Md. tobacco farmers enjoy end to 3-year price slump

Southern farm belt gets $15.66 million


April 18, 2000|By Ted Shelsby | Ted Shelsby,SUN STAFF

For the first time in three years, Southern Maryland tobacco farmers received a higher price for their crop at auction, according to figures released yesterday by the state Agriculture Department.

The average price for leaf at the annual four-week auction was $1.66 a pound, up from $1.63 in 1999, but still well below the $1.91 tobacco companies paid in 1997.

This year's sale pumped $15.66 million into the agriculture economies of Anne Arundel, St. Mary's, Calvert, Charles and Prince George's counties.

"It was a pretty good market," said Earl "Buddy" Hance, a Calvert County tobacco grower and chairman of the Maryland Tobacco Authority, an industry group that regulates the local market.

"Prices tailed off near the end," he said, "but that was because most of the better tobacco had already been sold."

"Many farmers were pleasantly surprised," said David L. Conrad, a University of Maryland tobacco extension specialist. "The market turned out better than most expected."

The average price dropped steadily from $1.77 a pound during the opening week of this year's sale to $1.34 by the close last week.

When the annual sale began March 21, Conrad said that many growers were nervous. They knew that tobacco was bringing lower prices at auctions in other parts of the country.

Conrad said that 37 percent of the Burley-type leaf grown in Kentucky, Tennessee, southern Virginia and western North Carolina didn't sell and was turned over to the federal government's Commodity Credit Corp.

He attributed the strength of Maryland's market to strong export demand and better than anticipated interest from domestic tobacco companies.

Conrad said that nearly half of the Type 32 tobacco grown here was purchased by foreign cigarette companies. He said Switzerland, Germany and Italy accounted for the bulk of the export sales.

Most of the better quality leaf goes to the export market, which pays the highest prices.

The highest price paid this year was $2 a pound for a small amount of top-quality leaf. Most of the better grades brought $1.90 or $1.80.

Conrad said the encouraging part of this year's sale, which ended Thursday, was the demand for the middle grades of leaf by the domestic tobacco companies.

"During the last week of the auction, I saw Philip Morris paying $1.50 a pound," Conrad said.

While tobacco is no longer referred to as the economy of Southern Maryland, it is still by far the region's most important crop.

Leaf is grown on only about 5 percent of the region's farmland, but it accounts for nearly two-thirds of the value of all commodities grown in the region.

"The profit is not in tobacco the way it used to be," Hance said, "but it is still better than anything else we can grow."

Turning to another aspect of tobacco economics, Hance said a move in the General Assembly to reduce the amount of money to be paid to farmers from the government's master settlement with domestic tobacco companies was defeated.

Growers had been promised $9 million from the settlement the first year to help them switch to other crops or to pay a buyout if they quit growing tobacco,

The bill that was defeated would have cut that amount to $5.8 million.

Hance said farmers are scheduled to register in September or October for the state buyout or crop transition payments.

In a separate agreement with the tobacco companies, Hance said, growers are to receive 10 cents a pound in direct payment this year from the tobacco companies to help offset lower tobacco prices due to the industry's settlement with the government.

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