far East. China is the number one grower of tobacco in the world, and also has the largest consumer market.
“Domestic demand for tobacco products has, you know, has continued to drop and is not what it was 30 years ago. But in countries that have developing economies, particularly in China, there is a tremendous demand for tobacco products and they are wanting a better quality product than what they had in the past and they realize that the way to do that is to use North Carolina tobacco.”
Officials with the State’s Department of Agriculture have cultivated a relationship with Chinese tobacco companies, holding trade missions in 2009 and 2011. Last year, China Tobacco International opened an office in eastern North Carolina to serve as the base for its leaf buying operation. Long says North Carolina tobacco is in high demand because of its superior quality and competitive prices.
“Our farmers, they know how to grow it. Our researchers have worked on new technologies and techniques and ways to improve the crop. Our agricultural leadership in the state is very attuned to tobacco and knows a lot about it as well. We have the climate and the soils here that make for growing really high quality tobacco and we have the ability now to sell it in a world market in a more competitive way.”
While the distribution of locally grown tobacco worldwide remains a viable venture, the industry is facing some challenges with the advent of e-cigarettes. Since the electronic cigarettes are forecasted to surpass the sale of traditional cigarettes by the end of the decade, Executive Vice President of the Tobacco Growers Association of North Carolina Graham Boyd says North Carolina growers may have to shift their focus to growing tobacco for the purpose of extracting nicotine for e-cigarettes.
“This is an emerging market as it ties itself back to tobacco. Again, tobacco in a different form, tobacco in a different purpose and use than what we’re conventionally understand tobacco to be, but nonetheless, our growers are the best at producing tobacco and we want to recognize that this is a growing market or an emerging market opportunity. How do we capture the momentum that allows us to capitalize on the economics.”
Boyd says the impacts e-cigarettes will have on the tobacco industry still remains uncertain. But one company is already constructing a nicotine extraction facility in eastern North Carolina. The Virginia Tobacco Company in partnership with AVOCA, Inc will produce liquid nicotine in Merry Hill, in Bertie County. The company expects to begin commercial production in July 2014.