Tobacco Production Overview

Tobacco Types

• Flue-cured – cured with heat (7-8 days)

• Burley– air-cured (several months)

• Dark air-cured and Dark Fire-cured

• Cigar

• Oriental

2010 Estimated World Tobacco Production

North America

South America

Africa Asia Europe

Million Kg

Flue-cured

249 797 326 3140 133

Burley 106 140 293 160 61

ULNA

Oriental: 272 M KgDark Air-Cured: 126 M Kg

Federal Quota Buyout

• October, 2004

• Quota had value (bought and sold since the 30’s); License to Produce Tobacco

• Growers and Quota Owners Paid for Quota and Program dissolved

• Fully Funded by Tobacco Companies

• 10 annual payments

• $7/lb owned and $3/lb grown

2004 Quota Determination2003 2004 Change

Purchase Intentions 283 254 - 29

3 year Export Average

255 229 - 26

Reserve Stock Adjustment

- 11.7 - 25

Sec. Of Ag. Adj. ------ + 3%

Basic Quota 526 472 - 54

(- 10%)

NC Burley Tobacco Production

NCDA-CS

Post Buyout Burley Tobacco

• North Carolina Production– 2004: 4,700 acres (Pre-buyout)

– 2005: 3,000 acres

– 2006: 4,200 acres

– 2007: 4,000 acres

– 2010: 2,000 to 2,500 acres

NCDA-CS

2009 Flue-cured Tobacco Production

NCDA-CS

Post Buyout FC Tobacco

• North Carolina Production– 2004: 150,000 acres (Pre-buyout)– 2005: 123,000 acres– 2006: 155,000 acres– 2007: 164,000 acres– 2010: 170,000 acres

• Price – 2004: $1.86 per pound (Pre-buyout)– 2005: $1.48 per pound– 2010: $1.72 per pound

NCDA-CS

Total Tobacco Value by State2006

• NC: $496 M

• KY: $331 M

• TN: $93 M

• SC: $72 M

• VA: $71 M

NCDA-CS

Flue-cured Tobacco Production 2009

• NC: 418 Million pounds

• VA: 40 Million pounds

• SC: 37 Million pounds

• GA: 21 Million pounds

• FL: N/A

USDA

Flue-cured Variable Costs

• Transplants $210• Lime $17• Fumigation $125• Fertilizer $175-

300 Herb. and Fung. $120

• Insecticides $36• Sucker Control

$125• Cover Crop $15

• Curing Fuel $350?

• Electricity $125

• Crop Ins. $65• Bailing Supp. $8• Machinery $330• Labor $900 - 1300• Interest $35

Fixed Costs

• Tractor/Machinery $320

• Barns and Equipment $170

• Total Costs = $3,500

• 2,500 lbs / Acre X $1.70 = $4,250– NET RETURN = $750

Net Return