By TIM THORNBERRY
Kentucky Correspondent

LEXINGTON, Ky. — The old saying “when it rains, it pours” would be fitting for Kentucky farmers this year … if it would only rain.

The Easter Freeze put many fruit and produce growers nearly out of business but spared tobacco producers due to the time of year it happened - most of the state’s crop was yet to be planted - and tobacco plants that used to be cultivated in outdoor tobacco beds are mostly grown in greenhouses, now.

However, Mother Nature is everything but predictable and the lack of rainfall in the early season has many growers sitting on the edge of their seats waiting for the next problem to arise.

As of last week, much of Kentucky was experiencing either mild or moderate drought, according to the Palmer Drought Index, which monitors long-term drought conditions.

What this means to tobacco producers, who are entering their third growing season since federal quota buyout legislation was passed in 2004, remains to be seen. If dry conditions are going to exist in the tobacco-growing season, it’s better to have them earlier rather than later, said University of Kentucky (UK) Tobacco Specialist Gary Palmer.

“Right now all the work is taking place underground. Tobacco is good in dry weather, but it needs a good root system and that is what is developing now,” he said. “The more rainfall we get early, the more rain the plant will need, but the less rainfall we have early in production the less the plant will need. I wouldn’t set any tobacco in these conditions right now but what is already in the ground is in good shape.”

The National Agricultural Statistics Service said, as of last week, tobacco setting was ahead of last year and the five-year average with 62 percent of the state’s burley crop having been set compared with 44 percent for last year and the five-year average of 38 percent.

Palmer compared this year’s conditions to those in 1988.

“It was extremely dry that year. It didn’t rain until around the 10th of July,” he said. “And yet, some of those producers who weren’t able to irrigate had better crops than those that did. Tobacco is one of those plants that come through in adversity. Everything was brown that year except tobacco and alfalfa. All the leaves on the stalks stood straight up as a way of self-protection and water conservation but it’s hard to tell a farmer to just hang on but I would tell them not to give up. That 1988 crop was the best many growers ever had.”

The tobacco business

Tobacco production has been on the downswing in Kentucky since many producers took the buyout funds and left their crop behind. The 2005 crop of 143.5 million pounds was the smallest since 1927, according to Kentucky Department of Agriculture statistics.
Last year there was a bit of a comeback with 186.7 million pounds, second only to North Carolina. But late season heavy rain and labor problems left many producers wondering if the rewards were worth the effort.

UK Tobacco Economist Will Snell said acreage this year may increase but not enough to meet industry demands.

“Acres may be up around 5 percent or so this year, but labor is still a concern. A lot of the farmers are going the H2A route, which of course is more expensive, but is more dependable,” he said.

“Even with a 5 percent increase in acres and an average yield, we still may be a little short in total of what the industry needs. At this point, we might be looking at a 240-250 million pound crop, assuming an average yield. In recent years the export market has consumed around 200 million pounds of U.S. burley which of course means that the domestic market is not using much and/or they are drawing down co-op and their own stocks.”

The H2A Snell mentioned refers to the temporary farm program that establishes a means for agricultural employers, who anticipate a shortage of domestic workers, to bring non-immigrant foreign workers to the United States to perform agricultural labor or services of a temporary or seasonal nature. Information pertaining to the program can be found at www.foreign laborcert.doleta.gov/h-2a.cfm

What’s next?

In a report entitled Tobacco Economics in the Post-Buyout Era, written by Snell and UK Assistant Extension Professor Greg Halich, the two noted that “over the past two decades burley tobacco yields in Kentucky averaged around 2,100 pounds per acre. Current budgets and price schedules indicate that 2,100 pounds per acre is close to the ‘break-even’ yield, given an average cost structure.
Obviously under the current price and cost environment, burley growers will either have to achieve yields above our historical average or find ways to reduce costs in order to survive in a more competitive market.”

Assuming the weather straightens out, and those yields go up, this year could be a rebound of sorts for tobacco growers. The UK Extension Service’s outlook for 2007 includes the possibility of record farm cash receipts totaling nearly $4.3 billion.

But will the rain come along at the right time and will the labor issues be managed and will tobacco companies offer incentives again this year? The answers to these questions will determine if tobacco will figure into those outlook expectations at a higher rate
than last year.