Tobacco Asia

Volume 18, Number 3

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60 tobaccoasia Burley There were considerable hopes over the winter that US burley growers might enjoy increased contracting opportunities in 2014, said Will Snell, Kentucky Extension tobacco economist just as US burley planting began in the spring. However, it appears some companies have re- duced US burley contract volume, although there was a slim hope that last-minute contracts might appear. This may not be the case for all companies or for all growers, he said. And the calculations may have been skewed by some "fictitious" con- tract volume that was never going to be produced and has now been cleared from everyone's books. "Preliminary signals that 2014 burley production opportunities may be reduced for some growers is certainly disappointing," said Snell. "It is also some- what surprising, given how aggressive the buying interest has been in recent years in attempting to find more US burley production." Evidently, lower cost/lower quality burley is finding its way back into cigarette blends in increas- ing amounts in the midst of overall declining global and domestic burley consumption, Snell said. "Prior to the [2004] buyout, US burley exports had swelled to more than 200 million pounds (lbs) [91 million kg]. Now, despite favorable exchange rates and overall competitive prices during most of the post-buyout period, US burley exports have been cut in half." The likely explanation is that ample supplies of lower quality/less expensive burley from com- peting nations, coupled with lower world burley needs, have more than offset competitive US bur- ley prices in global markets since 2004. On a positive note, US burley exports have re- mained relatively stable over the past four years, ranging from 108 to 114 million lbs, he adds. "However, burley imports into the United States have been increasing, despite slumping domestic cigarette production." he said. "Since 2010, do- mestically, cigarette consumption continues to decline by 3-4% annually, a rate above historical levels due to higher prices, bans, health issues, and the growth of electronic cigarettes, which proba- bly contain limited, if any, nicotine extracted from US leaf." An Economic Perspective on US Leaf in 2014 A farmer interrupts the first plowing of his Eastern N.C. flue- cured belt near Four Oaks, N.C., to clear trash from the shanks. By Chris Bickers

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