Monday, December 20, 1999
Tobacco farmers worried
Burley crop awaits buyers
BY SUSAN VELA
The Cincinnati Enquirer
When his grandchildren gather around him this Christmas, Boone County tobacco grower Ronnie Vest knows one piece of advice that he might offer: There are better careers to pursue than growing tobacco.
“It used to be a good way to raise your family and make a living, but it's not any more,” said the 65-year-old grower, who sold about 8,000 pounds of tobacco this year. About 85 percent was sold to the Lexington-based Kentucky Burley Tobacco Growers Cooperative, which offers lower prices than tobacco company buyers.
He still has another 15,000 pounds to worry about.
“If the government holds the support price up, we'll be OK,” he said. But, the tobacco companies “are importing all this tobacco from across the water, and the big lawsuits haven't helped, neither.”
Mr. Vest and other tobacco growers are taking a respite from the first round of tobacco sales, which began Nov. 29 and concluded Thursday. They will resume Jan. 10 and end about six weeks later.
Some burley warehouse managers report that, so far, auction prices have ranged from about $1.90 to $1.97 per pound. In contrast, the price support has ranged from $1.86 to $1.97 for tobacco's three grades.
Burley warehouse managers expect that a lot of lower-quality tobacco will come to market for the second round of sales, leaving the average per- pound price to ultimately fall a few cents shy of last year's average of $1.90.
The second round of sales also should be challenged when tobacco company buyers reach their quotas and leave the remaining tobacco for the cooperative to purchase and place in its pool.
Pool tobacco is known as the lower-quality crop that could not get a penny over the price support. Across the burley belt, about 35 percent of this year's sales has gone into the pool.
Growers and burley ware house managers blame quota cuts and tobacco companies' multibillion-dollar settlements for their precarious position.
“The settlements had some bearing on demand,” said Gary Moran, of the Ohio Tobacco Growers Association and the Ohio-Kentucky Tobacco Warehouse in Ripley, Ohio.
So far, the city's two warehouses have sold about 5 million pounds of tobacco at an average per-pound price of $1.90. About 18 percent went into the pool.
“The tobacco industry companies are just as cautious as a farmer is right now,” Mr. Moran said. “They need so much tobacco but they have commitments, and they're not going to go beyond their commitment. (But) it'll be another decent year.”
Larry Grimes, manager of the King Burley Warehouse in Maysville, isn't so sure. The warehouse has sold about 3.5 million pounds of tobacco at an average of $1.97 per pound.
The entire Maysville market, which entails several warehouses, sold 18.5 million pounds at about $1.95 per pound. About 24 percent went into the pool.
What worries Mr. Grimes is a rumor that won't go away. It entails a quota cut of up to 30 percent for 2000. Growers had a similar cut this year.
Mr. Grimes grows tobacco, too, and is expecting some tobacco settlement money. But there's no way, he said, that it will cover the loss he'll take from having to grow less tobacco.
“The check is not going to come close,” he said.
The Carrollton market has sold 14.5 million pounds of tobacco at $1.90 per pound. The Kentuckiana Tobacco Warehouse, located in that city, has sold 2 million pounds, also at $1.90 per pound.
“It's decent,” said Melvin Lyons, the warehouse owner. He is optimistic that tobacco quality will remain the same for the post-Christmas sales.
“The farmers need every penny they can get out of it,” he said. “It's been a tough year for them.”
Over the next 25 years, tobacco companies will pay about $206 billion to individual states because of tobacco's health-related costs. Kentucky will receive a $138 million share this year and $3.45 billion overall.
Over a 12-year agreement, tobacco companies will pay $5.15 billion to compensate the tobacco quota owners, landowners and tenants to compensate for the higher prices they expect to put in place because of the larger settlement.
Kentucky's tobacco-growing industry will receive $112.7 million this year and $1.5 billion for the entire 12-year period. Their first checks are expected in the first week of January.
Last year, 590 million pounds of tobacco sold in the burley belt. Kentucky had 74 percent of that market.
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