2005 industry report: agriculture
TREND: Farmland continues to vanish in the face of encroaching urbanization.
OUTLOOK: With the tobacco-quota system gone, many small growers will be forced into retirement or growing other crops by large farms that can operate on thinner margins.
If you want to see a small tobacco farm, you’d better take a picture. After what happened in 2004, it might not be long before they exist only in photographs and memories.
The $10.1 billion federal tobacco buyout, passed by Congress in October, will pay about $3.8 billion to quota holders in the Tar Heel State during the next 10 years. It also could shrink the number of tobacco farms. Within the next couple of years, half the 7,850 in the state likely will be gone, says Blake Brown, an economist at N.C. State University.
About 80% of tobacco farmers already grow leaf under contract to cigarette companies. Without the government buying tobacco, nearly all will. It’s easier for companies to contract with a few large growers than with many small ones. Smaller and older quota-holding farmers who have hung on to their fields and tractors awaiting the buyout likely will quit planting tobacco, speeding consolidation.
The buyout ends a program that limited production, propped up prices and made American tobacco uncompetitive with foreign-grown leaf. The amount farmers were allowed to grow has dropped 50% since 1997. Had the quota system remained, farmers probably would have seen a 30% to 35% cut in production limits this year. Without the quota system, tobacco acreage is expected to grow and leaf prices to drop.
Acreage of burley tobacco, typically grown on small farms in the west and Pied-mont, likely will shrink because of pressure from residential and commercial development. Tobacco farming could cease in some western counties, where mountains make large-scale farming impractical.
But the acreage of flue-cured tobacco, which made up more than 97% of the state’s total tobacco receipts in 2003, is likely to increase on the flat land of Eastern North Carolina, where the growing season is longer and mechanization is easier. “You might see 500-acre tobacco fields” instead of the patches that long had enabled small farmers to survive on price-supported tobacco, says Billy Ray Hall, president of the Raleigh-based North Carolina Rural Economic Development Center.
Money from the buyout will help more farmers move to niche crops. Growth continued last year in specialty melons, lettuces, blueberries, strawberries, goat meat, cheeses, fish farming and sweet potatoes. Growers in the state sold $3 million of sprite melons, which weren’t produced here three years earlier. About $27 million went to growers of eastern cantaloupes and $5 million to those who raised red seedless watermelons. The state also should experience a 50% increase in blackberry growers during the next five years.
Good farmland — for growing tobacco or raising niche crops — is getting harder to find. Many cities in the state are growing, and developers are converting farms into neighborhoods. According to the federal agriculture census, 3.9% of the farmland in the state — 366,000 acres — was lost from 1997 to 2002.
Farmland has been converted from forests, making up for some crop-acreage losses. But most of the million acres of forest lost between 1990 and 2002 were to development, according to a 2004 study by the U.S. Department of Agriculture.
Not only is land harder to find, but labor costs could rise for some Tar Heel farmers. The North Carolina Growers Association and the Farm Labor Organizing Committee reached an agreement that allows about 8,500 foreign farm workers in the state to form a union and provides for better pay and benefits such as sick days and bereavement leave. The agreement covers more than 1,000 farms, many of which grow cucumbers for Mt. Olive Pickle Co.
The deal could crack the door for better working conditions and increased pay for the rest of the estimated 43,500 foreign farm workers in the state, supporters say. But by November, fewer than half the potential members had signed union cards and agreed to pay dues.
Producers of the state’s top agricultural commodity faced their own uncertainties. Experiments continued on some Eastern North Carolina hog farms to find an economically and environmentally sustainable way to deal with pollution. A moratorium on new hog farms is in place until an acceptable waste-treatment method can be found.