2007 Industry Report: Agriculture

Where there's smoke, there's fare for farms
By Tim Gray

Crop report

TREND: Flue-cured tobacco production is increasing.

OUTLOOK: Bright leaf should continue its rebound, thanks to increased consumption in Asia and reduced production in Africa.

Don't tell Faylene and Richard Whitaker that tobacco farming is fading in North Carolina. Despite a federal buyout of quotas that has reduced production in recent years, they grow about 140 acres of it on their Climax farm - double what they devoted to it two years ago. "We think we've seen the bottom in terms of tobacco production in the state," says Brian Long, an N.C. Department of Agriculture spokesman. "If you look at flue-cured tobacco, we'll see about 330 million pounds this year. That's 20% above 2005."

Tobacco's rebound doesn't signal a return to the past, when thousands of North Carolinians lived off the crop. It's just one way some Tar Heel farmers are hedging their bets in fickle commodities markets. Farmers are price takers, not makers, and one way they can ensure the market doesn't get the best of them is to spread around their money and effort. Besides bright leaf and burley, the Whitakers grow tomatoes and strawberries and run two garden centers. "In the mid-'80s, we started growing tomatoes because tobacco sometimes didn't look so good," she says. "In 1990, we added strawberries. In about 2000, I started growing greenhouse flowers, and then we built our first retail center here on the farm. If tobacco ever left North Carolina, we didn't want to come in on the tail end of trying to find something else."

The Whitaker operation has been aided by the decisions of sons Travis and Shane to return to the farm after college. They're exceptions to the rule. In North Carolina, the average age of a farmer is 56 and rising.

The Whitakers sell their tobacco to Philip Morris, part of New York-based Altria Group. Their flue-cured tobacco is shipped abroad - Japan consumes the vast bulk of Tar Heel tobacco exports - while their burley stays in the United States. Just a few years ago, China was a bogeyman, with farmers fearing they would be smothered by that country's cheap leaf. But the Chinese puff away so furiously they have little left to export, says Blake Brown, an agricultural economist at N.C. State. Zimbabwe, which along with the U.S. and Brazil grows the world's best flue-cured tobacco, was supposed to become a big producer, too. "But it has been falling apart politically, so companies have been moving out of there," Brown says. "A lot of that production got moved to Brazil, but they're moving some back to the U.S., too."

Many Tar Heel farmers, especially those near cities, don't care. They've already planted other crops. Near the Triangle and, to a lesser extent, around Asheville and Wilmington, a popular new pursuit is organic farming, which capitalizes on the willingness of affluent urbanites to pay more for food they consider healthier and environmentally friendly. Chatham County, south of Chapel Hill, has become a hotbed for vegetables sold at the farmers market in Carrboro. A few farms, such as Maple View Farm in Hillsborough, have managed to command premiums by branding their products. Maple View, a dairy farm, sells milk in returnable glass bottles in Triangle grocery stores and runs three ice-cream shops.

If urbanization creates opportunities for farmers, it also erases some. Swelling cities continue to gobble prime farmland. Christmas-tree growers in the west, in particular, are being squeezed, says Linda Gragg, executive director of the N.C. Christmas Tree Association in Boone. The vacation- and retirement-home boom in the mountains has driven up the cost of land, making it less desirable for farming.

Just as change transforms the fields, so does it the state's food factories. In November, about 500 employees at Smithfield's giant hog slaughterhouse in Tar Heel walked off the job, protesting a crackdown on illegal immigrants after the plant started matching Social Security numbers provided by its workers with federal records. Any production slowdown could become a critical bottleneck in the journey of pigs from farm to meat counter. Federal immigration restrictions, a hot political topic in Washington, could hamper larger farms and processing plants, most of which depend on migrant labor.

Even with a moratorium on new large hog operations, North Carolina remains the nation's second-largest pork producer, behind Iowa. Turkey production should get a boost from Mount Olive-based Carolina Turkeys' $325 million purchase of ConAgra Food's Butterball brand in October. Carolina Turkeys took Butterball's name, and the deal made it the biggest producer in the United States. It will employ nearly 6,000 nationwide.