Tobacco Asia

Volume 20, Number 2

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56 tobaccoasia / Issue 2, 2016 May / June) He believes that through the efforts of USTC, the US flue-cured crop is on track to be recognized as the most sustainable, compliant, and reliable source of flue-cured tobacco in the world. "We are working hard to drive the industry to one audit standard, and we believe the market is heading toward 100% audit of growers on an annual basis." This development ought to work to USTC growers' advantage, because the US already excels in every area of leaf production management. "So this will help us to secure market share and create additional demand for US flue-cured tobacco," he says. US flue-cured may well be the most sustainable compliant tobacco in the world today, he adds. "Independent audits have shown that child labor is virtually nonexistent in US flue-cured production," says Thompson. "Deforestation and currency issues are also non-issues here." Among the many other advantages of American leaf: "Neither manufacturers nor leaf suppliers have to finance the crop or bear the cost of bad debt nor overhead associated with the teams of agronomists and field techni- cians they maintain in other countries," said Thompson. "In the US, those costs are borne by our growers and embedded in the green price of tobacco." USTC sources no tobacco through auctions or dealers and has full traceability for every bale it buys, says Thompson; "All the way back to the farm and curing barn. We only source our leaf from the US, eliminating the possibility of offshore tobaccos being added and the risk of contamination to our crop." Another advantage is that the tobacco trade is generally US-dollar based so a buyer will always know that he is dealing in a stable currency. In addition, compared to many other tobacco-producing countries, the US is politically stable. "We are owned by the farmers themselves, so they have a strong incentive to pro- duce and market a quality product," he says. Once the leaf from a given year is completely sold, each farmer is issued a dividend with some portion being retained by the cooperative as equity. This practice is called patronage, and it provides a financial incentive to growers to produce the best tobacco they can. "Patronage is a unique benefit to our members that has helped us attract and re- tain the best tobacco farmers in the US. Our farmers understand that our patronage dividend significantly increases their profitability, providing additional cash to invest in their farming operations." "The goal is to pay a fair price to the farmer while maintaining the lowest possible conversion cost," says Thompson. "We have the best growers in the United States producing the best tobacco, and we vigorously promote the quality of US tobacco." While there are challenges in the short term, there is a very bright future for growers. "The cooperative is undergoing a major rebranding project," he says. "Today, many people don't realize that our members are the best US growers, giving us access to the best flue-cured tobacco." Other news from the cooperative: -- Besides Thompson, other members of USTC's senior management team are: Tommy Bunn, president; Ed Kacsuta, chief financial officer; Wayne Crawford, senior vice president of leaf acquisition; Mike Lynch, senior vice president for leaf sales; Jim Schnee- berger, vice president of business development; Russ Mancuso, vice president of consumer products; and Ron Morgan, president of US Flue-Cured Tobacco Growers Inc. -- USTC is directed by a board composed of nine farmers. James T. Hill of Kinston, NC, is currently the board chairman. -- USTC will operate six leaf-market- ing centers in 2016, in Nashville, GA.; Mullins, SC; Sanford, NC; Smithfield, NC; Wilson, NC; and La Crosse, VA. The last center is new this year. It has closed centers in Oxford, NC, and Danville, VA. It also has a storage facility in Fuquay-Varina, NC. -- USTC is the largest supplier of US tobacco to China. Almost all cigarettes smoked in China are Virginia blends that are made mostly of flue-cured leaf. Stuart Thompson, c.e.o., USTC A USTC worker identifies tobacco that has been delivered to one of the cooperative's receiving stations This building in downtown Raleigh, NC, has housed the headquarters of USTC--formerly known as Flue-Cured Stabilization--for nearly 40 years.

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