Leaf Trends and Leaf Trends and Quality Expectations Quality Expectations

U.S. Tobacco Forum U.S. Tobacco Forum Durham, NC June 11, 2010Durham, NC June 11, 2010

Worldwide TrendsWorldwide Trends

Total flue-cured production is remaining very stable throughout the world

There are greater variations in flue-cured production within different regions throughout the past years

Future Production totally dependant on demand

Worldwide TrendsWorldwide Trends

Total burley production has declined throughout the world

This primarily due to a shift in sales away from an American blended cigarette to a Virginia blended cigarette.

There continues to be consolidation of cigarette manufacturers throughout the world.

U.S. Quality ExpectationsU.S. Quality Expectations

Leaf QualityLeaf QualityExpectationsExpectations

Contract Company specific requirementsNTRM FREE!!Tobacco moisture

Pesticide ResiduesFDA regulation affecting the

farm level

Company RequirementsCompany Requirements

Number of harvestsCrop Throw RequirementsQuality ExpectationsColor line that is in highest demandCrop Protection Agent residue requirementsOverall adherence to all contract

stipulations

NTRMNTRM

NTRMNTRM

Zero Tolerance– Synthetic– Non-Synthetic– Organic

Increased emphasis as a result of FDA

NTRMNTRM

Farm InspectionsIncreased picking at the farm levelGrower educationFarm Ratings

Tobacco MoistureTobacco Moisture

All companies require adherence to moisture levels

Some companies offer incentives for tobacco delivered in a certain moisture range

Rejection of the tobacco due to higher than acceptable moisture levels

Crop Protection Agent Crop Protection Agent ResiduesResidues

CPA ResiduesCPA Residues

Increased emphasis from all customers Applications of only approved pesticides at

labeled rates Follow all post harvest interval requirements Avoid application/drift of non-labeled

pesticides HUGE POTENTIAL FDA IMPLICATIONS

Potential FDA Implications Potential FDA Implications

Complete traceabilityCPA residuesNTRM issuesTSNA levelsIncreased regulations from all countries

ConcernsConcerns

ConcernsConcerns

Input CostsAging grower populationLack of younger people beginning to grow

tobaccoAging Infrastructure

ConcernsConcerns

Increases on state cigarette taxesIncreases in state wide and city smoking

bans– NC and VA

QuestionsQuestions