There are multiple species of tobacco, which is in the same botanical family as eggplant, tomatoes, potatoes, and chili peppers. Nicotinia rustica migrated north from Mexico, presumably with the help of Native American farmers, and was being grown in Virginia when Jamestown was settled. John Rolfe is credited with importing Nicotiana tabacum seeds, so Virginians could grow a species of tobacco that was less harsh when smoked.1
Tobacco growing and processing dominated Virginia's economy for over three centuries, and transformed its landscape. Tobacco wears out the land, exhausting minerals ands nutrients from the soil. The first Virginia colonists to acquire ownership of land were positioned to gain great wealth, permitting them to abandon old fields and plant in fresh soil that would produce great quantities of the crop.
The hunger for new land was fundamental to Virginia's colonial claims to the Ohio River Valley and to Kentucky. Virginians seeking new places to grow tobacco created conflicts with Native American tribes long after Powhatan's paramount chiefdom had been subjugated and the Coastal Plain had been occupied by European trespassers. Early towns in Virginia, including Alexandria, developed at locations where tobacco inspection stations and warehouses were built.
Tobacco is a labor-intensive crop, so in the 1600's the Virginia gentry who had acquired land needed to import a labor force. Imports of indentured servants were spurred by grants of headrights, but the supply of interested immigrants from England declined after the end of the English Civil War and restoration of Charles II to the throne in 1660.
Religious and economic refugees were recruited from France and what today is Germany in the 1700's, as were the Scottish settlers in Ireland who sought greater opportunity in the New World. However, by 1700 it was clear that the Virginian leaders had committed to institutionalizing and expanding slavery, in order to obtain the labor needed to farm tobacco. Without tobacco, slavery in Virginia may have died out as the practice did in the northern states. Without the economic factor of slavery, Virginia might have chosen to stay with the Union rather than join the Confederacy in the American Civil War in 1861-65...
Each slave or indentured servant working on a tobacco plantation in colonial days may have planted and weeded about two acres of cleared land with 9-10,000 plants a year, requiring bending over perhaps 50,000 times. The crop also drained the soil of key nutrients. "Old fields" had to remain unplanted for one-two decades before soil fertility was restored naturally (unless fertilized with animal manure). The most economical way to grow tobacco was on large farms, where most of the acreage could be left unused for 20 years:2
Today the process of growing tobacco is still labor-intensive, but profits from several acres of tobacco can exceed the profits from many more acres planted in corn or soybeans.
Nationwide, the annual tobacco crop was sold for about $3 billion in 1997, but the "value added" by processing it into cigarettes and other products was substantially greater - consumers spent $60 billion on tobacco products in 1998. Peak value of the tobacco crop was $3.5 billion in 1981, the same year as peak production. In 2010, the US tobacco crop was valued at $1.25 billion. Since 1970, Virginia's tobacco crop has ranged in value from a low of $61 million in 2005 to a high of $266 million in 1981. In 2010, value was $78 million.3
In the United States, tobacco is a regional crop, concentrated in the Southeastern United States. Tobacco is also a significant crop in the Connecticut River valley, where farmers produce the leaves used for cigar wrappers by growing tobacco plants under white cloth to reduce the number of spots from the sun and insects. It is also grown in Canada, Africa, China, Brazil, and the Middle East.
Different types of tobacco are grown in different places, from Connecticut to Florida and in other countries. Cigarette, cigar, and pipe tobacco manufacturers blend the tobaccos to create unique tastes and burning characteristics. As described in the September 2000 "Tobacco and the Economy: Farms, Jobs, and Communities" report:4
 counties growing flue-cured tobacco in 2010 were concentrated east of the Blue Ridge Source: National Agricultural Statistics Service |
 counties growing burley tobacco in 2010 were concentrated west of the Blue Ridge Source: National Agricultural Statistics Service |
Burley is a dark leaf grown primarily in Kentucky and Tennesee, while bright tobacco (also known as "flue cured" or "Virginia" tobacco) is grown in the Piedmont and Coastal Plain from Northern Florida to Maryland. (Strip the paper from a cigarette today, and the different color of tobaccos inside are obvious. Typically the darker-colored tobaccos are burley and the lighter-colored tobaccos are "bright," but remember that foreign tobaccos are also added to almost every cigarette.)
Local regions growing bright tobacco are known traditionally as "belts." Tobacco used to be sold at auctions in warehouses in small southern towns. Auctions were held in sequence, moving north as the crop ripened from the "Georgia Belt" in August to the "Old Belt" in Virginia in late Fall. Climate plays a role. The harvest in Georgia is over by late August, but in Virginia the end of the harvest for flue-tobacco or "Type 11" tobacco is mid-October.
Farmers would bring their crop to a warehouse, and bidders from different tobacco companies (such as Philip Morris) would walk along piles of tobacco arranged in long rows. An auctioneer would chant the bids until finally announcing the price at which each pile was sold. The bidders walked at a steady pace, and it might take just 10-15 seconds at each pile until the auctioneer concluded his sing-song chant of the bids with "Sold American!" (if purchased by the American Tobacco Company, for example). A clerk trailing the bidders would write the price and the buying company on a ticket, which he would toss on each pile. After examining all the tickets on his piles, the tobacco farmer would discover if he had made a profit that year.
The warehouse auction process has almost disappeared now. Farmers are contracting in the Spring with a specific tobacco company to sell the crop, eliminating the competitive bidding in the Fall. The small Virginia towns that had tobacco warehouses, such as South Hill, have lost both the economic activity of the crowd that came to auctions and an activity that reflected the unique culture of the tobacco growing community.
Four types of tobacco were raised by Virginia farmers, but one specialty version is no longer grown in sufficient quality to be recorded in the government statistics. Virginia tobacco farmers grow bright tobacco (classified by the US Department of Agriculture as flue-tobacco or "Type 11") in what USDA calls the Piedmont District (basically Southside Virginia). They grow burley ("Type 31") tobacco primarily in Southwestern Virginia. The Blue Ridge separates the bright and burley regions - 98% of the burley is grown west of Patrick County, while bright (or Virginia) tobacco is grown east of the Blue Ridge.
In addition, small amounts of tobacco classified as fire-cured (Type 21, cured with smoke) and sun (Type 37, cured in direct sunlight) are grown in Virginia. Sun-cured tobaccos, often grown in Turkey and the Balkans, are added to many types of cigarettes to add aroma. One brand of cigarettes with sun-cured tobacco was marketed as "Oriental," with a camel as the symbol on the packaging.
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Bright tobacco leaves are picked as they ripen, the bottom leaves first. Multiple trips through the tobacco fields to harvest leaves as they ripen is one reason tobacco is still a labor intensive crop. The picked leaves are "flue-cured." A half-dozen or so leaves will be tied together at their base, and the bundles will be hung in air-tight barns. The barns are heated by propane burners located outside the barn, with flues carrying the heat into the barn to bake the leaves slowly. As the green tobacco leaves dry out and cure in the dry heat, the leaves turn yellow with brown "sugar spots."
Burley leaves are harvested all at once, by cutting the tobacco plant stalk at ground level. Leaves are left attached to the stalk, which is speared onto a stick and then hung in long rows at the top of barns to dry until brown. Burley barns are not air-tight, and the leaves dry in the coool autumn air without extra heat. Air circulation in the barn is increased by bending every other board away from the barn wall. Drying is essential to prevent the leaves from rotting, and ultimately to allow them to burn in cigarettes, pipes, cigars, etc. Fire-cured leaves are smoked in barmns, similar to meat. Stalks are harvested similar to burley, so farmers make just one pass through the fields. Tobacco stalks are hung on racks, where leaves are exposed to several days of heat and smoke from hardwood fires. Tobacco is often reported to be "the world's most widely cultivated non-food crop."5 Most Virginia farms do not grow tobacco, but it's a key crop for those who do. In the Piedmont District ("Piedmont" tobacco region, as defined by the US Department of Agriculture - not the entire Piedmont physiographic province...), less that 10% of the farms had an allotment allowing them to grow tobacco. In 1996, however, that one crop "accounted for about half the gross value of production for the agricultural sector of the Piedmont region in 1996." Tobacco was grown on 10% of the average farm (29 of 290 acres) but generated 90% of the income for farms in that region.6 |
Unfortunately for Virginia farmers who appreciate the income from tobacco, the harvest is declining in quantity and value now. This is due in part because the supply of tobacco has increased as manufacturers - mostly cigarette companies - are importing cheaper tobacco from Africa and China and South America. Brazil is now the world's largest producer of flue-cured tobacco:
The manufacturers blend tobacco material from different locations to get the preferred combination for taste, burning rate, and cost. The use of imported tobacco is not new in Virginia. The camel logo for one brand of cigarette was legitimately exotic image; Turkish tobacco has added intense flavor to Virginia-made cigarettes for almost a century. Today, "unmanufactured tobacco" is one of the major commodities imported as well as exported through Norfolk:
The 1998 Master Settlement Agreement (MSA) between large tobacco manufacturers and the Attorneys General of 46 states led to a major increase in costs to consumers who still choose to smoke or chew, reducing demand for tobacco substantially. The legal agreement requires the tobacco companies to pay over $200 billion during the next 25 years. This settlement resolved numerous lawsuits over health care costs associated with tobacco.
At the last minute, Virginia joined the lawsuit and was awarded over $4 billion. Price increases to cover those costs, and the elimination of more advertising outlets - the Marlboro Man no longer appears on highway billboards - are cutting into cigarette sales and reducing demand for the Virginia crop.
The General Assembly, following Governor Gilmore's recommendation, allocated 10% of that settlement to the Virginia Foundation for Healthy Youth to combat underage tobacco use and childhood obesity, 40% to the Virginia Health Care Fund for the State’s Medicaid program, and the remasining 50% to tobacco farmers and their region. Rather than wait for annual payments from the tobacco companies (which are obliged to provide payments in perpetuity), in 2005 Virginia securitized the projected income for the next 25 years. It raised enough in bond sales to create a $1 billion endowmebnt for a 31-member Tobacco Indemnification and Community Revitalization Commission (TICR). That organization was given responsibility to allocate funding from the tobacco settlement to the individual tobacco growers (nearly 47,000 filed for payments through 2011) plus roads, education, or a variety of economic revitalization initiatives in "tobacco-dependent" communities of Virginia.
The commission defined 41 "tobacco-dependent" communities, with 24 localities in Southside and 17 localities in Southwest Virginia. The eligible localities were defined based on 1998 tobacco production levels, excluding other jurisdictions nearby that also had relatively high unemployment, low incomes, and slow population growth. After 2012, when the last of the Phase I tobacco grower indemnification payments are distributed, the Tobacco Indemnification and Community Revitalization Commission will be just an economic development organization.
Between 2000-2011, the commission created nine separate funding programs and awarded $756 million via over 1,300 grants, some for less than $25,000 (such as $15,000 for a walking track at Hayters Gap Community Center in Washington County). The biggest grant to date has been $25 million, to create the King College Medical School in Washington County. Revitalization projects were chosen through a political process that was allowed for fraud (The state Secretary of Finance, John S. Forbes, ended up in jail) and poor project selection without coordination with the four primary state economic development agencies - Virginia Economic Development Partnership (VEDP), Virginia Department of Housing and Community Development (DHCD), Virginia Department of Business Assistance (DBA), and theVirginia Tourism Corporation (VTC).
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According to the state's legislative oversight agency in a 2011 audit:7
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 Virginia's tobacco-dependent communities traditionally have higher-than-average unemployment rates Source: Joint Legislative Audit and Review Commission (JLARC) Review of the Tobacco Indemnification and Community Revitalization Commission (June 2011) |
Maryland used some of the $4 billion it received from the tobacco settlement to pay farmers to convert to other crops, getting Maryland farmers out of the tobacco growing business after 370 years. The state is paying $1/pound for farmers to grow something else, such as vegetables. Tobacco sold for less that $2/pound in 1999, but even with the state subsidy it was still a challenge for farmers to make the same profit per acre on lower-valued crops.
In addition to the Master Settlement lawsuit funding distributed by the Virginia Tobacco Indemnification and Community Revitalization Commission, tobacco farmers also received compensation under the Fair and Equitable Tobacco Reform Act of 2004. Between 1938-2005, tobacco could only be grown by farmers with authorization from the Federal government. The "market orders" were created by the Agricultural Adjustment Act of 1938, to help manage supply and ensure steady income during the Great Depression. Funds for the payments ($7/pound to quota owners, $3/pound to producers, or $10/pound for farmers who still owned their quota) came from tobacco manufacturers and importers, based on an individual company's share of the market. Payments through 2011 mitigated the lost potential profits from future crops that will not be grown and sold over the next 25 years, smoothing the transition to a free market.8
Why didn't Virginia follow the Maryland example, and use the $4 billion payment to steer farmers completely away from growing tobacco? Maryland's commitment of $1/pound to farmers for 10 years will cost the state only $15 million annually from the $4 billion settlement. Virginia will receive essentially the same settlement income, $4 billion, but the annual production of tobacco in Virginia is much higher. In addition to the cultural support for growing the traditional crop, a "permanent buy out" so Virginia tobacco farmers never grew tobacco again would have exceeded the funding available from the tobacco settlement.
