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Burley and Dark Tobacco Outlook: Thoughts and Observations for 2013. Economics. Will Snell Ag Economist, University of KY. Burley Review of 2012. Economics. Higher Prices ($1.97/lb). USDA: U.S. Burley Acres +14%, Production +19% (207 mil lbs ???) Universal Leaf (190 mil lbs)

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Burley and Dark Tobacco Outlook:

Thoughts and Observations for 2013


Will Snell

Ag Economist,

University of KY

Burley Review of 2012


  • Higher Prices ($1.97/lb)

  • USDA: U.S. Burley Acres +14%, Production +19% (207 mil lbs ???)

  • Universal Leaf (190 mil lbs)

  • Overall Better Quality Crop

  • Leaf Exports Stable

    • Price competitive despite higher valued U.S. dollar

    • Exports limited due to supplies

  • Domestic Use Fairly Stable

    • Rate of Decline in US Cigarette Sales Near “Traditional Levels”

    • Increased Smoking Restrictions

  • Extremely Tight Supply/Demand Balance

U.S. Burley Prices



Avg. Prices Up 15-20+ Cents/Lb

Tobacco prices vs prices of other enterprise and the cost of inputs 2012 as a of 2004 levels
Tobacco Prices vs Prices of Other Enterprise and the Cost of Inputs2012 as a % of 2004 levels

Source: Calculated from NASS/USDA data

Agricultural Economics

Kentucky Tobacco, Prices, Value for 2012



Value of kentucky tobacco production
Value of Kentucky Tobacco Production


Source: Ky Ag Stats/NASSK

What about the 2013 U.S. Burley Outlook?


  • Look for Contract Lb Offers to Increase

  • How Will Tobacco Growers Respond?

    • Labor challenges

    • Crop Insurance Challenges

    • Aging infrastructure Continued Regulation uncertainty

    • GAP/Contract demands

    • Favorable Outlook for Other Ag Enterprises

U.S. Burley Production vs

Disappearance (Use)


Can the Market Support a 210-220 Mil Lb US Burley Crop in 2013?

Source: NASS/ERS/AMS, UK Production Estimate for 2013

World Burley Production


Source: Universal Leaf, September 2012

U.S. Burley Export Value vs

Brazilian Import Value

Source: USDA/TMA

Agricultural Economics

U.S. Burley Exports


Agricultural Economics

2013 burley contract price schedules
2013 Burley Contract Price Schedules

Based on the following crop throw 10%Xs, 20% Cs, 40% Bs, 10% BRs and 20% Ts

Agricultural Economics

What About Dark Tobacco?

U.S. Snuff Production

Us dark tobacco acres
US Dark Tobacco Acres



U.S. Dark Tobacco Use vs Production


Source: NASS/ERS/AMS, UK Disappearance Estimates for 2011-2012

Dark Tobacco Prices


Agricultural Economics

Number of Farms Growing Tobacco

in the U.S and Kentucky

FSA “Reported” Farms

for Burley Only

Source: USDA Ag Census

Agricultural Economics

Kentucky Buyout Dollars (2005-2014)


Source: ERS, UK Estimates for 2013 and 2014

Emerging Issues/Questions for 2013 and Beyond

  • Regulation will come at a cost, but can it be a benefit to differentiate US tobacco

  • Will immigration reform happen? If so what will be the “cost”?

  • Will we be able to adopt more mechanization/lower labor requirements?

  • Can we increase yields w/o sacrificing quality or industry requirements?

  • Will crop insurance survive and it what form?

  • How long can the industry go w/o significant infrastructure reinvestment?

  • Will consumer-accepted alternative (reduced risk) tobacco products contain less or minimal tobacco?

  • China – Will it become a significant market for U.S. burley?

  • Can tobacco growers/leadership work with health community on “reasonable” tobacco regulation and control efforts?

  • Will adequate funds be available to support regional collaboration on tobacco grower research and extension activities and personnel?

  • Will profit incentives/overcoming challenges result in an adequate # of growers