Organic tobacco—An idea whose time has come? - First Quarter 2009
Production has doubled in each of the last few years, as has farm level pay per pound
There are many reasons why a farmer might want to take up organic tobacco production, but the most appealing is that growing organic tobacco is more profitable.
“I’m a real believer in organic tobacco,” says Stanley Hughes. “Particularly because of the favorable price I get when I bring in a certified organic crop of quality tobacco. By producing quality leaf, using environmentally friendly chemicals and proven cultural practices, I’ve been receiving a premium price.”
Hughes, who was one of the first organic farmers to cultivate tobacco under contract to Santa Fe Natural Tobacco Company (SFNTC), now grows about six acres of organic tobacco on his small farm in Orange County, N.C.
Many of the original organic growers farmed close to the company’s manufacturing operations in nearby Oxford, where they could get help understanding and following the strict requirements of cultivating organic tobacco under the USDA National Organic Program.
Despite the higher labor costs to grow the crop, out-of-pocket expenses are lower. The yield is also less (about 1,900 pounds per acre compared to the 2,000 to 2,500 pounds per acre with fertilizers and chemicals) but SFNTC offers much higher prices—two and sometimes two and a half times more than for conventional tobacco.
“So while some extra labor is required to grow organic tobacco, the increase may well be more than offset by the premium price paid and by lower chemical costs,” says Fielding Daniel, SFNTC’s director of leaf.
How can that possibly be justified in today’s competitive tobacco economy?
“The price we pay is warranted,” says Mike Little, senior vice president of operations for SFNTC. “Our organic growers are producing crops that are under more stress and a whole lot more susceptible to Mother Nature, so we pay them a little more.” The prices are not guaranteed, he points out: Growers are paid only if their tobacco tests free of prohibited pesticides.
“There’s a near-zero tolerance under the USDA certification rules,” says Little, who initiated the program for SFNTC. “If we find something that exceeds the rules, then it won’t make organic. It’s not that we won’t take that tobacco, but it loses organic certification right there. We’ll go ahead and use it in one of our conventional blends.
“Nevertheless,” Little says, “we at SFNTC are committed to organic production in order to continue using the best possible tobacco in our products.”
In the beginning, organic tobacco was cultivated only on a small scale. In 1989, the company bought and processed 4,000 pounds of organic tobacco. By year 2000, some 60 growers produced 750,000 pounds of organic tobacco for the company. In recent years, demand for organic tobacco has doubled each year. In 2008, SFNTC processed more than 2 million pounds.
The scale of organic tobacco production has grown globally, with more than 100 farmers worldwide providing the company with organic leaf. “In size, the farms run the gamut—from small to large—in acreage,” says Little. There are some 40 growers in the United States, another 40 in Brazil and about 20 in Canada. Some consideration is also being given to operations in Argentina and Turkey.
“While these numbers may seem small to many, especially to the big tobacco companies, demand is growing significantly.”
Once farmers learn to produce organic tobacco, they find the skills and knowledge translate well to growing organic produce.
“Organic certification allows the growth of other high-value seasonal crops, which can demand a premium price on the ever-expanding organic market,” says Daniel. “Our growers are heartened by this new and profitable market and worry less about petrochemicals—the cost and the risk of mishandling of them.
“Many also tell us that they are seeing a return of long-missed wildlife and nature to their land.”
Why grow organically?
There are compelling agronomic reasons for going organic, but for Richard Ward of Whiteville, N.C., the reason was simple economics.
“Everything in conventional farming was getting smaller and smaller,” recalls Ward, who grew conventional tobacco into the ’90s. “I talked to an agricultural extension agent and asked what I could do to supplement what I was making. The agent sent some information about organic crops. It seemed to be a good match.
“I was running some cattle at the time, so I had a lot of acreage that had been without chemicals for five or six years. I also had some land that I had leased that was too sandy—not enough topsoil for corn and soybeans.”
So Ward gave organic tobacco a try on some of the land, but bad weather affected his results the first year when his organic field was struck by a hailstorm twice in one day.
“It just devastated the crop. I lost 60 percent of it,” Ward says. “The second year, I planted 10 acres, all the while researching everything on organic farming to increase my knowledge. The results were much better, as was the income I earned growing a crop that met SFNTC’s quality standards.
“What keeps me going is the feeling of satisfaction I get when I see the results of all the hard work that goes into growing everything organically. In organic farming, you replace many of the traditional chemical inputs with improved management.”
An obvious believer in growing crops organically, Ward has more than tripled his acres of organic tobacco and now also grows a wide range of organic fruit and vegetable crops on his “100-percent organic” farming operation.
By far the largest-acreage organic tobacco grower for SFNTC (and probably in the United States) is Billy Carter of Eagle Springs, N.C. He first grew two acres of organic tobacco on his Moore and Montgomery county farms in 1998. He now grows organic tobacco on 42 acres.
“I like the challenge of it,” he says. “Growing organic tobacco is basically the same as growing other tobacco, except for fertility and pest control. Compared to conventional tobacco, you have a lot more limited options—and they are more long-term and not quick-fix options. It’s a management thing—being more in sync with what Mother Nature brings you in a particular season.”
Labor is another critical factor, he quickly adds, now operating nearly 100 acres of certified organic land. “We harvest our organic tobacco manually, so there’s a much greater level of labor required in growing an organic crop of tobacco.”
“There are a lot of things we enjoy in our relationship with SFNTC. Obviously, the thing that drives our interest is that there’s a premium paid for the product we receive. We feel like it is a well-earned premium—a mutually beneficial-type economical relationship.
“The higher price that Santa Fe offers compensates us for the added labor, materials and risk I take on when I cast away the chemical arsenal that we historically used to keep weeds, insects and diseases out of our crop. So, you have to be aware of everything going on around your crop to show an organic inspector that you’ve truly kept up your part of the bargain.”
Jane Iseley, of Burlington, N.C., was also among the first group of organic growers, and says organic tobacco was a boon to her small operation.
“Growing organic flue-cured tobacco under contract to SFNTC has allowed me to stay in business,” she says. “We never have been big tobacco farmers. But it [organic] just sort of fit our operation. If we weren’t growing organic, we wouldn’t be growing tobacco at all.”
When she saw she could grow organic tobacco free of any prohibited pesticides, it occurred to her that she could cut back on using pesticides on her produce crops as well.
“I started experimenting with raising organic produce, such as corn and lettuce,” Isley says. “And now I’ve gone totally organic. We farm basically for the quality of life. It’s a hard life. But being on the farm, and on a river bottom, we offer a lot of ground for animals to raise their young.”
Roger Smith of Brooksville, Ky., was one of the first farmers to grow organic burley in the early 1990s.
“I personally would not be raising tobacco now unless it was organic,” he says. “But you have to work hard at this to make it work.”
Conventional burley tobacco farmers often back away from organic tobacco when they learn they have to sucker by hand, says Smith, who now grows and coordinates several other Kentucky growers under contract to SFNTC. “But it can be done using varieties that don’t sucker a lot.”
Insect control is also a challenge. “That’s because the only commercially available insecticides that can be used are those derived from Bacillus thuringiensis [Bt] like Dipel,” he says, adding there are other means of controlling insects. “But we’ve learned to promote populations of beneficial insects like ladybugs and lacewings by planting crops that attract them. They like to breed in sunflowers, hay and certain flowers.
“Organic burley will be confined to small-scale growers until there is more demand. But the interest is definitely growing. The price offered by SFNTC is generally about double the market price.”
SFNTC—pioneers in the field
Santa Fe Natural Tobacco Company was born in 1982 in Santa Fe, N.M., when two friends had a dream of creating a better cigarette in keeping with the philosophy of Native Americans. Their goal was to use only the best part of the tobacco leaf with no additives or flavorings added. Just pure, 100 percent tobacco leaf.
In the early years, the tiny company started buying the best Virginia-type tobacco it could, having another firm manufacture its initial pouch tobacco product. Along the tobacco road to organic farming came the first stop—reduced usage of pesticides. This idea turned into a successful earth-friendly program now called purity residue clean (PRC) in the industry.
In 1989, SFNTC took the novel approach of introducing to its growers a program to totally eliminate the use of pesticides and presented them with an unheard of proposition: “How about growing pure and natural organic tobacco for us?”
In December 1996, SFNTC began direct manufacture of its first cigarette in a newly acquired and expanded 28,000-square-foot West Street facility in Oxford. Three years later, SFNTC constructed a new $4.5 million facility on Knotts Grove Road, south of town, which has since been expanded to include 250,000 square feet of manufacturing and distribution space.
In addition to marketing its Natural American Spirit organic tobacco in pouches and cans, the company now markets a growing number of cigarette styles as well as loose tobacco in several cans/tins and pouch products. The now wholly owned subsidiary of Reynolds America Inc. offers its products in all 50 states, and has experienced rapid sales growth of its products around the world.