Friday, April 30, 2004

Ky. growers will sell tobacco to China

Deal could open up world's largest tobacco market

The Associated Press

LEXINGTON - More than 1.6 million pounds of Kentucky burley tobacco are being sold to Chinese buyers after the growers reached a deal over the weekend.

The Burley Tobacco Growers Cooperative in Lexington signed a $5.735 million deal with Chinese buyers. Last year, the co-op sold about 1 million pounds to China, the first sales to the tobacco-loving country.

"It's a big sale and a small sale," said Danny McKinney, CEO of the co-op.

"It's a small sale in that it's very few pounds, but it's a big sale because they are our first sales."

China grows and uses more tobacco than the rest of the world put together, McKinney said, so the potential market is huge.

The pounds sold to the Chinese buyers came from the 2003 surplus or "pool" stocks purchased by the co-op with federal loans. Often, the co-op will have to discount pool stocks to sell them, but not in this case, McKinney said.

The Chinese paid an average of about $3.58 per processed pound this year, "and that's what we priced it at," he said.

An eight-member Chinese delegation visited North Carolina and Canada as well as Kentucky.

In North Carolina, tobacco dealers sold the Chinese 7 million pounds of flue-cured tobacco at about a 20 percent discount, McKinney said.

As domestic burley sales have dropped, exports have become more important to Kentucky farmers. The future looks good for additional sales.

"We had some very serious discussions before they left concerning future purchases," McKinney said.

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