Commonwealth Journal

September 14, 2011

'Golden Leaf' has lost its luster

Special to the CJ
Commonwealth Journal

Somerset — For many years, tobacco was the undisputed king of crops in Kentucky, but the end of the tobacco quota program in 2004, a continuing decline in the number of smokers in the United States and increased competition from foreign-grown tobacco have combined to greatly diminish tobacco’s impact on the state’s farm economy.

To be sure, more tobacco is grown in Kentucky than any other state, but the 726 million pounds of tobacco Kentucky farmers expect to take to market this fall represent a drop of nearly 28 percent from a decade ago when 991 million pounds of tobacco were raised in the state.

The number of cigarette consumers in the U.S. has dropped dramatically in the last two decades, and here in Kentucky, state and local governments and employers have actually encouraged the smoking decline.

For years, Kentucky had the nation’s lowest tax on a pack of cigarettes at a meager 3 cents, but former Gov. Ernie Fletcher, a physician who knew all too well the harmful impact of smoking on health, convinced legislators to raise the tax to 30 cents, while admitting he would have preferred a larger increase but could not convince enough legislators to support it.

While the timing was not right for a higher increase in the tobacco tax during Fletcher’s term, Gov. Steve Beshear convinced legislators to double the cigarette tax to 60 cents a pack, and the increase came at the same time as a huge increase in the federal tax on a pack of cigarettes. The tobacco quota program ended in 2004, and that dramatically changed the way it is grown and marketed throughout the eight-state tobacco belt.

First, farmers who never actually raised tobacco but sold their quotas to larger farmers suddenly lost their only source of tobacco income. Instead, larger farmers who bought those quotas simply continued to raise as much tobacco as they always had and were grateful for having been spared the cost of buying quotas.

The end of the quota system also brought about the closing of dozens of tobacco warehouses in small towns throughout the state, as farmers sold directly to tobacco companies instead of taking their crops to market to be sold at auction. That resulted in the elimination of hundreds of part-time jobs in warehouses. ...

For years, agriculture experts repeatedly talked about the need for Kentucky to diversify its farm income, but most farmers refused to listen, choosing instead of continue much as they always had. Well, they are listening now, and many have found new ways to earn money on the farm.

While there probably is not another legal crop that can generate as much income per acre as tobacco, at least other crops for the most part do not shorten the lives of those who use them.

The tobacco market is never going to be like it was. Everyone knows that. Farmers have no choice but to seek other ways to earn money.