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The next generation

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Starting a farm is expensive. Who’s going to grow tobacco after the current generation of farmers retires?

Matt Mullen

Jim Lund, a Wisconsin farmer, smiles slightly beneath a faded Green Bay Packers hat as he heaves back the heavy door of a metal shed to reveal his first crop of burley tobacco. Hanging upside-down in the shed are row after row of burley tobacco plants, curing slowly in the crisp autumn air.

The $25,000 shed, which Lund invested in this year to help cure the new burley, currently holds his entire crop, about two acres. “I’ve been really pleased with it so far,” Lund says. “It seems to be a good cure; it’s a really slow cure in our type of weather. We’ll wait and see the results of the smoke tests, but I plan to grow more next year if [the tobacco companies] want it.”

Lund personifies a successful young tobacco farmer in today’s environment. He’s optimistic; he farms 500 miles north of where burley is normally grown in the U.S. And he’s cautiously expanding his tobacco acreage in response to increased demand after the buyout.

Many farmers in the neighborhood are watching the burley experiment closely. “A lot of the younger farmers around here are excited, because if this catches on, this may allow them to have a future,” Lund says.

Despite his unusual location, however, Lund has many advantages that other aspiring burley tobacco growers don’t have. He has land; with his brothers he farms about 3,000 acres of other crops. He has tobacco-farming experience; his family has been growing Wisconsin types 55 and 54, types used in chewing tobacco, since the 1880s. And he has access to labor: Lund and other farmers in the area rely on a stable farm workforce consisting mostly of Hmong people who immigrated to the U.S. after the war in Vietnam.

For farmers without the same types of advantages, getting into tobacco production may be a long shot. That’s getting some farm leaders concerned. As the current generation of growers approaches retirement, will there be enough younger farmers to take their place?

This summer, a group of leading tobacco farmers from North Carolina traveled to Europe to meet with executives at various tobacco companies. One of the purposes of the trip was to articulate to the companies what kinds of situations growers in the U.S. faced. One major concern: the lack of opportunities for younger tobacco farmers.

The North Carolina farmers told the executives that farming is a risky business at best, and young farmers willing to take that risk found it difficult to start up a farming operation because of the huge investment required for land. One farmer said he has seen scores of students at agricultural colleges who were interested in farming go into other careers because of the start-up expenses required. Basically, without a relative to inherit land and equipment from, most young farmers find it too expensive to get into farming.

Start-up costs
Gary Palmer, a burley tobacco Extension specialist with the University of Kentucky, echoes those concerns. He says it’s pretty easy to find successful younger growers who have taken over family farms, but farmers who want to start an operation without any assets have a difficult time. “Unless he inherits a farm or takes over for his father, it’s almost impossible. Barn space and land to get started is very expensive.”

A grower may need 10 years or more to pay off a loan for the costs associated with getting into tobacco production. A signed production contract with a tobacco company may provide some assurance to a loan officer, but most contracts are binding for only three years. As Palmer says, “How are you going to get someone to loan you money on something like that? Do you have a 10-year contract? No, but that’s the question a banker is going to ask.”

Loren Fisher, Extension tobacco specialist for North Carolina State University, says the demand for U.S. tobacco seems to be increasing, and growers that have at least some experience growing tobacco seem to have no problems securing a contract. “The ability for a younger farmer to get a contract is getting better every day.”

It’s the availability of capital, rather than contract availability, that’s the real problem for younger growers, Fisher says. “The real issue here is the start-up costs, particularly the costs associated with securing curing barns and any mechanical harvesting equipment. That’s pretty specialized equipment. If they can get a long-term contract, a bank may loan them the money.”

Kevin Kinlaw, a young farmer and rancher team leader with North Carolina Farm Bureau, says that getting into tobacco production isn’t necessarily harder than getting into another type of farm operation. “I don’t think [getting specifically into tobacco production] is a problem. Like any other type of farming, though, it’s a risk.”

Kinslaw, who travels extensively across the state developing leadership programs for young farmers, says farming in general is hard to get started in if you don’t have family help. “It’s probably a little more difficult to get into it than a job like you or I have, because of the amount of capital you have to have to get started,” he says. “It’s hard to just start something like that right off of the ground.”

Other concerns
Besides start-up costs, growers thinking about getting into tobacco production face many of the same problems that more experienced growers face as well.

Palmer says the current labor situation in Kentucky also may have growers thinking twice about getting into tobacco farming. Kentucky farmers normally rely on migrant workers from Mexico and Central and South America. This year, that labor has been in short supply because workers are having trouble crossing the U.S. border, and agriculture faces stiff competition for the workers who are available.

Without labor to help harvest and hang burley to cure, some farmers are having trouble getting the crop out of the field soon enough, resulting in poor quality. “There are crops ruining in the field because of the lack of labor,” Palmer says.

The stress of finding enough workers to harvest the crop each year is too much for younger farmers to handle, and many are turning to other types of employment, Palmer says. “It’s really difficult to keep older growers in it too.”

In response to the labor situation, several manufacturers have developed burley harvesting machines that automate part of the harvest process, the cutting of the stalk. But farmers still need labor to hang the stalks and strip them. Besides, mechanical harvesters are expensive. “If I’m a young guy, I can’t afford to buy those,” Palmer says.

Higher land prices are a problem that all farmers, not just tobacco farmers, have to deal with as well. Increasing development of agricultural land for urban uses hasn’t made land prices any cheaper.

Any hope?
So what, if anything, is being done to encourage younger farmers to consider tobacco production?

According to 2005-2006 USDA surveys, farmers suggested several options to limit land price hikes: ending agricultural subsidies, ending estate taxes, restricting use of productive lands to agricultural use, purchasing developmental, agricultural or conservation easements and matching new farmers with farmers approaching retirement.

The first four proposals would only come about as a result of some major governmental policy changes that would likely require some serious and lengthy negotiations between a perplexing array of farmers, farm groups, various other interest groups, corporations, state and local governments, and the federal government.

The fifth proposal, matching new farmers with older farmers approaching retirement, might have more immediate merit. At least one program, known as the Farm Transition Network, currently exists. The organization is a land trust program that matches farmers who want to retire with younger farmers who want to farm but don’t have the means to. Kinslaw says he knows of a few young farmers who got started this way.

There are some grants and other funding sources out there for farmers who may not have an inheritance or help from farming parents, Kinslaw says. The Farm Service Agency is an example of one of the government agencies that also has some grants for younger farmers.

The North Carolina Farm Bureau also sponsors summer institutes at universities in the region, with the purpose of introducing young people to potential careers in agriculture through education.

Some of the tobacco companies operating in the U.S. also directly or indirectly provide assistance to younger tobacco farmers. The U.S. Smokeless Tobacco Company’s Web site has a “Farmer relations” page touting the company’s efforts at funding scholarship programs and research grants at six colleges and universities in Kentucky and Tennessee. According to the Web site: “These scholarships have benefited more than 270 families, helping preserve the American tradition of the family farm.”

The company supports county extension services that conduct meetings and conferences for farmers to stay up-to-date on issues affecting their business, and it has also established an “Agriculture Leadership Development Program” at Murray State University for dark tobacco producers and agribusiness people. The two-year program includes training, travel and seminars to enable participants to enhance their leadership skills and awareness of issues and policies related to dark tobacco and agribusiness.

Other tobacco companies have some similar programs. A spokesman for Philip Morris USA said that he was not aware of any programs the company currently had for directly recognizing young farmers but noted Philip Morris did give grants to universities, and sometimes the universities themselves may run programs like that.

Philip Morris used to have a recognition program for outstanding younger farmers, where outstanding farmers under the age of 40 were recognized with awards at banquets in different regions of the country. When contracting became more prevalent toward the end of the tobacco program, the recognition programs were put on hiatus. There has been some talk amongst Extension professionals from different universities about trying to get the program started up again, but so far, the programs have not been revived.

But in a move that could benefit younger and older burley growers, Philip Morris recently implemented an incentive program for farmers involved in burley production. This cost-sharing program helps growers finance equipment such as curing barns.

Despite these efforts by companies and different organizations to assist younger farmers, an aspiring tobacco farmer has to be very determined if he or she wants to start a farm business from scratch. U.S. farms go out of business at a rate of 9 to 10 percent a year, says the USDA, and younger farmers exit the business at a much higher rate.

It requires a lot of family help to start a tobacco farm, but luckily, farming is still an industry of family businesses. Ninety-eight percent of farms are family farms, and they account for 86 percent of farm production, according to the USDA. That’s one bright spot for family farmers and the manufacturers who rely on U.S. leaf.

Unfortunately for those without a history and family support, farmers like Lund have a much greater chance of succeeding, even if they are trying a new crop on fields far from where burley tobacco is usually grown.