Impact of Tobacco Deregulation on Kentucky Farmers

[deluxestogie]

This interesting analysis of the impact of tobacco deregulation on Kentucky tobacco farmers was just published:

http://phys.org/news/2012-06-kentucky-tobacco-farmers-deregulation-production.html

Bob

 

[BigBonner]

Thats a very amusing article but they wrote a good fiction story to make KY farms look better financially and stronger than they really are .

I would like to stick that article up the writers "arse" It is hog wash !!! BELIEVE ME IM SITTING RIGHT IN THE MIDDLE OF TOBACCO.

In the late 1990's and Before the tobacco buyout I paid .65 c per pound for other farmers tobacco allotment lease .This lease money was for the other farmers to pay their farm taxes and bills with . At that time tobacco was bringing $1.85 to $2.10 a pound . After the buyout tobacco was bringing $1.40 to $1.50 a pound .At auction tobacco brought .65 to $1.35 .
Tobacco now is Bringing $ 1.75 to $1.90 per pound at big tobacco's buying stations . In the last four to five years big tobacco has cut all contracted pounds to less than half of what we raised before the buyout .
In 1995 I grew Over 100,000 lbs , Some of the pounds I leased and some was my own . Fertilizer was cheaper than today , Average fertilizer was $255 per ton in the late 90's and today I average $725 per ton for fertilizer and Diesel is $3.72 and gas is $3.64 this is tripple of the tobacco buyout .Today Im looking to hit 40,000 LBS . In 2010 I had a 21,000 alotment from big tobacco in 2011 It dropped to 12,000 lbs .

Tobacco at one time would average 2500 to 3600 lbs per acre , Now that they have genectially altered tobacco , average tobacco pounds per acre is 2000 lbs . Farmers are complaining that tobacco doesn't weigh like it did in the 90's . This has also been questioned to the KY department of AG . They say the tobacco should weigh the same . The tobacco is now a Low Converter tobacco (LC ) . If they test my tobacco and find my tobacco isn't the LC type they will cancle my contract and I have to pay back the money paid for my tobacco .

Farmers are self diversifying because they have to to survive . Farm land has gone down in price unless you have a large flat bottom for grain . Grain prices and cattle prices has been the only reason for farmers to make a proffit . If it wasn't for this farmers would go bankrupt .

Now they say before the buyout there was 40,000 farms and now there is 8500 .This is a big bunch of bull . Where did the other 31,500 farms go ? I look around and all the farms are still there they just grow grain or raise cattle . You don't loose 31,500 farms because of the tobacco buyout .
Tobacco barns that were filled year after year are now empty .
The 31,500 farms are still there raising cattle or grain .Higher Cattle and Grain has helped these farms proffit , Not raising tobacco didn't make the farms proffit .

 

[deluxestogie]

The study reports that over that ten year period, nearly 80% of all Kentucky tobacco farms went belly up, and that the majority of those were family farms, rather than agribusiness enterprises.

Bob

EDIT: I would guess that the "productivity" that they are reporting is return on investment, rather than pounds per acre.

 

[BigBonner]

I can't see the return in investment as fertilizers have doubled and some have trippled in price per ton .Gas and diesel has doubled + some .
The Deere tractor I own I paid $36,500 for it in 96 to replace it now cost over $54,000 . Tobacco is cheaper than it was pre buyout .

The report says

"After the buyout, the total acreage farming tobacco in Kentucky declined, but the remaining acres became more productive. They began producing more tobacco per acre on fewer acres."

Farmers are complaining that we cannot get the pounds from the LC type tobacco that we did before they altered the tobacco to LC . This question was asked by the tobacco co-op to the Uk college of AG .
NOw there is also one problem we have with the LC tobacco that we didn't have before and that is color cured green in the leaf . It takes a long time for the green to come out .big tobacco will not buy color cured green tobacco . They will send it back home with you . If you decide to sell it , the auction system is the only way to get rid of it , or I should say give it away .It will bring half of what is should have been worth.

Now the report didn't say about the age of the farmers . Most farmers are older I would say from 50 to 75 years old . When the buyout came through . I know several older farmers who quit farming tobacco . They only have enough cattle on the farm to make ends meet .Some of those farmers cash rented their farms out to grain growers or others who wanted more room for cattle .

Here is another piece of the report I think is bull .

" They didn't have a decline in productivity leading up to the buyout," Kirwan said. "Their tobacco production did not decline, and after the buyout their tobacco productivity rose dramatically and so did their acreage. Their acreage more than doubled."


I Disagree with that statement .Just Before the buyout I raised around 80,000 lbs ,after the buyout , big tobacco only contracted to buy 45,000 lbs of tobacco from me . then my pounds was reduced three times in three years . Every grower's contracted pounds was cut by big tobacco .In 2009 about 50% of growers contracts was not renewed they were left with no contracts for tobacco .PM closed a contract station here close to me leaving only a hand full of farmers with a contract . Now I have to haul my tobacco 40 miles further away to the contract station . I have always had decent tobacco and was lucky to have any contract with the tobacco companies .

Farmers who have had their farms handed down were lucky . They don't have to worry about payments .
I on the other hand have bought every cow , piece of equipment and land and paid for it myself , lots of the time with borrowed money . I own 381 acres none of it was handed to me , no one died and left me anything either .
Alot of the bigger farms were hand me down farms . They were also handed cash along with the farms .

 

[deluxestogie]

"Their acreage more than doubled."

"After the buyout, the total acreage farming tobacco in Kentucky declined, but the remaining acres became more productive. They began producing more tobacco per acre on fewer acres."

"The study found that the most productive farmers were also the most diversified with crops other than just tobacco."

I guess I don't really have a clue what they're actually trying to say. I'm confused as to whether the acreage is the total available on the farm (its full utilization restricted by allotment), or if they're trying to say that the yield of tobacco per planted acre increased dramatically. The latter seems improbable.

Of course, this is a journalist's interpretation of a technical paper, so I tried to look at the actual published paper. Well, for only $32, I can view the paper for one day. Being unwilling to pay for University funded (i.e. government funded) research results, I had to settle for just the abstract:

We examine the distortionary effects of agricultural policy on farm productivity by examining the response of U.S. tobacco farmers’ productivity to the quota buyout of 2004. We focus on the impact of distortionary policy, i.e., the tobacco quota, by decomposing aggregate productivity growth into the contribution of farm-level productivity growth and the contribution of reallocation of resources among tobacco growers. We find that the aggregate productivity of Kentucky tobacco farms grew 44% between 2002 and 2007. The elimination of quota rental costs and reallocation of resources, including entry and exit, accounted for most of the post-buyout productivity growth.

http://ajae.oxfordjournals.org/content/early/2012/05/07/ajae.aas019.abstract

It really doesn't seem to be saying the same thing as the news article.

Bob

 

[BigBonner]

They say diservisified ?

Here's the scoop on diversified . After the buyout some of that money was paid to the farmers in installments over a 14 year period. 65% of the money was kept by the state AG Board . The payments was calculated by how many pounds you grew , owned , or leased . The calculations was on the years we had the least amount of allotted GOV Tobacco pounds .

Here is the kicker , Not all of that money went to the farmers . The state set up a AG diversfication board http://agpolicy.ky.gov/board/index.shtml . They recieved 65% of the money

Here is a link to the KY Study http://agpolicy.ky.gov/Documents/UK-Study.pdf

This money is sent to tobacco growing counties as a 50% cost share programs .Now are you ready for it ? Farmers who couldn't afford their part of the 50% cost share didn't or couldn't afford their part and could not participate in the programs .
Example of a program . Fence line so we could have more cattle . State would pay $5000 and the farmer would pay $5000 matching the states tobacco buyout grant money . Farmers who didn't have the $5000 to match the state funds got nothing . Only the larger farms who has money and could afford the money did so .

Here are some of the divsersified programs

Failure
_______________________
Florist Vegetables
Meat Goats Chickens
Sheep Bee's
Lama's Shrimp
Grapes Deer
Rabbit's Talapa

GOOD
_______________________
Heifer replacement
Bull genectics
Farm hay equipment
Fence line replacement



I believe these study was created to make the buyout look better than it is and to make the state AG board look like it was not a failure .

Farm proffit has risen because of cattle and grain . In the late 90's Feeders averaged .60c to .65c per LB , today feeders average from $1.30 to $1.85 per LB.
Pound cows .75c to .90c per lb today compared to .25c to .55 per lb in the late 90's
pound bulls .90c to $1.10 per lb today compared to .45c to .65c per lb in the late 90's

example
500 lb bull calf in 1999 = $325
500 lb bull calf in 2012 = $850 Big difference in proffit I would say .

 

[Chicken]

very intrested, converssation indeed, and BIGBOONER thanks for throwing the #'s in your statistic's, > very helpfull in understanding the thepry behind what the article was trying to sugar-coat...

i do find it odd, { i.e. my area n. fla. } that my area once flourished in the growing of baccy,,,, everywhere you see a field, be it now, watermelons,,hay,,silage,,peaunuts,,or cattle,,

you will see sometimes old wooden baccy barns, or newer gas powered barns,,

where those barns are present, was at one time a flourishing baccy farm, most growers back then grew baccy each year,religiouslly,

now thiose barns are falling down, and the at one time field, is full of weeds,'' most farmers have moved to growing peanut's, [ must be big money in peanuts ]

some farms have moved onto doing other things,,, a dairy nearby, at one time was a thriving baccy plantation, now they do milk cows,

'' BUT I GOT ACESS TO THIER 2 BARNS THIS YEAR,,,,'' {insert smiley face<}

maybe if the government stepped out of the picture, and let the farmer and big-baccy deal one-on-one, it may be different ? but then i bet big-baccy would get thier product from outsourcing it, and let the american farmer go out of business,?

 

[deluxestogie]

Chicken,
On the subject of all those abandoned tobacco fields in Florida, the question of why was examined in a Masters Degree thesis (very readable and entertaining) by an FSU graduate student in 2003. Pando, Robert T.: Shrouded in Cheesecloth: the Demise of Shade Tobacco in Florida and Georgia. Below is the link to the table of contents. You have to click each chapter individually.

http://etd.lib.fsu.edu/theses/available/etd-11142003-204324/

Subcultures have boundaries. For many years, in a small, demarcated area along
the border between Florida and Georgia, farmers and farm workers produced shade
tobacco, an unusual crop that engendered a distinctive local culture. Then suddenly, the
Georgia-Florida shade tobacco industry collapsed. When asked the reason for the
collapse, farmers and workers whose lives and livelihoods were bound up with shade
tobacco suggest various causes. Some reasons do not seem to be adequate explanations;
others are contradictory. This study examines a range of possibilities offered for the
demise of shade tobacco and presents conclusions about its passing.

Bob

 

[Chicken]

very good link,,

i read the intro, and the first chapter,

and will read it all eventually,

 

[johnlee1933]

Bull genectics

I believe these study was created to make the buyout look better than it is and to make the state AG board look like it was not a failure .


example
500 lb bull calf in 1999 = $325
500 lb bull calf in 2012 = $850 Big difference in proffit I would say .

Being our esteemed government you should expect "Bull" something



You didn't mention the additional costs for inspection, certification, shots and such required in 2012 vs. 1999.

John