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September, 2008

A New Day Dawns for
Organic Tobacco

By Chris Bickers

With the American leaf market in near complete turmoil, one segment continues to grow: the production of organic tobacco and organic products.

The outlook for organic tobacco products appears very positive, said Micou Browne of Organic Smoke Inc. “Any tobacco without pesticide residues is more attractive than conventional in the current market.” The reason this segment remains strong is that consumers continue a long-running love affair with organic products.

Santa Fe Natural Tobacco has been the pioneer in commercial organic tobacco, and now it sells two organic cigarette brands and an organic roll-your-own mixture, all of which are doing well. “In 2007, sales of the organic cigarettes were up nearly 30%,” said Mike Little, Vice President of Operations for Santa Fe in Oxford, while sales of the organic RYO mixture were up about 25%.

“When consumers understand what we are doing, they really buy into it,” said Little. “The organic concept has a lot of appeal [in the current market].”

“Quite a number of farmers are buying into organic as well,” said Browne. “Because of the price paid, a small operator can still make a little money on organic tobacco, which he can’t in conventional tobacco. A lot more effort is required, but the premium price is enough to allow a profit.

“Basically the opportunity [organic gives] is that a grower doesn’t have to grow tobacco in quantity to make money. That is not true any more of conventional tobacco.”

“At Santa Fe, the goal is to expand production, and it starts by focusing on its organic grower base,” Little said. “We are building on the growers we currently have. They are the ones who have a good understanding of the methodology of growing organic tobacco. We have approached them, trying to expand their production.”

Santa Fe has also been vigorously recruiting new organic growers while also running a more extensive program of farmers who produce tobacco that is not organic, but is residue-free tobacco. For such farmers, the conversion to organic production is less of a challenge than if they were coming from conventional production.

Half of the growers are completely new to the program, and they get special attention from the Santa Fe staff or from their agents.

“We spend a lot of time with new organic growers so that they don’t have to reinvent the wheel,” said Little. “We work hard to establish and maintain relationships with all our growers. We are in communication with them year round, and I am proud to say we never lose any growers.”

One reason is the high level of remuneration: The Santa Fe price is about 2 1/4 times the conventional price, based on grade.

“We have an attractive contract,” said Little. “Growers understand that about us.”

Santa Fe’s contracted production in 2008 is expected to double that of 2007, he said. “We expect to have a crop of over a mn pounds planted in the US this year, grown by 60 growers on a total of perhaps 800 acres.”

Since Santa Fe’s cigarettes all contain a preponderance of flue-cured, most of the company’s growers are flue-cured growers in North Carolina (NC) and Virginia, in a fairly constrained area.

The geography of organic tobacco has been largely in the “Old Belt” of the NC and Virginia Piedmont, and a little in the Coastal Plain of NC “as far as far east as Wilson,” said Little.

“Now we are going farther south to areas like Lumberton and Fayetteville, NC, and east to Kinston and Goldsboro, NC. We are getting into Virginia and may soon move into South Carolina.”

There are also a few organic flue-cured growers in the Canadian province of Ontario, and a few in Wisconsin and Pennsylvania.

Micou Browne, one of the principals of Organic Smoke Inc.

In the last three years, another small tobacco company has begun to have an impact in organic. Organic Smoke Inc. was founded by Browne and Sun Butler, who had been significantly involved in Santa Fe’s organic program as consultants from 1989 to 2005 when they went out on their own and formed Organic Smoke, headquartered in Raleigh, NC.

The goal from the beginning was to take advantage of their tobacco expertise before it was lost.

“We targeted the small- to medium-sized growers who have the generational knowledge needed to produce premium tobacco,” said Butler. “We want to get them in our program, because these traditional growers are the ones with the expertise to grow true quality in tobacco.”

In its first year, Organic Smoke had four flue-cured growers and eight burley growers. Now it has 30 growing about 400,000 pounds in 2008, says Butler. Eleven are flue-cured growers (counting four in Canada) and 19 are burley growers, including some in Wisconsin and a few in Pennsylvania.

The Pennsylvanians are growing a small amount of the Havana type traditionally grown there. “We don’t have a product for it yet, but we think it might be good to have some later,” said Butler. “We also grow a small amount of organic One Sucker, a dark air-cured type, in Pennsylvania.”

Organic Smoke has a pipe mixture on the market now and is cooperating with D&R Tobacco on three RYOs.

There is sometimes some disappointment among first or second year growers with the yield they obtain, Browne said. But as they gain familiarity with organic practices - particularly with the fertilizers - their yields tend to become comparable with what they were doing when they were growing conventional.

“Sucker control requires the greatest adjustment for farmers,” said Browne, since they can’t use the systemic sucker control agent maleic hydrazide. Much of the sucker control has to be done by hand, although there are some materials that have been revived from the old days (pre-MH).

“We base control of suckers on the use of old fashioned methods like application of soy oil, vegetable oil, or flax oil,” he said. “They have to be hand-applied. If the application is good, we get excellent sucker control, but you can also get leaf drop. And if the farmer applies it with too heavy a hand, it may kill the plant.”

There would be a great savings in labor for farmers if a sucker control agent were found that could be sprayed on with a mechanical sprayer. Browne said an effort is being made to find one.

Rick Smith, owner of Independent Leaf Tobacco Company of Wilson, NC, supervises the contracting and growing of organic flue-cured for Hail & Cotton, a supplier of Santa Fe. He thinks there is definitely a future for organic at the farm level.

“I am trying to get more organic tobacco grown in eastern North Carolina,” he said. “It looks to me like that’s where there is potential for more growth. Organic products could become a more important market for our tobacco, since it seems that a certain portion of the public will pay more for anything organic.”

Smith said organic works for two types of tobacco farmers in North Carolina: small growers with about 15 acres of tobacco, two or three barns, enough family labor that they don’t have to hire anyone, enough land to rotate, and maybe some income from off the farm.

On the other hand, organic tobacco fits well for the “mega” grower who is already organic in something else so that he can work tobacco into the rotation.

“It won’t work very well for many growers in between,” he said. “But for the right grower it is certainly lucrative.”

“The biggest challenge in the short term will be growing enough organic tobacco to service what appears to be an ever increasing market,” said Smith.

Consumer Demand Leads to New Organic Tobacco Products
Organic tobacco products have been largely the territory of a single manufacturer to date: Santa Fe Natural Tobacco, maker of Natural American Spirit cigarettes and roll-your-own mixtures.

But now a flurry of recent launches by three different companies suggests that organic tobacco products may be on the way to becoming a bigger part of the overall tobacco market:

Organic Pipe Dreams, a new pipe tobacco mixture from Organic Smoke Inc. is believed to be the first pipe blend ever certified as organic. An all-Virginia blend, Organic Pipe Dreams is manufactured on contract by the bulk hand-blender Cornell & Diehl Inc. and is made with both organic leaf and organic casing materials. Introduction was scheduled for May at the Chicago Pipe Show. Organic Smokes provides the leaf for this mixture.

Yuma Organic cigarettes, seek to serve the emerging trend in ecological niche products, according to the manufacturer, Yuma Europe Tobacco Company of Niederanven, Luxembourg. Two styles were introduced in Germany last September. As of yet, there are no plans to introduce these brands in North America any time soon.

“Natural” versions of the Vengeur, Rowland, and Windsail roll-your-own products were scheduled to launch when this issue went to press.

Vengeur, Rowland, and Windsail are manufactured by D&R Tobacco, and all three are line extensions of popular existing brands and use only organic leaf, which Organic Smoke supplies.

Vengeur Natural and Rowland Natural fall in the Virginia/Burley blend type, which traditionally contains Oriental. This created a problem for D&R: Oriental tobacco has never been successfully produced organically and can’t be used in an organic product. Still, Mark Ryan, Owner of D&R, wanted to maintain an Oriental presence. His solution has been to steam Oriental tobacco into syrup, distill it, and derive an Oriental essence that he puts in as a topping. That took some experimentation, but Ryan said the work was worth it. “Oriental adds to the balance of the blend.”

Santa Fe’s organic cigarettes, by comparison, are made up of pure organic flue-cured and burley.

Rowland Natural is essentially the same as the Vengeur blend, but “an organic cocoa flavoring has been added on top of it,” Ryan said. Also, Vengeur contains no flavorings.

Windsail Natural, like the conventional Windsail product, is a British blend mixture made entirely of flue-cured tobacco.

Santa Fe, meanwhile, continues to offer two styles of cigarette using organic tobacco: the full-flavor Maroon (referring to the color of the pack) and its light- to mellow-tasting Gold. It also offers an organic roll-your-own mixture.

All three new natural blends from D&R contain an organic humectant and anti-microbial, developed by Organic Smoke, to preserve flavor and freshness.

Tobacco International - September, 2008

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