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September, 2007

U.S. Tobacco Cooperative

Sales to China fuel hopes for flue-cured tobacco growers

A dream that once seemed remote has become reality for American flue-cured tobacco growers: The People’s Republic of China is becoming a dependable buyer of American leaf.

And more sales could be coming. “We have the opportunity to expand our business with China,” says Albert Johnson of Gallivants Ferry, South Carolina. “China has said it will increase purchases here.”

“They want more US leaf, and they are very serious about it,” adds Arnold Hamm, general manager of the cooperative.

The significance of all this is not lost on the farmers, who know that China bought little American flue-cured in modern times until the cooperative made its first sale in 2005.

Richard Jenks, a flue-cured grower from Apex, North Carolina who just retired from the cooperative’s board, says, “The next big challenge to the coop is going to be to find a way to continue to work with the Chinese. I think we may have to partner with them a bit in some areas.”

The Chinese, like all modern cigarette manufacturers, place a high priority on the absence of foreign material–or as it is called now, non-tobacco-related material (NTRM). The cooperative is taking steps to educate its growers about how to address the Chinese concerns.

A product integrity program was created this year to help member/growers understand some of the problems, says Hamm. “The intent is not to embarrass or chastise any farmer, but to assist in understanding what can be done on the farm to minimize NTRM.”

Among undesirable NTRMs are organic materials like grasses, tobacco stalks, paper and cotton strings, and non-organic materials like styrofoam, plastics, metals, hydraulic fluid, and nylon.

On another issue related to quality, flue-cured growers are urged to maintain the moisture content of their baled tobacco in the recommended range.

Moisture in the baled leaf affects the ability of the purchaser to efficiently process the tobacco and to safely store the tobacco until processing, according to Extension Service recommendations. A level below 12% may result in excessive leaf shatter during baling. Excessive moisture will impact the ability to store the bale without damage to the tobacco.

The burley cooperatives in the US have also made some sales to China, but since all-flue-cured cigarettes dominate the Chinese market, the flue-cured growers have had an easier time.

Barring unforeseen events, that situation is unlikely to change for some time. A source who has visited China on tobacco missions told Tobacco International that the limiting factor in the near term will not be what they can use in their blends but how much they can afford.

The only competitor for this type of leaf seems to be Zimbabwe, but that country lacks the stability to be a dependable supplier.

So for now, the Chinese seem certain to be heading back to North Carolina this fall with orders in hand.

“They have bought more than 60% of our crop the past two years, and the fact of the matter is that they want more,” says Hamm. “We are studying ways to help China meet its needs.”


Argentina
Flue-cured target up, burley way up
Salta - Transplanting of the 2008 flue-cured crop was set to begin in mid-August in Jujuy and mid-September in Salta. The crop size was forecast at 88 mn kgs, slightly more than the apparent production in 2007.

Meanwhile, Argentine burley farmers were still trying to recover from the excessive rains of 2007. In August, seedlings were growing in beds in both the burley-producing provinces-Tucuman and Misiones. The 2008 crop size was now forecast at 48.8 mn kgs, said Universal Leaf, which would be almost a third more than the estimate of the 2007 crop. - (Bickers)


Guatemala
Transplanting began in August
Guatemala City - Transplanting of the early crop in the Zacapa Valley began the week of August 13th. The 2008 Guatemalan crop has been forecast at 10.9 mn kgs, up 9% from actual production in 2007. Almost all tobacco produced in this country is burley. - (Bickers)

Malawi
Flue-cured way down
Lilongwe - Flue-cured sales were expected to end on August 24. With three weeks to go, about 21.5 mn kgs had been sold at an average price of US$1.94/kg. The crop size estimate was increased to 22 mn kgs, but that would still be more than a quarter less than in 2006. - (Bickers)

Mexico
15% increase predicted for burley
Tepic - Production of the 2008 burley crop has been forecast at 11.5 mn kgs by a leaf dealer doing business in the country. About a half mn kgs are to be produced in the rainy season, the rest in the traditional dry season. If achieved, the 11.5 mn kg production would exceed 2007 by about 15%. - (Bickers)

Tanzania
Production stable
Morogoro - Sales were nearly complete in mid August 11, with the remainder to be purchased by early September. The crop estimate was lowered by 0.8 mn kgs to 49 mn kgs, but that amount would still be about the same as in 2006. - (Bickers)

United States
Bluegrass burley stands up to the heat
Frankfort - The Kentucky burley tobacco crop continues to make a good stand despite the parched conditions throughout the southeast. The National Agricultural Statistics Service reported from its Kentucky field office that 61% of the crop was rated either good or excellent, and another 24% is rated as fair.

The dry weather is keeping blue mold in check. There are some reports of black shank, but the disease presence is not considered serious at this time. Around 67% of the burley in the field had been topped as of August 12, 9% ahead of the crop at this time last season and ahead of the five year average of 60%. About 10% of the burley had been cut, just ahead of the nine percent posted last year at this time and the five-year average of 9%.

The dark tobacco crop is well on the way, with 84% at or past topping stage, compared to 74% at this time last year and 80% for the five-year average. Just 5% of the crop has been cut, ahead of last year’s three percent but slightly behind the five-year average of 6%.


Tobacco-based drug may help fight cervical cancer
Louisville - In the heart of tobacco country, researchers are doing work that could save countless lives in the developing world. The aim of the work is to coax from tobacco plants a drug that could be used to prevent cervical cancer. The vaccine would be somewhat similar to Merck & Co.’s Gardasil, approved by the US government last year to prevent strains of a STD that causes most cervical cancer. One big difference is that a tobacco-based vaccines would cost much less. The vaccines still in the development stage would cost an estimated $3 for three doses, compared with $360 for three doses of Gardasil. This would make it affordable for developing countries where the disease is the most common malignancy among women.

Zambia
Good market for flue-cured
Lusaka - Through mid August, nearly 8 mn kgs of flue-cured had sold on auction floors for an average price of US$2.29/kg, up from US$1.53 at about the same point in last season’s sales. Tobaccos on offer were of good to fair quality, with an increase in lower quality styles, said a report from Universal Leaf. - (Bickers)

Zimbabwe
Bigger crop, better price
Harare - With less than a month to go until the end of the sales season, about 61.4 mn kgs of flue-cured had been sold at an average price of US$2.35/kg through August 10. That was noticeably higher than in 2006. As of the same date a year ago, the average price was US$1.97. Universal Leaf lowered its estimate of crop size by 5 mn kgs to 70 mn kgs. That would still be about 27% above 2006 production. - (Bickers)

Tobacco International - September, 2007
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