Tobacco Asia

58 tobaccoasia Issue 1, 2025 January / February Best estimates of 2024 US production by type Burley production: 55 million pounds (vs. 65 million pounds in 2023). [Snell] Dark fire-cured production: 24 million pounds (vs. 36 mil- lion pounds in 2023). [Snell] Dark air-cured production: 10.8 million pounds (vs. 12.1 million pounds in 2023). [Snell] Flue-cured production: In the range of 230 to 240 million pounds. An early estimate had pegged the crop at around 340 million pounds. [Boyd] Note: The American Southeast suffered another hurricane in late September. Hurricane Helene was very destructive, but it missed most tobacco-growing areas. The one exception: The mountain area of Eastern Tennessee and Western North Carolina (which are adja- cent). Burley is grown there but on a very small scale, and much of what is grown is planted at high elevations, out of range of the flood. So tobacco loss of any type to Helene was very small. The markets responded in a supportive way. "We know that worldwide there is a tight supply of tobacco at this time so naturally the demand is strong," Boyd says. "Most growers remarked that grading and pricing were considerate of the dif- ficulties encountered by weather this season." Input prices were very high. "We knew [before the season began] that the 2024 crop was going to be the most expensive flue-cured crop we have ever grown," said Boyd. "When you add the [extra 2024] costs of wind mitigation (an average of US$250 per acre in labor to re-stand the crop each time) along with diminished yields due to the multiple weather events, all that simply makes margins razor thin and often negative for the [individual] farm." Burley and dark types The 2024 growing season was another challenging year for bur- ley and dark farmers but nowhere near the disaster that flue- cured growers experienced. The challenges ranged from ex- treme weather events to dramatically changing tobacco product markets. Nevertheless, burley and dark growers were expected to enjoy a good market, though not an exceptional one. It got going in earnest in early December, "Yes, there were some curing quality issues, and there were pockets where yields were disappointing," said Will Snell, Kentucky Extension agricultural economist, in a report to the Burley and Dark Tobacco Producers Association. "But overall, prices will likely improve modestly over last year's prices, al- though heightened labor and other higher input costs will con- tinue to erode profit margins." This may be the first time since 1955 that the value of tobacco production in Kentucky has fallen below U$200 mil- lion, he adds. On a positive note, the US burley sector has seen some rebound in leaf exports. But given the radical decline that exports had taken in previous years, US burley is dependent pri- marily on sales of domestic tobacco products, as is the US dark tobacco sector. Burley supplies remain tight globally, but the supply/de- mand balance is not as tight as it has been in recent years given a significant decline in US cigarette sales. Historically, US ciga- rette sales have declined at a 3-4% annual pace, but the decline has accelerated in recent years to nearly 10% annually. The US dark tobacco industry continues to be plagued by the entry of nicotine pouches. That market is growing at an an- nual 30%+ pace compared to 6-8% annual decline among major snuff products. What's the outlook for burley in 2025? The industry will likely continue to lose growers as profit margins remain thin, says Snell. He thinks the significant factors will be: • limited leaf price increases, • yield expectations, • wage rate hikes, • labor challenges, and • company requirements. Given swings in tobacco product markets and anticipated increased production levels overseas, total needs for US burley and dark tobaccos may continue to fall. But individual grower contract volume may remain near recent levels due to attrition of growers. Continued strong cattle prices will entice some away from declining profit margins realized in tobacco. "But antici- pated weak grain markets may encourage some farmers in the dark tobacco regions to hang in there for another growing sea- son given labor and infrastructure availability," said Snell. Crop chronologies for burley and dark Burley: A very wet May gave way to a dry summer and early fall across much of the burley belt, says Bob Pearce, Kentucky Extension tobacco specialist. The wet spring delayed planting and led to most of the crop being planted in June and some up into July. Mild to moderate drought conditions were observed in Kentucky and Tennessee throughout the growing season but many growers received just enough rainfall to have burley crops with above average yield prospects. Dry weather in August and September meant harvesting was able to progress well until the remnants of Hurricane Helene blew through in late September. Fortunately, damage to tobacco crops from Helene was relative- A river in Mitchell County, NC that has washed away most of its banks thanks to Hurricane Helene.

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