New Directions:
Co-ops help tobacco farmers transition to new crops

By Pamela J. Karg
Field Editor

obacco quotas have been cut by more than 60 percent during the past two years, leaving Kentucky with 110,000 acres of quality farmland that's "basically up for sale as farmers try to figure out what they're going to do next," says Jim Mansfield, horticulture/aquaculture program director for the Kentucky Department of Agriculture. While some Americans have applauded recent court settlements levied against the tobacco industry, it's the small farmers across 20 states stretching from Minnesota to Florida who are paying the ultimate price. The 1997 USDA Agriculture Census counted 89,706 tobacco farmers in the United States and approximately 286,500 farms with assigned tobacco quotas. This year's quotas, announced at the beginning of 2000, dropped throughout the tobacco industry. So did prices. In 1999, Congress appropriated $328 million under broad farm disaster legislation to help compensate farmers for cuts made in tobacco quotas. USDA, under the Tobacco Loss Assistance Program, administers this one-time-only compensation fund. In late June and early July, farmers also received checks from their state governments through the $5.15 billion Tobacco Growers Trust, established by tobacco companies to help cushion the fall for farmers. The checks can be spent any way a farmer sees fit, but many officials hope farmers will use the money to find an alternative to tobacco.

A migrant laborer from Mexico harvests tobacco in Virginia. USDA photo by Ken Hammond.











Karen Calhoun (above) is making the switch to aquaculture to offset a two-thirds reduction in her tobacco quota. photo courtesty of Kentucky State University Opposite page: Univesity of Kentucky horticulture specialist Jim Mansfield (center) discusses the fine points of growing eggplant, one of the vegetable crops seen as an alternative to tabacco. Photo courtesy of Ketucky Dept. of Agriculture.

A huge challenge
"Tobacco is a crop that is non-perishable, fairly easy to grow and harvest, you know the value per acre and you know what you're going to get paid for it before you even plant it. To replace that is going to be a big challenge," Mansfield says. But he believes some farmers do have options. They just need to be willing to consider new crops, change how they are farming and work with neighbors to market these new agricultural products. That's a tall order, but one that was not lost on Karen Calhoun. The Harrison County, Ky., tobacco and beef cattle farmer had her burley quota cut by more than two-thirds during the past three years. She could raise more beef cattle, but that requires more land, and good farmland is something that doesn't come cheap. And she also has limited access to labor. Calhoun found her niche, with assistance from the Kentucky Department of Agriculture and Kentucky State University. "I'm trying new things. I am now in the farm-raised shrimp business, and it looks to have some real potential," says Calhoun. To help spur the business, the state provided a $149,528 grant to the university to help build a shrimp hatchery at its Frankfort research facilities. This infusion of money into the state's agricultural infrastructure enables Kentucky farmers to buy seed stock from a nearby source rather than shipping it in from Texas and running the risk of high mortality. Within an hour-and-a-half of harvesting her first shrimp crop, Calhoun had sold out her entire crop directly to local consumers. Because she's the first in her area to begin an aquaculture enterprise, the shrimp harvest generated a large amount of publicity, attracting consumers eager to buy Kentucky bred "seafood." The high demand for her shrimp surprised Calhoun, who plans to lease the remaining tobacco portion of her farm this year so she can concentrate on beef cattle and shrimp, and some vegetables and pumpkins.

Where tobacco plants once grew, Jill Streck helps harvest shrimp, a new crop her aunt hopes will replace lost tobacco income. Photo courtesy of Kentucky State University.


Writing on the wall
Mansfield says shrimp production is just one example of aquaculture endeavors open to Kentucky tobacco farmers. The state also has projects and financial programs that support trout, catfish, paddlefish, minnows and bass production farms. "We have a progressive group of farmers. They see the writing on the wall that they're going to have to be changing their business because they can't just hang their hats on tobacco any more," Mansfield says. Cooperatives and quasi-cooperative organizations are playing a large role in helping farmers make the transition to new crops. Working with the Kentucky Agriculture Department are groups such as the Commodity Growers Cooperative Association; the Kentucky Center for Cooperatives; Kentucky Network for Sustainable Agriculture; the Kentucky Farm Bureau and state Resource, Conservation and Development councils (RC&Ds).

In fact, the Jackson Purchase RC&D Foundation received a state value-added grant for $194,650 to pay for two efforts: construction of a catfish processing plant, to be owned and operated by the newly formed Purchase Area Aquaculture Cooperative Inc. (PAAC), and establishment of a revolving loan fund for aquaculture infrastructure development. The PAAC has a goal of producing 1 million pounds of fish within two years. The plant will create approximately 20 new jobs and is expected to need production from more than 100 farmers who will convert low-production soil into fishponds to meet PAAC's need for 2,000 acres of water. "This alternative to tobacco should aid many local farmers and will also help our grain farmers, as there will be a need of 750,000 bushels of grain each year for feed," said Robert B. Johnson of the Jackson Purchase RC&D.



Other alternatives have potential
In addition to aquaculture, Kentucky tobacco farmers are switching to greenhouse and nursery crops, willow trees, meat goats, beekeeping, grapes and wine production, Christmas trees and other fruits and vegetables. Still others are switching to more traditional farming endeavors, says Mansfield, including beef and hog production, raising dairy heifers for export (especially for the Mexico market), and grain production. But in southeastern Kentucky, grain production is limited due to a lack of suitable land and storage facilities. Most of the corn grown in the area is fed to local cattle. Research conducted at the University of Montana suggests that echinacea an herb which proponents claim has medicinal properties could be an alternative crop for tobacco farmers. Other research is focusing on the industrial hemp market. "We want to diversify and stabilize the number of farm enterprises that generate income for our farm families," explains Jim Lacy of the Kentucky River RC&D Council. "So more and more of our farmers are looking to grow vegetables to supplement their income from the lost tobacco poundage." A farmers' market was established in Campton, Ky., to allow producers to sell their crops at a central location. The state Farm Bureau has assisted in the formation of new farmers' markets through its Certified Roadside Farm Markets program.

Interest high in vegetable co-ops
In Lewis County, Ky., the Vegetable Growers Association was formed in November and had 18 farms sign on for the season. They received a grant for just over $7,000 for vegetable production demonstration equipment used in connection with the farmers' market. "Commercial vegetable farming is a new challenge to our producers. A high level of management is required," says Lacy, of the Kentucky River RC&D. With a grant from the Wolfe County Conservation District and the state agriculture department, the RC&D council received money to purchase mulching equipment so farmers could begin converting to commercial vegetable farming. However, if every tobacco farmer sells fresh produce, there's the possibility of a glut in the marketplace that would drive down prices. Or production could fail to adequately target what consumers want to buy. That's why more grower associations are being formed, and these groups are coordinating their production and marketing with other cooperatives even some outside their region, says Mansfield. (See related story, on page 22) "We have really been asking ourselves how we can form more marketing alliances and partnerships to have better coordination of our value-added products," Mansfield adds. The Commodity Growers Cooperative (CGC) in Lexington addresses both the dependence of Kentucky's farm families on tobacco and the need for a local, sustainable food system by providing market development assistance to farmers who are trying to diversify their crops. The CGC has already developed markets for family farm products primarily in the horticultural area by building a base for locally grown products. These efforts, due to the support of many partners, have greatly increased Kentucky's commitment to diversification initiatives, says Patrick Rupinen, CGC administrative manager. "Kentucky is the No.1 one burley tobacco producer, and we have 40,000 farm families out there producing it. We don't want 40,000 burley tobacco growers to suddenly disappear. So there are a lot of us trying to help farmers find alternatives," Rupinen says. Now the CGC is collaborating with the Kentucky Center for Cooperative Development to award $80,000 in grants to conduct market feasibility studies by groups interested in forming cooperatives. The deadline is September 2001. "We have a lot of interest by some people -- people who are willing to take a chance on something new," Rupinen says. "You have to understand that tobacco farmers didn't really have to work together with other tobacco farmers. Now that they're looking at other crops, cooperatives are slowly forming. It's a new idea for them that will come about as they realize that they can share equipment or facilities, and do more coordination to get the job done."

Growers co-ops to coordinate marketing

Faced with a cut of more than 50 percent in their tobacco quota, farmers of the Owensboro, Ky., area responded by forming the West Kentucky Growers Cooperative (KWGC) to help them produce and market sweet corn and other vegetables. "These farmers have taken action to ensure the strength of agriculture in their region as well as the continuation of their own agriculture-based economy with the founding of this cooperative," Kentucky Agricultural Commissioner Bill Ray Smith said at the opening of a new farm market facility this spring. The Kentucky Department of Agriculture approved a grant for $100,000 to assist the West Kentucky Growers Cooperative (WKGC). It now joins cooperatives already established in Georgetown, Horse Cave and Monticello/Russell Springs, Ky. "We think there is a major opportunity for Kentucky in the produce industry," says Jim Mansfield, director of Kentucky's Division of Value-Added Horticulture/Aquaculture. "Now is the opportune time to establish a net-work of facilities with coordinated sales and value-added processing." The WKGC leases a large facility originally built by the J.C. Ellis family in Stanely, KY. The plant has ample cold storage space, hydro-coolers, icemakers and a slush-ice injection unit suitable for produce grading, packing and cooling. But the enterprise doesn't stop there. WKGC is extending outside its borders to cooperate with another grower's cooperative. Owensboro farmers, together with representatives from the state agriculture department and the University of Kentucky, traveled to Florida and entered into an agreement with the Pioneer Grower Cooperative of Belle Glade. "Pioneer Growers Cooperative has corn growing in Florida and Georgia, and wants to become year-round marketers of sweet corn," Mansfield said. "There is a 10-week period through July and August, however, when they are unable to produce sweet corn. This is where the West Kentucky Growers Cooperative comes in." The Kentucky cooperative will grow 1,000 acres of sweet corn that will be marketed by the Florida cooperative. A third of the corn will be tray-packed in Kentucky and sold as value-added corn. Two-thirds will be sold to retailers. Patrick Rupinen of the Commodity Growers Cooperative in Lexington, Ky., says that more and more tobacco growers are learning about the cooperative way of doing business. Some are realizing that by pooling their resources and their bounty, they are able to tap into more retail markets. "And if farmers can sell directly through some of these retail channels, that will mean better prices for them," Rupinen said. In addition to corn, the Kentucky co-op is selling 150 acres of mixed vegetables grown by the Owensboro farmers, although a different distributor will market it.

End nears for tobacco warehouse co-ops

By Isaac J. Bailey
The Sun News
Myrtle Beach, S.C.

For more than 30 years, Robert Boyed, a tobacco market sales supervisor, has heard the rumors. For more than 30 years, the anticipated demise of the auction-style tobacco sale has been exaggerated. But time may finally be catching up to the event that has for decades been a celebration of bountiful harvests for farm families. Warehouses, such as Twin City Farmers Cooperative Inc., where Boyd is supervisor, may become storing houses, he said. Tobacco companies are signing more farmers to contracts, with which a given company pays farmers a determined amount, rendering useless the time-honored tobacco auctions. Companies want to better control the quality of crops and the harvesting process, Boyd said, and better farm equipment has caused some of the changes. "The number of farmers is decreasing every year," he said. "And companies want to get more mileage out of their tobacco." Next year, or maybe the one after, could be the last of the auctions, but maybe the end will never come, Body said. "for the entire 35 years I've been in this business, I heard that every day, "Boyd said Tuesday, sitting on a 800-pound stack of baled tobacco during the opening of markets in Loris. "it may continue indefinitely. But it appears now it is closer than it's ever been." The scene of families gathering in the warehouses, maybe eating hot dogs and drinking lemonade, on opening day has been replaced by lone farmers checking prices marked on small pieces of paper on the tops of tobacco piles. Some visit on days when they aren't selling to get a glimpse of the price they can expect when they do. The strong scent of tobacco sweet to some noses, over whelming to others permeates the entire place. Signs imploring farmers to keep their tobacco clean decorate warehouses. "whole families used to do it, so this was a big day," said Sarah Strickland, who was in Loris Tuesday to sell her aunt's harvest. "you had snow cones and saw everybody you know. Now, they just sell and go." The farmers sell when they feel a fair price has been offered, and many sold tobacco in mid-August at the two warehouses in Loris. nm,, At Brink tobacco Warehouse, 157,421 pounds of tobacco were sold for $249,743.90, an average of $158.65 per 100 pounds. At Twin City Farmers Cooperative Inc., 251,505 pounds of tobacco were sold for $400,986.30, an average of $159.43 per 100 pounds. The total figures for Loris tobacco markets by Aug.15 were: 408,926 pounds of tobacco sold for $650,730.20, an average of $159.13 per 100 pounds. Representatives of Dimon, Export Leaf, Standard Commercial and J.P. Taylor tobacco companies walked up and down rows of tobacco bidding on baled and loose-leaf crop, sometimes pushing prices more than 20 cents above the minimum listed. They followed Steve Ivey, who has been an auctioneer for 25 years. "Dollar bill, dollar bill, dollar bill," Ivey uttered in a voice distinguishable only to the trained ear. A bale here sold $170 per 100 pounds, a pile there sold for $160 per 100 pounds, another for $155 per 100 pounds. Loris farmer Marcus Gerald has seen a lot in the 25 years he's grown tobacco. While farming has been good to him, Gerald said, all the change has made him feel uncertain. "You don't know whether to keep investing in farming or not," he said.


Pursuing other uses for tobacco

The Burley Tobacco Cooperative Association Inc., in Lexington, KY., is participating in a pilot program with Star Scientific Inc. to experiment with low-nitrosamine burley tobacco. One hundred farmers in central Kentucky and the Owensboro area have entered into an agreement with Star to produce the low-nitrosamine tobacco. Nitrosamines are thought to be one of the major carcinogens in tobacco. Farmers will have to prime the burley tobacco and cure it in special curing structures. If the experiment is successful, Star plans to expand its efforts and include more farmers next season. Farmers also have the option of converting from chemically intensive tobacco production to organic production. Willing buyers exist, such as the Santa Fe Natural Tobacco Co. in New Mexico, but with a three-year resting period before soils can be certified as pesticide-free. Few growers have explored that possibility. A versatile crop, tobacco leaves can be used to create ethanol or bio-methane, alternative energy fuels. Biomass tobacco, a minimal-nicotine crop that is converted to fuel, not smoked, can thrive in poor soil and a wide range of environments, is not labor-intensive and also requires minimal chemical treatment. Tobacco can also become animal feed.












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