Tobacco not the cash crop it used to be

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By James Roberts

No one ever said farming was easy. But faced with increased production costs and a sub-par contract offering, some tobacco farmers are finding their livelihood even more difficult.

Bernie Cave is one of those farmers. Cave grew up on a Taylor County tobacco farm. He paid his way through college working in tobacco fields. But today, he's finding that tobacco just isn't the cash crop it used to be.

"In light of current contract prices, I plan to expand my cow herd and broodmare band and downsize my tobacco production each year as my financial condition will allow."

That means that in a few years, Cave will not be growing tobacco.

"Farming was easier back when I started. I was younger for one thing. I was born and reared on a farm here in Taylor County. My dad was a farmer, growing tobacco and having cattle and horses.

"I started out grain farming and when tobacco quota could be bought and sold, I started buying. My farm was limited by its size to be able to make a living with grain, so I opted to get bigger in tobacco."

Cave grew 36 acres last year, the most yet.

"I will be growing less this year. I have signed a contract for 50,000 pounds. That is down 40,000 [from last year]."

Cave said the tide began to turn in 2005.

After Congress passed the tobacco quota buyout in 2004, tobacco companies filed a lawsuit stating that they didn't owe farmers the 2004 Phase II payment. "When January 2005 rolled around, the $15,000 Phase II payment was not there for me. So, I refinanced my farm loans and transplanted more tobacco in the spring of 2005."

A North Carolina Supreme Court eventually ordered the companies to pay in August 2005. However, in June of that year, Kentucky farmers received their Phase II payments, though the money came from the state rather than tobacco product manufacturers. Farmers received less money than if tobacco companies had paid. When tobacco companies did pay, that money went to the state rather than farmers.

By summer 2005, Cave found that he couldn't find enough barn space to house his expanded tobacco crop, so he built a new barn.

By the end of 2005, Cave decided he needed to grow more tobacco to help pay his workers and he built another barn to house the additional tobacco. Federal law requires migrant workers be paid at least $8.65 an hour.

"We had record rainfall during 2006 and thousands of pounds of tobacco rotted off the stalks in the field," Cave said. "2006 was not profitable for me."

Now, Cave has barn loan payments of about $25,000 and a tobacco contract with Phillip Morris that will essentially pay him the same rate per pound as last year.

In December, Cave and Marion County Farmer Joe Spaulding organized a meeting of Central Kentucky tobacco farmers. The purpose of the meeting was to discuss forming an association and electing directors and officers. The association seeks to provide farmers with representation in the group that determines contract prices. The group also wants more information about tobacco sales and about how tobacco is graded, and they stated concerns about having one person grade the tobacco.

The 2008 contract proposed by Philip Morris includes an increase in the base price of 7 cents per pound (compared with the 2007 contract), and growers who sold to Philip Morris in 2007 are eligible for another 2 cents per pound if they sign their contracts by tomorrow.

But fuel, maintenance, equipment and the cost of workers have risen, Cave said, and the contract won't cover those additional costs. Last summer, Cave had four migrant workers and five local helpers to pay.

At the group's meeting in February, Cave told farmers that the contract probably wouldn't change.

"We finally got feedback from Philip Morris," Cave told the group. "It's not what we wanted to hear."

Spaulding said Craig Stariha, direct purchasing materials director for Philip Morris, visited him recently, and they spoke for more than two hours.

"He assured me we would not get a price increase this year," Spalding said in February.

He also said that Stariha told him the local group of farmers would not be recognized by Philip Morris.

Cave says that contracting with a different company isn't a feasible option. Because Philip Morris buys the majority of available tobacco, other companies' contracts mirror Philip Morris'.

But the news isn't stopping the group. Cave said a meeting has been scheduled for April 10 at 7 p.m. at the Anderson County Extension Office in Lawrenceburg.

"We're not going to stop."

- Staff Writer James Roberts can be reached at 465-8111 Ext. 226 or by e-mail at writer@cknj.com. Comment on this story at www.cknj.com.