Tobacco Farmers Lose Longtime Safety Net

Tobacco Farmers Lose Longtime Safety Net

2:31pm Oct 24, 2014
Marvin Eaton owns a farm in Belew's Creek, N.C., where he grows 200 acres of tobacco. He bought the farm from his grandfather and plans to pass it down to his son.
Marvin Eaton owns a farm in Belew's Creek, N.C., where he grows 200 acres of tobacco. He bought the farm from his grandfather and plans to pass it down to his son.
Emily McCord / WFDD
  • Marvin Eaton owns a farm in Belew's Creek, N.C., where he grows 200 acres of tobacco. He bought the farm from his grandfather and plans to pass it down to his son.

    Marvin Eaton owns a farm in Belew's Creek, N.C., where he grows 200 acres of tobacco. He bought the farm from his grandfather and plans to pass it down to his son.

    Emily McCord / WFDD

  • Workers on Stanley Smith's farm in King, N.C., hand-pick the leaves off the stalk of a tobacco plant.

    Workers on Stanley Smith's farm in King, N.C., hand-pick the leaves off the stalk of a tobacco plant.

    Emily McCord / WFDD

Tobacco growers are about to face a completely free market. This month, they'll receive their last checks from a government program meant to ease them out of a Depression-era tobacco-price-fixing system.

That has left Stanley Smith, who grows about 60 acres of tobacco on his farm not far from Winston-Salem, N.C., feeling a little unsettled.

"I've farmed all my life," Smith says. "I think the best way to sum it up is our safety net now is gone."

The safety net is the Transitional Tobacco Payment Program, also known as the buyout. Since the 1930s, the government regulated the tobacco market with a quota system. It limited how much a farmer could grow to control supply and demand, and farmers profited. That ended in 2004 with the $9.6 billion buyout program that paid growers yearly sums to help them adapt to the free market.

"Twenty-five, 30, 40 years ago tobacco was clearly the most profitable thing you could do on the farm," says Tim Hambrick, with the agricultural extension office in Winston-Salem. He says back then farmers could get $1,000 an acre. Now it's more like $200. So they have to grow more tobacco to make the same money. Farms get bigger, or they get squeezed out. And everyone is trying new things.

"You see guys invest heavier into the grain market. You see guys put up chicken houses. You see guys retire and just get out of the business. They look for other things to do. They encourage their kids to look for other things to do," Hambrick says.

But tobacco is still big business. The U.S. tobacco crop has been steadily bringing in about $1.5 billion a year and may even grow, given the global nature of the market. Blake Brown, an agricultural economist at North Carolina State University, says even though Americans are smoking less, overseas markets are promising. And there's still demand for the highly prized North Carolina leaf.

"So I think for the next five years, demand for U.S. tobacco may be stable and could actually increase a little bit because of the export demand, but we don't know exactly whether the growth in China will offset the decline in demand in the U.S. and Europe," Brown says.

And another unknown: how e-cigarettes will affect the demand for tobacco leaf.

It's the growers at larger farms that have a little more breathing room. Marvin Eaton grows 200 acres of tobacco, along with grain and strawberries, in Belew's Creek, N.C. He has a contract with Philip Morris and R.J. Reynolds. Right now, that's paying Eaton's bills.

"The companies, they're in control, and if they don't want Marvin Eaton raising tobacco and I can't make a living on what they say they're going to pay me for, then I, Marvin Eaton needs to get him something else he enjoys doing," Eaton says.

For now, Eaton is hopeful. He points to his son, who has finished college and is back home to help his dad and learn the family business. Buck Eaton stands watch over a giant conveyer belt that's sorting tobacco leaves. Someday this farm will be his.

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Transcript

STEVE INSKEEP, HOST:

Tobacco growers are about to enter the free market. This month they receive their last checks from a government program. It's designed to ease them out of tobacco price fixing, a system that's been around since the Great Depression of the 1930s. Here's Emily McCord of NPR member station WFDD in Winston-Salem, North Carolina.

EMILY MCCORD, BYLINE: It's harvest season in what's called the Old Belt of tobacco country. The crew on Stanley Smith's farm separates the hearty leaves from their stocks by the armful, collecting them and dumping them onto a flatbed hitched to a larger tractor.

STANLEY SMITH: I've farmed all my life. You're here on our family farm.

MCCORD: Smith grows about 60 acres of tobacco. It's in his veins. He's even worked as a tobacco auctioneer for 17 years and proudly shows off his craft.

SMITH: Ninety-five and I say 95, ba da bum, bum, bum, 95 put a bid now, R.J. Reynolds.

MCCORD: He's had to rely on that skill lately, working more hours on the side doing estate auctions. It's been harder to make ends meet on the farm. And now with no more money coming from the tobacco buyout program, he's feeling a little unsettled.

SMITH: I think probably the best way to sum it up is our safety net now is gone.

MCCORD: The safety net is the Transitional Tobacco Payment Program, also known as the buyout. But let's back up here for a moment. Since the 1930s, the government regulated the tobacco market with a quota system. It limited how much a farmer could grow in order to control supply and demand, and farmers profited. That ended in 2004 with a $9.6 billion buyout program that paid growers yearly sums to help them adapt to the free market.

TIM HAMBRICK: Twenty-five, 30, 40 ago, tobacco was clearly - it was clearly the most profitable thing you could do on the farm.

MCCORD: Tim Hambrick is with the area agricultural extension office. He says back then, farmers could get $1,000 an acre. Now it's more like $200, so they have to grow more tobacco to make the same money. Farms get bigger or they get squeezed out, and everyone is trying new things.

HAMBRICK: You see guys invest heavier into the grain markets. You see guys put up chicken houses. You see guys retire and just get out of the business. They look for other things to do. They encourage their kids to look for other things to do.

MCCORD: But tobacco is still big business. The U.S. tobacco crop has been steadily bringing in about $1.5 billion a year and may even grow, given the global nature of the market. Blake Brown is an agricultural economist at North Carolina State University. He says even though Americans are smoking less, overseas markets are promising, and there's still demand for that highly prized North Carolina leaf.

BLAKE BROWN: So I think for the next five years, demand for U.S. tobacco, you know, it may be stable to - it could actually increase a little bit because of the export demand. But, you know, we don't know exactly whether the growth in China will offset the decline in the U.S. and Europe.

MCCORD: And another unknown - how will the growth of e-cigarettes affect the demand for tobacco leaf? It's the growers at larger farms that have a little more breathing room. Marvin Eaton has 200 acres of tobacco, along with grain and strawberries. He has a contract with Philip Morris and R.J. Reynolds. And right now, that's paying Marvin Eaton's bills.

MARVIN EATON: If the companies - they're in control. And if they don't want Marvin Eaton raising tobacco, then I can't make it. I'm living on what they say they're going to pay me for it, then, I, Marvin Eaton, needs to get something else he enjoys doing.

MCCORD: For now, Eaton's hopeful. He points to his son who's finished college and is back home to help his dad and learn the family business. Buck Eaton stands watch over a giant conveyor belt that's sorting tobacco leaves. Someday, this farm will be his. For NPR News, I'm Emily McCord. Transcript provided by NPR, Copyright NPR.

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