CCAAAAPPAgricultural Policy Analysis Center - University of Tennessee - 310 Morgan Hall - Knoxville, TN 37996-4519

www.agpolicy.org - phone: (865) 974-7407 - fax: (865) 974-7298

2006 TN-VA-NC 2006 TN-VA-NC Tobacco SurveyTobacco Survey

& Perspectives on& Perspectives onPost-Buyout MarketPost-Buyout MarketInformation NeedsInformation Needs

Tobacco Summit

Charleston, SC

October 7, 2006

Kelly Tiller

CCAAAAPP

Change in Total Tobacco AcreageChange in Total Tobacco Acreage

• Still not back to pre-buyout acreage– North Carolina almost

back to 2004 level

• Burley generally down more than flue

• Burley expansion into Pennsylvania

• Florida down 72.5%

2004 to 2006

1.7%

-72.5%

-21.7%

-27.8%

-3.2%

10.3%

-1.3%

-44.6%

97.5%

-18.5%

-33.9%

-32.0%

CCAAAAPP

Change in Total Tobacco AcreageChange in Total Tobacco Acreage

• Flue-cured states’ acreage up– Florida way down

• Mix in burley– Kentucky up some– Tennessee down 13%– Pennsylvania up 58%

• Several states no longer reported

-2.0%

-56.0%

12.5%

4.1%

0.8%

18.5%

22.2%

-8.8%

58.0%

10.0%

-12.9%

17.7%

2005 to 2006

CCAAAAPP

Change in Flue-Cured AcreageChange in Flue-Cured Acreage

2005 to 2006

-72.5%

-21.7%

-0.9%

-18.5%

-26.1%

2004 to 2006

-56.0%

12.5%

22.0%

10.0%

21.4%

CCAAAAPP

Change in Burley AcreageChange in Burley Acreage

2005 to 20062004 to 2006

-31.1%

10.3%

-14.9%

-44.6%

-41.7%

-52.5%4.3%

18.5%

33.3%

-8.8%

-17.6%

0.0%

150.0%

CCAAAAPP

2006 TN-VA-NC Burley Survey2006 TN-VA-NC Burley Survey

• Mail-based survey of 6,000 burley growers in traditional areas of Tennessee, Virginia, and North Carolina– Sample drawn from burley active grower buyout contract

recipients

• First available market and production information post-buyout

• Surveys completed May 2006

• 813 completed responses, preliminary results available

• Follow-up Extension agent survey Dec.

CCAAAAPP

Respondents Growing in ‘06Respondents Growing in ‘06

0

100

200

300

400

500

600

700

800

900

Total TN VA NC

Nu

mb

er

of

Re

spo

nd

en

ts

46%47%

52% 40%

No

Yes

CCAAAAPP

Average Planted AcresAverage Planted Acres

0123456789

10

Ave

rag

e P

lan

ted

Acr

es

2004 2005 2006

CCAAAAPP

’’06 Average Acreage06 Average AcreageNo

53%Yes47%

0123456789

10P

lan

ted

Acr

es

All TN VA NC

CCAAAAPP

Last Year Actively GrowingLast Year Actively Growing

0

50

100

150

200

250

# R

esp

on

den

ts E

xiti

ng

2002 2003 2004 2005

3%

11%

62%

23%

CCAAAAPP

2006 Prices, Tennessee2006 Prices, Tennessee

0

20

40

60

80

100

120

140

20

06

Pric

e D

istr

ibu

tion

(fr

eq

)

< $

1.3

5

$1

.35

-9

$1

.40

-4

$1

.45

-9

$1

.50

-4

$1

.55

-9

$1

.60

-4

$1

.65

-9

$1

.70

-4

> $

1.7

4

CCAAAAPP

2006 Prices, Virginia2006 Prices, Virginia

0

5

10

15

20

25

30

35

40

20

06

Pric

e D

istr

ibu

tion

(fr

eq

)

< $

1.3

5

$1

.35

-9

$1

.40

-4

$1

.45

-9

$1

.50

-4

$1

.55

-9

$1

.60

-4

$1

.65

-9

$1

.70

-4

> $

1.7

4

CCAAAAPP

2006 Prices, North Carolina2006 Prices, North Carolina

02468

1012141618

20

06

Pric

e D

istr

ibu

tion

(fr

eq

)

< $

1.3

5

$1

.35

-9

$1

.40

-4

$1

.45

-9

$1

.50

-4

$1

.55

-9

$1

.60

-4

$1

.65

-9

$1

.70

-4

> $

1.7

4

CCAAAAPP

Likelihood of Producing in ‘07Likelihood of Producing in ‘07

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

% o

f R

esp

on

den

ts

DefinitelyYes

ProbablyYes

Not Sure ProbablyNot

DefinitelyNot

Among respondents producing tobacco in 2006 …

CCAAAAPP

Expected Acreage Changes in ‘07Expected Acreage Changes in ‘07

020406080

100120140160180200

# R

esp

on

den

ts

Up>50%

Up25%-50%

Up25%

Same Down25%

Down25%-50%

Down>50%

Among respondents producing tobacco in 2006 …

CCAAAAPP

Why NOT Producing in ’07?Why NOT Producing in ’07?

• Not profitable enough (88%)

• Shortage of labor (63%)

• Age, near retirement (52%)

• Too risky without a price guarantee (37%)

CCAAAAPP

Likelihood of ProducingLikelihood of Producing

Probably Not

Definitely Not

Not Sure

Definitely Yes

Probably Yes

2007 2010

2015

Among respondents producing tobacco in 2006 …

CCAAAAPP

Other Farm EnterprisesOther Farm Enterprises

0

10

20

30

40

50

60

70

80

Per

cen

tag

e

HayBee

f

Gra

in

Fr & V

eg

Dark F

ire

Dark A

ir

Dairy

Among respondents producing tobacco in 2006 …

CCAAAAPP

Top Sources of InformationTop Sources of Information

1. County Extension agents

2. Farm magazines / newspapers

3. Neighbors / other farmers

4. Researchers / research publications

CCAAAAPP

Total Gross Farm Receipts from TobaccoTotal Gross Farm Receipts from Tobacco

0%

5%

10%

15%

20%

25%

30%

% o

f R

esp

on

den

ts

None < 10% 10-24%

25-49%

50-74%

75-99%

All

Among respondents producing tobacco in 2006 …

Average = 57%

CCAAAAPP

Net Farm Income from TobaccoNet Farm Income from Tobacco

0%

5%

10%

15%

20%

25%

30%

% o

f R

esp

on

den

ts

None < 10% 10-24%

25-49%

50-74%

75-99%

All

Among respondents producing tobacco in 2006 …

Average = 52%

CCAAAAPP

Biggest Challenges Next 2-5 YearsBiggest Challenges Next 2-5 Years

• Contract prices too low (66%)

• High costs of hiring labor (58%)

• High costs of nitrogen fertilizer (52%)

• Shortage of affordable and/or legal labor (35%)

• High costs of other production in puts (26%)

CCAAAAPP

Investment PrioritiesInvestment Priorities

1. Curing barns

2. Upgrading equipment or new equipment

3. Market prep facilities and baling equipment

4. Acquiring more good land

5. Field curing structures

CCAAAAPP

Future Industry Information NeedsFuture Industry Information Needs

• Standardized and timely reporting of acreage, yields, production– Geographically disaggregated– Traditional and non-traditional areas

• Market prices

• Domestic and export use, disappearance, stocks

• Producer information– Operation, costs, challenges/issues, profiles

• Publicly available and accessible

CCAAAAPP

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