- The Washington Times - Tuesday, August 30, 2005

Jerry Jenkins is a third-generation tobacco farmer, but instead of cultivating and curing broad, green tobacco leaves this year, he is growing soybeans.

“I’m not growing any tobacco this year. There are so many uncertainties, I’m not willing to risk it,” the 68-year-old said from his land in south-central Virginia, near Blackstone.

Mr. Jenkins is not alone in sitting out the tobacco-harvest season. Tobacco production in the United States is plummeting as farmers switch to other crops or retire.

The drop-off follows the elimination of federal quotas and price supports, a system that since 1938 had governed where tobacco could be planted and how much farmers could sell on the market.

Now, anyone in the United States can grow tobacco anywhere. But in the first year of the new era, nationwide tobacco acreage is expected to be the lowest since the 1800s, the U.S. Agriculture Department said in a spring report.

“What we’ve seen with the deregulation … the price immediately fell, which was expected. The other thing we have seen is a fairly large exodus of tobacco farmers and a consolidation of farms. We probably have not seen the end of it,” said Blake Brown, professor of agricultural and resource economics at North Carolina State University.

Congress eliminated the decades-old system of quotas and price supports as part of a broader corporate tax bill approved last year. In return for giving up the system, quota holders and producers received a $10 billion, 10-year buyout.

The Agriculture Department has received about 410,000 buyout applications from one-time quota holders — both farmers and landlords — and 183,000 from producers who rented quota allotments. Taxpayers are expected to shell out $950 million this year to the farmers and landlords.

Mr. Jenkins, for example, estimated his buyout ranging from $20,000 to $30,000.

“I’m trying to set it up as a retirement fund,” he said.

The quotas limited production in an effort to support prices. They essentially functioned as growing permits, determining where tobacco could be planted and how many pounds could be harvested.

Quotas were attached to specific parcels of land and could be rented, bought, sold or inherited. Some absentee landlords turned a profit for doing almost nothing, and some producers counted on future rental income for retirement.

While the quotas had become valuable commodities in their own right, they also were steadily declining in worth. The Agriculture Department cut quota allotments — the amount that could be harvested and marketed — by more than half from 1997 to 2004 to maintain prices as demand for U.S. tobacco fell.

Demand dropped as U.S. cigarette consumption declined amid growing health concerns and rising consumer costs, and as countries like Brazil became major producers and exporters of tobacco.

Tobacco remains an important cash crop in the United States, but production this year dropped off sharply.

In Virginia, 18,900 acres are expected to produce 43.5 million pounds of tobacco this year, down from 29,680 acres and 67.3 million pounds in 2004, the Agricultural Statistics Board said in an August report.

Nationwide, the decline is similar, with 319,860 acres producing 677.1 million pounds of tobacco, down from 408,040 acres and 879.2 million pounds last year.

The quick decline reflects that some farmers were just holding on while waiting for the buyout, but also the uncertainty of the new era.

Mr. Jenkins, who grew up on a tobacco farm and had managed his own place since 1963, said he does not expect to grow another tobacco plant. Other, smaller growers also are likely to bow out of the market, he said, though he would understand if they try to turn a profit with the crop.

“It’s hard work, and there are a lot of problems associated with it. But it’s almost an addiction. I miss it,” he said.

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