China is buying U.S. leaf again, making selections from the 2021 crop. It may buy more tobacco that in recent years, but this is far from certain, says Blake Brown, N.C. Extension economist. “Relations between the United States and China are likely to remain strained,” Brown said at the recent N.C. State Tobacco Situation and Outlook webinar.“That is probably going to temper to some degree the Chinese appetite for U.S. products.” This may translated into a little instability on the tobacco market. Most of the tobacco that China buys from the U.S. is bought by a state monopoly which is more sensitive to U.S. /PRC political tensions than a commercial buyer would be.
Let’s not forget how U.S. flue-cured was affected the last time a trade war affected U.S./China sales. Flue-cured sales dropped to 238 million pounds, and the drop was entirely ascribed to the abandonment of our market by the Chinese, starting in the midst of the 2018 market and continuing through 2019 and 2020. The Chinese buyers returned in 2021, and sales rebounded to 303 million pounds. Brown said a modest increase in contracted pounds may be possible.
Note: China bought about 60 millions pound from U.S.--or about 20 percent--in the most recent year. “So there is a bit of growth opportunity this year,” he says. But if we plan to sell to China, we should have a balanced portfolio and we should focus on countries other than China. We can always be optimistic. “It is still a growing tobacco market,” Brown says.
How to get through the current situation: Intense international competition coupled with concentration in the buying sector mean price growth at the farm level will be limited in the future, wrote Will Snell, Kentucky Extension agricultural economist, earlier in the year. “To survive, U.S. growers must be willing to
- adapt to a changing product market,
- produce high quality leaf with reduced health risks, and
- find ways to constrain the growth or ideally to reduce their cost structure.
“Improvements in labor efficiency, optimal input usage, and boosting yields will be critical to remain profitable,” he wrote.
Deadline approaching: By January 11, members of the Burley Tobacco Growers Cooperative Association must submit amended materials that document that they are members of the settlement class in the legal action that is ending the cooperative. Note: If you are one of those members, BTGCA sent notices on November 12, so if you didn’t get a notice, don’t worry about it. But if you did, the clock is ticking. For information, please see the Important Documents page on the BTGCA website.
In passing: Marion Hawkins Jr., founder of GoldLeaf Seed Co., a domestic and international supplier of tobacco seed, passed away in November. He was a real visionary in the breeding of flue-cured, and He spent many a long hour trying to make me understand how a modern tobacco breeding program gets from one point to another. Unfortunately, I still don’t get it, but don’t blame Marion for that. Goodbye to a real Tobacco Great.
The referendum of N.C. growers on continuing the 30-year-old assessment to raise funds for tobacco-related research and Extension efforts of NCSU’s College of Agriculture and Life Sciences passed in November. This year’s vote, which provides for a 10 cents per 100 pounds checkoff on each pound of flue-cured and burley tobacco sold, continues the assessment through 2027.
