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December, 2007

Farm Union targets RJR

Winston-Salem -  Union organizers from around the US gathered in front of RJR’s Winston-Salem headquarters to announce the beginning of a new union drive in late October. They seek the unionization of thousands of tobacco workers in North Carolina, most of them undocumented immigrants.

“Conditions are shamefully bad for most farmworkers,” said Virginia Nesmith, head of the National Farmworkers Ministry, based in St. Louis. Nesmith.

RJ Reynolds - the maker of Camel, Kool, and Pall Mall cigarettes - doesn’t directly employ farmworkers. Instead, the company buys tobacco from contracted growers, who in turn employ the field hands. Company officials said they will not bargain with a union.

“If migrant workers want to be represented by a union, they and their employers need to negotiate that,” said David Howard, a spokesman for RJ Reynolds.

Crop starts out a bit behind
Buenos Aires - Transplanting of flue-cured was considerably delayed. At the end of September, about 85% of the Jujuy crop had been set out along with only about 40% of the Salta crop, according to a report from Universal Leaf. “Plantations look healthy but less developed than past years due to the delay in transplanting,” the report said.

In the two major burley-producing states, crop progress was nearer to schedule, said the report. Transplanting of burley in Tucuman was 50% complete, compared to 65% at this time last year, while in Misiones, it was 70% complete, about the same last year. - (Bickers)

Yield may fall short of original expectations
Brasília - Transplanting of both flue-cured and burley crops for 2008 was complete and harvesting of the flue-cured lower stalk was under way in October. Good rains had been received, and a mature crop was expected. But Universal Leaf predicted that flue-cured yields will be somewhat lower than originally expected. The crop size estimate has been reduced by 17.5 mn kgs, or 2.8%, down to 600 mn kgs, compared to 625 in 2007. - (Bickers)

Growers irrigate their way out of drought
Ottawa - Despite extremely dry conditions, the Ontario flue-cured crop appeared headed for a normal yield.

“It looks good in the fields,” Chris Van Paassen, Simcoe, Ontario, told The Simcoe Reformer, as harvest began in August. His neighbor, Mike Bokla, also of Simcoe, said the quality appeared “a little above average.”

Although the lack of rain during the growing season was remarkable, most Canadian growers have the equipment and resources to irrigate their crop, so there were few crop failures due to drought. But production costs were high, as many growers had to irrigate five or more times compared to two or three in a normal year.

There was an early killing frost in much of the tobacco-growing area in mid September, inflicting damage on the part of the crop that remained in the field.

“We don’t know the extent of the losses, but it could be significant,” said Fred Neukamm, a farmer from Aylmer, Ontario, in Tillsonburg News. Like many farmers, Neukamm had finished harvesting his tobacco by the time the frost struck.

The damage was more extensive north of the town of Delhi, he said. - (Bickers)

Stronger currency weakens price
Ottawa - With all the other problems Canadian tobacco farmers are facing, it hardly seemed fair that the unprecedented strength of the nation’s currency was limiting their market further.

Since January, the Canadian dollar had zoomed to its highest level relative to the US dollar since the late 1800s. On November 7, it reached a high of US$1.09. This was a stunning reversal of normality; traditionally the Canadian dollar is worth only about 80% or 90% of its southern counterpart.

At least partially as a result, the average price for tobacco for use on the Canadian domestic auction market was down four cents per pound from 2006 market while the export average price is down 12 cents per pound, by the calculations of the Tillsonburg (Ontario) News.

The new president of the growers cooperative in Ontario, where nearly all Canadian tobacco is grown, said that not only are companies buying fewer pounds, but there are fewer buyers, meaning less competition.

“These factors all contribute to a softer market,” said Tom McElhone of Vanessa, Ontario. “Some of it we’re working to get resolved. [But] some of it is accentuated by our high dollar, which is higher than it was when the crop was negotiated.”

Auctions began October 15, and as of November 8, after 19 sales days, 6.2 mn pounds had been marketed for an average price of C$1.55 (US $1.66) per pound. To make matters worse, a substantial portion of this crop failed to attract a buyer and went into cooperative storage.

A good cross section of tobacco is being purchased rather than certain grades, McElhone told the News. That might provide some grounds for optimism, along with the fact that the Canadian market typically gets off to a slow start, he noted. “We see some areas where we are hopeful the market will improve.”

Only 350 farmers planted tobacco this year.

The target for the tobacco crop now being marketed in Ontario (all flue-cured) was set in July at 32 mn pounds, 43% less than last year and the smallest crop in 50 years. The target price is C$2.2792 [US $2.45] per pound.

In an idnicaion that farmers are desperate for help, McElhone was voted chairman of the tobacco growers’ board in October. He succeeded incumbent Fred Neukamm of Aylmer, who had served several terms.

The board also elected a new vice chairman, Linda Vandendriessche of Langton, whose assessment of the situation facing farmers was even grimmer than McElhone’s. “These are not good times - these are the worst of times,” she said. “We’ve come off a hot, dry summer with high costs and (now) a questionable market.”

But another tobacco farmer, Joseph Slusarczyk, said the biggest problem facing farmers right now is financing.

“The silent exit of the farmers is by the banks,” he told the News. “When the bank is pressing on you, you can’t help yourself...You’re out.” - (Bickers)

The rain just kept falling
New Delhi - Much of the tobacco-producing area of India received exceptional rain through October.

In burley areas, harvesting and curing of the 2007 Yeleshwaram and Raghavapur crops was under way in October, according to a report from Universal Leaf. The Yeleshwaram crop was damaged by heavy cyclonic rains, which may lead to a reduction in crop size. Transplanting of the 2008 Vinukonda crop continued in October. Production estimates for burley were being revised in the wake of the continuous rain.

Among the flue-cured areas, nursery seeding was complete by November 1 in the Northern Light Soils (NLS) of Andhra Pradesh, with a few nurseries damaged by the heavy rains. In the traditional area, nurseries are progressing well. Marketing of the 2007 Mysore flue-cured crop continued in October, with 19 mn kgs sold as of October 15. Tobacco on offer consisted of bright, medium and low grades with mature to ripe styles.

Earlier, marketing of the Andhra Pradesh 2007 flue-cured crop had resulted in an average per kilogram price of INR 47.47 (US$1.21) on about 172 mn kgs, according to the Tobacco Board of India. - (Bickers)

Mexico increases burley, but Guatemala can’t find farmers
Mexico City - In Mexico, transplanting of the 2008 burley crop began in October as the rainy season slowly came to an end. Universal Leaf predicted a 20% increase in production of burley in Mexico.

In Guatemala, the 2008 crop - all burley - was developing well in the Zacapa Valley, with transplanting due to be complete by the first week of November. Transplanting in the South (Pacific Coast) began in October. An increase of roughly 10% in production had been predicted when contracting began, but the companies found it difficult to sign up new farmers, and as November began it was expected that there would be little increase from the 10-mn-kg crop of 2007. - (Bickers)

Southern Africa
Zambia, SA volume will fall, but Mozambique will be up 30%
Cape Town - In Tanzania, farmers were sowing and watering seedbeds for the 2008 crop in mid October. The crop goal was forecast at 53.4 mn kgs, 8% above 2007 but 12% less than Universal Leaf had forecast just a month earlier. No explanation was given for the reduction in estimated production. Marketing of the 2007 crop was complete by mid October, and the final crop size was placed at 49.3 mn kgs.

In Zambia, marketing of the 2007 flue-cured crop was expected to be complete by November. Final estimated crop size was 18.9 mn kgs. Of that, 9.5 mn kgs were sold on the TAZ floors at an average price of US $2.26/kg. Volume in 2008 is projected at 17 mn kgs, which if realized would this the second consecutive crop with lower production after the high years of 2005 and 2006.

And in South Africa, about 30% of the 2008 flue-cured crop had been transplanted by mid October. Volume is projected at eight mn kgs, down 20% from last season. South African has produced less flue-cured in each year since the high of 23 mn kgs in 2003.

In Mozambique, preparation of burley seedbeds for the 2008 crop was almost complete in all areas by mid October. The crop size forecast remained 36 mn kgs, close to 30% above the 2007 production. - (Bickers)

Tobacco International - December, 2007

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