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Tobacco Farmers on Edge

Posted on: Tuesday, 5 July 2005, 15:00 CDT

Jul. 5--GREENEVILLE, Tenn. -- This tobacco-growing season is Alan Sasscer's first without the federal government's involvement.

It could also be his last.

Sasscer, whose tobacco fields sit in one of state's biggest tobacco-producing counties, is among thousands of farmers across tobacco growing country -- Tennessee, North Carolina, West Virginia, Kentucky -- waiting to see the outcome of the first growing season following a federal tobacco buyout that ended the price support system in place since the 1930s.

Sasscer has a contract to grow burley for R.J. Reynolds this season. In between early summer rains, he got his plants set in the ground -- 16 acres worth compared to last year's 30.

The rest is up to Mother Nature and the tobacco company.

"I work for cheap," he said. "I don't work for free."

For 70 years, the federal government managed U.S. tobacco production by assigning quota amounts farmers could grow each year and buying up tobacco that didn't sell on the open market.

Now, tobacco will be bought and sold entirely in a free market system, with tobacco growers and quota owners receiving $10.1 billion in buyout payments over the next 10 years.

The deadline to sign up for the buyout passed last month, and the first producers should start getting payments in August.

The uncertainty of life without federal price supports has caused many farmers to get out of the business or, like Sasscer, to cut back this year's production.

Preliminary analysis indicates an approximately 25-percent reduction in the amount of local acreage used to grow tobacco this year, said Kelly Tiller with the University of Tennessee's Agricultural Policy Analysis Center.

However, the overall decrease in tobacco production will likely be more like 20 percent, because, "the ones that are staying in are your better, higher yield producers," Tiller said.

Sasscer, who grows tobacco seedlings in six greenhouses on his property in addition to raising his own crops, said the 25 customers he had last year dropped to 15 this season.

Many older, part-time producers have gotten out of the business. Others, like Sasscer, have cut back production and are waiting to see how they'll fare when buying time comes.

Even with a contract, Sasscer said, the price a farmer gets depends on the quality of the tobacco, which is judged by the buyer. The buyer also can opt to buy certain parts of the plant and reject others, he said.

And, if this year's total production is bad, there won't be a government price support to guarantee farmers a profit, he said.

"They say if you don't make 2,200 pounds per acre you're going to lose money," Sasscer said. "They say you've got to be really efficient or you're not going to make it."

Sasscer said he's made money every year he's raised tobacco since he returned to the business 18 years ago.

If Sasscer doesn't make money on this year's crop? "I'll quit," he said.

Tiller said Sasscer's not alone.

"I think that a pretty good number of (tobacco farmers) are viewing this year as the, 'I'm going to see what happens," kind of year," she said. "They're in a position where they're willing to stay in the market and participate, but it's kind of a cautious participation."

Not all Sasscer's seedling customers have cut back production, Sasscer said.

"Part of them's quit," Sasscer said. "Part of them just got bigger," including, one North Carolina producer who increased his order by one-third.

Tiller said this is the first of three to four "balancing" years for tobacco production in the state.

After this season, "Some will decide, 'Man, I can't do this,"" she said, "and some will decide, 'Man this is the best thing that's happened to my operation.""

Sasscer said a system guaranteeing only the best farmers stay in the business isn't necessarily bad for the market as a whole.

"I've always thought that (a free market system) might be kind of better in the long run," he said.

But, he said, the federal tobacco buyout doesn't give most producers enough of a financial cushion to risk more than one season of losses.

"I just don't think people can afford to try it two years," he said.

Monday found Sasscer working to irrigate the tobacco plants that rainy weather had delayed setting out a few weeks ago.

Thus far in the season, he said, things "are not going so good."

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Source: The Knoxville News-Sentinel

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