2006 TN-VA-NC Tobacco Survey & Perspectives on Post-Buyout Market Information Needs

1. 2006 TN-VA-NC Tobacco Survey & Perspectives onPost-Buyout MarketInformation Needs Kelly Tiller Tobacco Summit Charleston, SC October 7, 2006 Agricultural Policy Analysis Center - University of Tennessee - 310 Morgan Hall - Knoxville, TN 37996-4519 www.agpolicy.org - phone: (865) 974-7407 - fax: (865) 974-7298

2. -3.2% 97.5% 1.7% -44.6% -32.0% 10.3% -27.8% -1.3% -33.9% -18.5% -21.7% -72.5% Change in Total Tobacco Acreage 2004 to 2006 • 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%

3. 0.8% 58.0% -2.0% -8.8% 17.7% 18.5% 4.1% 22.2% -12.9% 10.0% 12.5% -56.0% Change in Total Tobacco Acreage 2005 to 2006 • 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

4. 21.4% 22.0% 10.0% 12.5% -56.0% Change in Flue-Cured Acreage 2004 to 2006 2005 to 2006 -26.1% -0.9% -18.5% -21.7% -72.5%

5. -44.6% -52.5% 10.3% -31.1% -14.9% -41.7% Change in Burley Acreage 2004 to 2006 2005 to 2006 150.0% -8.8% 0.0% 18.5% 4.3% 33.3% -17.6%

6. 2006 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.

7. Respondents Growing in ‘06 No Yes 46% 47% 52% 40%

8. Average Planted Acres

9. ’06 Average Acreage No 53% Yes 47%

10. Last Year Actively Growing 62% 23% 11% 3%

11. 2006 Prices, Tennessee

12. 2006 Prices, Virginia

13. 2006 Prices, North Carolina

14. Among respondents producing tobacco in 2006 … Likelihood of Producing in ‘07

15. Among respondents producing tobacco in 2006 … Expected Acreage Changes in ‘07

16. Why NOT Producing in ’07? • Not profitable enough (88%) • Shortage of labor (63%) • Age, near retirement (52%) • Too risky without a price guarantee (37%)

17. Among respondents producing tobacco in 2006 … Likelihood of Producing 2010 2007 2015

18. Among respondents producing tobacco in 2006 … Other Farm Enterprises

19. Top Sources of Information • County Extension agents • Farm magazines / newspapers • Neighbors / other farmers • Researchers / research publications

20. Among respondents producing tobacco in 2006 … Total Gross Farm Receipts from Tobacco Average = 57%

21. Among respondents producing tobacco in 2006 … Net Farm Income from Tobacco Average = 52%

22. Biggest 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%)

23. Investment Priorities • Curing barns • Upgrading equipment or new equipment • Market prep facilities and baling equipment • Acquiring more good land • Field curing structures

24. Future 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

25. For More Information … www.agpolicy.org