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China sales fuel flue-cured hopes

Adream that once seemed remote has become reality for American flue-cured tobacco growers: The People's Republic of China is becoming a dependable customer for their leaf.

Now, with this strong and relatively new overseas market — and with a new cigarette to market in the United States — members of the Flue-Cured Tobacco Cooperative are facing the 2007 sales season with renewed optimism.

At its annual meeting in Timberlake, N.C., the cooperative's president, grower Albert Johnson of Galivants Ferry, S.C., announced that 60 percent of the co-op's inventory of 2006 leaf had been sold to China.

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

In fact, there will be a Chinese delegation in the states this summer, Johnson said, so cooperative members may get a chance to host some of these Asian buyers on their farms.

The significance of all this was not lost on the farmers, who knew that China had bought no significant volume of American flue-cured tobacco in modern times until the cooperative made its first sale in 2005.

Richard Jenks, a flue-cured grower from Apex, N.C., and a member of the cooperative's board, said, “The next big challenge to the co-op is going to be to find a way to continue to work with the Chinese,” he said. “I think we may have to partner with them a bit in some areas.”

The Chinese, like all modern cigarette manufacturers, are very concerned about the amount of foreign material-or as it is called now, non-tobacco-related material (NTRM) — in the tobacco they purchase, and the cooperative is taking steps to educate its growers about how to address the Chinese concerns.

“Stabilization has implemented a product integrity program to help member/growers understand some of the problems,” said Arnold Hamm, general manager of the cooperative. “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.”

He said members of the cooperative's leaf operations department will be visiting growers in coming weeks. “The effort is to insure product integrity to our customers,” Hamm said.

If tobacco has to be rejected at the marketing center because of NTRM, penalties are possible, perhaps extending to contract cancellation.

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, Hamm urged growers 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 percent may result in excessive leaf shatter during baling. Excessive moisture will impact the ability to store the bale without damage to the tobacco.

In other news from the meeting:

  • The cooperative has contracted 55 million pounds from the 2007 crop.

  • The cooperative has begun marketing an American-blend cigarette called 1839. Last year, it introduced a roll-your-own mixture, also called 1839.

  • The relatively weak dollar is helping American leaf compete with its strongest competitor, Brazil, said Hamm. The exchange rate for the Brazilian Real versus the US dollar is now about two to one. As recently as 2002 it was four to one.

  • There are about 850 members of the cooperative. Only one type of contract is offered now: The distinction between exclusive and non-exclusive contracts has been abandoned.

  • There will be no changes in the location or number of cooperative market centers. They are the same ones as last year: Nashville, Ga., Statesboro ,Ga., Lake City, S.C., Mullins, S.C., Clinton, N.C., Williamston, N.C., Rural Hall, N.C., Danville, Va. and South Hill, Va.

  • The cooperative's factory in Timberlake is being used extensively for custom manufacturing, said Hamm. Among the manufacturing customers are Premier International Holding Company with its cigarette brands Wildhorse and Shield, and The New Century Tobacco Group with its brands Traffic, Stampede, Passport and Fact. It is also producing an RYO mixture called Kentucky Select as well as its own 1839 brand.

  • The cooperative has enjoyed good success selling blended strips overseas last year, said Hamm. Major customers were China, Indonesia, Vietnam, Turkey, Singapore and the European Union.

  • A new member was added to the board. Jimmy Crews of Oxford, N.C., took the place of Richard Jenks, who gave up his seat after 24 years.

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