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.
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.”