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Burley and Dark Tobacco Trends, Issues,

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Burley and Dark Tobacco Trends, Issues, – PowerPoint PPT presentation

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Title: Burley and Dark Tobacco Trends, Issues,


1
Burley and Dark Tobacco Trends, Issues,
Outlook Will Snell, University of Kentucky
  • Changes
  • Concerns
  • Challenges

but yet still opportunities
Agricultural Economics
2
Number of Farms Growing Tobacco in KY
Source USDA AG Census
Agricultural Economics
3
Distribution of KY Agricultural Cash Receipts
1990s vs. 2008
Source Ky Ag Stats/NASS
Agricultural Economics
4
Number of Farms Growing Tobacco in KY
Except for cattle/hay, more farms grow tobacco
than produce any other Kentucky ag enterprise
Source USDA AG Census
Agricultural Economics
5
U.S. Tobacco Farms(2007 Ag Census)
Agricultural Economics
6
Total (Both Burley and Dark) Tobacco
Acres(2005-08 Average vs 2004)
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Increased Acres
-25 to -40
0 to -25
gt 40 Decline
Agricultural Economics
7
Value of Kentucky Tobacco Production
Million Dollars
Source Ky Ag Stats/NASS
Agricultural Economics
8
Dark Tobacco Trends, Issues and Outlook
Agricultural Economics
9
U.S. Snuff Tobacco Consumption
  • Successful product marketing
  • Increasing number of public smoking restrictions
  • Reduced risk perception/reality

4 to 7 Annual Growth
Source USDA/ERS and TMA
Entry of Cigarette Mfgs in 2007, 2008
Agricultural Economics
10
US Dark Tobacco Acres
38
21
Source NASS/USDA
Agricultural Economics
11
U.S. Dark Tobacco Production vs. Use
Was Expansion Too Much?
Source ERS/NASS/USDA,
Agricultural Economics
12
US Dark Tobacco Acres
38
-16
21
Source NASS/USDA
Agricultural Economics
13
What about Burley?
  • Domestic
  • State and Federal Tx Increases
  • Increasing Smoking Restrictions
  • FDA and other Regulations
  • General Economy Downturn
  • Export
  • Higher Valued Dollar
  • Increasing Foreign Supplies
  • Global Economic Downturn

Agricultural Economics
14
How Did U.S. Burley Growers Respond in 2009 in
Response to Reduced Demand Expectations?
  • 2009 Burley Farmers Faced with
  • Lower ag commodity prices
  • Declines in dark tobacco contract needs
  • Off-farm job layoffs
  • Diminished buyout dollars
  • Available infrastructure
  • Alternative markets/decent prices for pre 2009
    crops

Agricultural Economics
15
US Burley Acres
1
Source NASS/USDA
Agricultural Economics
16
U.S. Burley Production
Source NASS/ERS/AMS/USDA
Agricultural Economics
17
U.S. Burley Production vs Disappearance (Use)
Potential Needs for 2008-09? 200 Mil lbs ???
What aboout 2009-2010 ???
Source NASS/ERS/AMS/USDA
Agricultural Economics
18
U.S. Burley Leaf Exports as a Percentage of Total
U.S. Burley Disappearance (Exports Domestic Use)
Source ERS/USDA 2006-2007 Estimates by UK
Agricultural Economics
19
U.S. Burley Leaf Exports
U.S. Burley Leaf Exports Are Down 25 in
2008-2009 Marketing Year
Source ERS/USDA/TMA
Agricultural Economics
20
Brazilian Reals to One U.S. Dollar
Source Federal Reserve Bank
Agricultural Economics
21
Total World Burley Production
15
19
Source Universal Leaf
Agricultural Economics
22
U.S. Cigarette Production
U.S. Cigarette Production Down 12 in 2008
U.S. Cigarette Consumption May Drop Another 6 to
9 in 2009
Agricultural Economics
23
U.S. Burley Production vs Disappearance (Use)
Potential Needs for 2009-10 at profitable
prices Less than 200 mil lbs ???
Source NASS/ERS/AMS/USDA
Agricultural Economics
24
Average U.S. Burley Prices
  • What about 2009/2010?
  • Better quality crop in 09 should induce higher
    average prices.
  • Poor quality tobacco, especially outside of
    contract will suffer greatly
  • Excess production in 2009 could enhance
    short-term disappearance, but have adverse
    impacts on 2010 contract volume given anticipated
    domestic and export demand outlook

25
  • What does the immediate future hold for U.S.
    Burley?
  • Companies Need Less Total Acres/Less Growers
  • More Volatile Prices and Tight Profit Margins
    Especially for Low Yielding/Low Quality Leaf
  • Consolidation Could Lead to Opportunities for
    Good Low Cost Producers of Quality Leaf to
    Maintain Profits and Crop Size
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