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Maintaining high-quality leaf is the “absolute bottom line” for North Carolina growers to maintain their niche in the world tobacco market.
That was Norman Harrell’s takeaway from the annual meeting of CORESTA, the Cooperative Centre for Scientific Research Relative to Tobacco, held recently in Santa Cruz, Brazil.
Harrell, director of the North Carolina Cooperative Extension office in Wilson County, was one of a seven-member team of North Carolinians that spent a week with 250 representatives from universities, companies, laboratories and associations meeting to discuss tobacco production research.
“Attending a meeting like this, you are hearing presentations from researchers from across the world,” Harrell said. “Increasing my general understanding of tobacco and the global situation was a very important part of it.”
Brazil is the main competitor for U.S. leaf, Harrell said.
“They are the second-largest tobacco-producing country in the world, but they are our No. 1 competitor for the style leaf that we grow,” Harrell said.
Brazil has a population of 207 million and is the sixth-most populous country in the world. There are 150,000 tobacco farmers in Brazil. The average farm is five acres.
Brazil currently grows 738,843 acres of tobacco with an average yield of 1,857 pounds per acre. In 2016-17, its tobacco crop was 1.372 billion pounds, which is three times the size of the U.S. tobacco crop.
Harrell and the team visited research stations, equipment companies, a seed producer, a variety of curing barns and tobacco farms.
The biggest advantage Brazilian farmers have is the exchange rate between the U.S. dollar and the Brazilian real.
“The U.S. dollar is strong right now and the real is weak. For every U.S. dollar, you get 3.25 reals, so there is just a lot of purchasing power in Brazil,” Harrell said. “That has been in place for several years.”
“A take-home message is that our place in the world market is quality tobacco,” Harrell said. “We can never lose that emphasis. We must continue to grow high-quality tobacco and we need to do it in a way where our growers make high yields with as low of an input cost as possible to make it. If we lose quality tobacco, that is our niche in the world.”
What allows North Carolina growers to do that is climate, elevation, soils and rainfall in addition to research, institutional knowledge from growers and the mechanization that U.S. infrastructure allows.
In Brazil, tobacco companies supply the farmers with the tobacco seed and the crop inputs and they finance the growers.
“It’s what we call a vertical integration because they are involved from the seed all the way through the sale,” Harrell said.
Most Brazilian tobacco farmers only have five acres of crop and transplant it all by hand and fertilize by hand. Yet they grow three times the tobacco as in the U.S.
“That is really amazing to me,” Harrell said. “It reminds me of what it would have been like here in the 1940s or ‘50s.”
Farmers don’t hire that much labor.
“They work with their neighbors and they trade labor out,” Harrell said.
Farmers there also do not have to till the tobacco fields.
“They are growing tobacco in a very hilly place, so it is for soil conservation to keep the soil in place,” Harrell said.
Grower start tobacco seeds in a float tray system like here in North Carolina. Harrell saw small greenhouses that were three trays abreast.
“It’s just on a simplified, much smaller scale because they need so much less,” Harrell said. “Our greenhouses will be 30 foot wide by 300 foot long. This is just a little outdoor bed that is heated through solarization. They make simple things for their small scale.”
The largest tobacco farm Harrell visited was 20 acres.
Curing barns are heated by burning eucalyptus wood like American farmers would have done in the ‘50s.
“We bale ours in 800-pound bales,” Harrell said. “Theirs is going to be like 1-foot-by-1-foot, a very small bale.”
Because Brazilian farmers hand-harvest and they grade the tobacco before it is baled, they can get some unique grades, Harrell said.
“The companies can often get very specific grades that they are looking for in Brazil because before they bale that up, they are going to put like kind together,” Harrell said. “Their costs are less than here. Their labor is really traded labor. Their fuel source is eucalyptus wood.”
By comparison, U.S. growers are paying $11.27 per hour for labor and paying for LP gas as a heat source.
The Brazilians are greatly disadvantaged by their lack of infrastructure.
“Their roads are nowhere as good as they are here,” Harrell said.
Corruption is widespread in Brazil, Harrell explained. The rail gauge changes from state to state, so the rail cannot continuously flow through the country. Crop has to be unloaded and reloaded between trains for a fee.
“Their economy is less stable that ours. The last two years, the banks have closed down for three months out of the year. Because the Brazilian government is broke, they cannot back up the banks, so the banks shut down, which makes it an issue of doing business down there,” Harrell said.
Brazilians deal with an unreliable electrical grid, which can cause issues with curing barns.
“There is just hardly no mechanization. Down there, the equipment is basically one row. Our equipment here is eight-row,” Harrell said. “We have leaf-handling equipment. They don’t have leaf-handling equipment at all. There just is no mechanization in Brazil.”
Harrell noticed that the Brazilians are not doing a lot of crop rotation.
“That is going to present them some disease issues in the long run, which kind of goes to my take-home message for U.S. growers,” Harrell said. “The absolutely bottom line key to our crop is quality. We have to grow quality tobacco and we have got to do in a way where we make high yields and low input costs in order to be profitable.”