Royster-Clark’s Ken Moshenek speculates on tobacco’s future in the U.S. and outlines the company’s strategy.
TFQ Staff Report
Questions remain as to how U.S. growers will respond to the buyout. Some farming pundits convey guarded optimism, while others maintain a “wait-and-see” attitude. At least one company, however, sees a bright future for U.S. production. Ken Moshenek, president and COO of Royster-Clark, tells TFQ why his company remains committed to U.S. tobacco.
TFQ: What do you think the future of tobacco farming will be in the United States?
Moshenek: I believe there is a very good future for domestic tobacco production. Of course, only the tobacco companies know where they want their tobacco grown. Still, when you consider the consistent high quality of tobacco produced in the U.S. and the current infrastructure already in place to support that production, along with the financial and governmental stability of conducting business in the U.S., it makes for a good case to increase leaf production here. Tobacco growers have been resilient through decades of adversity, and they will adapt to the changes created by the buyout and the effects of a free market.
TFQ: Do you see any trends?
Moshenek: The need to produce high-quality tobacco will continue to move toward producing even greater quality as growers compete for attention from tobacco companies. In the future, growers may be expected to produce tobacco according to specific standards as companies meet the terms of the Food and Drug Administration. The trend toward fewer growers producing more acres is likely to continue. It will be driven not only as an effect of the buyout, but a greater need for efficient production.
TFQ: Do you think U.S. growers will eventually increase exports?
Moshenek: Trade has always been important to tobacco, but with the decline of cigarette smoking in the U.S., the export market is more crucial to the grower’s success than ever before. Because of the quota system, U.S. growers have been disadvantaged in the global market for a long time. It was a disappointment when Zimbabwe tumbled and Brazil became the beneficiary of those acres. This will not happen again in the U.S. Today, U.S. tobacco is more competitive in the world markets, and we may have new opportunities for sales to Southeast Asia, the Middle East and Eastern Europe. With that said, export demand will ultimately be based on how efficiently growers can produce better flavor and higher-quality leaf than competing producer countries.
TFQ: Are you optimistic or pessimistic about the future of tobacco farming in the U.S.?
Moshenek: I am very optimistic about the future of tobacco farming in the U.S. Tobacco companies can source cheap, low-quality tobacco from many places in the world, yet, I don’t believe this is what they want. The current market situation may be influenced by high tobacco inventories, which can be sold below market price. These inventories may be keeping a cloud over the bigger picture. But the bottom line is the U.S. tobacco grower is the best producer in the world. These growers know what must be done, how to do it, and are committed to producing an abundant supply of high-quality leaf.
TFQ: How does Royster-Clark intend to respond?
Moshenek: Royster-Clark has always concentrated on how to help tobacco growers produce a high-yielding crop. Now that the rules have been so dramatically changed, our strategy is a balance between producing yields and quality, with even a stronger bias toward quality. For the past three years, we have conducted research on how proper plant nutrition can affect leaf quality. We’ve become much more focused on how to feed the plant and not the field. Plant nutrition can so often be overlooked, but we know that plant nutrition affects color, aroma and burning quality as well as other leaf characteristics. When we produce our tobacco plant food, we try to combine this science with the demand for higher-quality tobacco. We are continuing our search for improvements in leaf quality affected by plant nutrition as well as the proper placement of nutrients, which are essential to producing a quality, uniform crop.
TFQ: How does the company view its market for tobacco growers?
Moshenek: Royster-Clark has made a tremendous transition from delivering products to our customers to providing solutions to our clients. Obviously, we want to serve our customers by providing products they need. More importantly, we want to be a provider of services and the source of science-based production information for growers and the tobacco companies.
TFQ: What are trends for this market?
Moshenek: I am not sure what the trend is for marketing to tobacco growers. With respect strictly to our sector, when I look outside of Royster-Clark and Rainbow, unfortunately, I don’t see an abundance of energy being devoted to serving the tobacco grower.
TFQ: What are the company’s plans for growth in tobacco in domestic markets?
Moshenek: At Royster-Clark we have already jumped halfway across the river by making huge financial commitments to serve the tobacco producer in the U.S. We are fully committed to the tobacco grower, and we have no intention of changing that course. Tobacco is simply part of our culture; it is what we know and what we do.
TFQ: What are the products/services that the company offers to growers and what are their advantages?
Moshenek: The company offers a complete package of homogeneous tobacco plant food with Super Rainbow as its leading brand. In addition, the company offers a complete line of tobacco production products, which begin in the greenhouse and extend to into the fields as well as agronomic- and product-related services.