Tobacco in Virginia

cartouche on the lower right-hand corner of the Fry-Jefferson map of Virginia, showing tobacco hogsheads being inspected and shipped overseas
cartouche on the lower right-hand corner of the Fry-Jefferson map of Virginia,
showing tobacco hogsheads being inspected and shipped overseas
Source: Library of Congress A map of the most inhabited part of Virginia containing the whole province of Maryland
with part of Pensilvania, New Jersey and North Carolina. Drawn by Joshua Fry & Peter Jefferson in 1751

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 regions in US Tobacco growing and processing dominated Virginia's economy for over three centuries, and transformed its landscape. Tobacco wears out the land, exhausting minerals and 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.

Growing tobacco is very labor-intensive, 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 getting their labor from Africa. In the second half of the 17th Century the Virginia gentry institutionalized and expanded slavery for one primary reason: 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 - and 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.

Tobacco seeds are very, very tiny. Tobacco seedlings are grown in seedbeds of very fine soil, then transplanted to farm fields in the late spring after all danger of frost is past. 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.

Tobacco drained the soil of key nutrients, requiring labor to clear forests so tobacco could be planted in fresh soil. "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

[B]ecause the main crops, tobacco for export and corn for subsistence, were very demanding of soil nutrients, they required long rotations after short use if the land was to regain its fertility without manuring. The planter could grow tobacco for three years, followed by another three of corn, which has a deeper root system than tobacco and hence draws on another layer of soil, but the land then had to lie fallow for 20 years before yields could once again be profitable.

To maintain this rotation, the planter required 20 acres per hand, just for these two crops. Second, while seventeenth century planters introduced domestic livestock, they did not pen and feed it... and hence could not use animal manure. Long rotations were therefore the rule.

Tobacco has been grown in nearly every Virginia county. Tobacco culture has evolved over the centuries, and has become an essential element of what makes Virginia unique. However, the tobacco-growing counties now are almost all in Southside and Southwest Virginia, and few urban Virginians have ever walked in a tobacco field, pulled suckers, topped plants, or even seen the crop harvested.

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

Different types of tobacco are grown in different places. In the United States, tobacco is a regional crop, concentrated in the Southeastern United States. Pennsylvania farmers grow cigar filler, while Connecticut River valley 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. Tobacco is also grown in large quantities in Zimbabwe, China - and especially in Brazil.

tobacco-growing counties in the United States
tobacco-growing counties in the United States
Source: US Department of Agriculture - Economic Research Service, Trends in U.S. Tobacco Farming (TBS-257-02, November 2004)

Cigarette, cigar, and pipe tobacco manufacturers blend different tobaccos to create unique tastes and burning characteristics. As described by a US Department of Agriculture report:4

Tobacco is not a homogeneous product. The flavor, mildness, texture, tar, nicotine, and sugar content vary considerably across varieties or types of tobacco. Defining characteristics of different tobacco types include the curing process (flue-, air-, sun-cured) and leaf color (light or dark), size, and thickness. A given type of tobacco has a different quality depending on where it is grown, its position on the stalk (leaves near the bottom of the stalk are lower in quality), and weather conditions during growing and curing.

counties growing flue-cured tobacco, 2010
counties growing flue-cured tobacco in 2010
were concentrated east of the Blue Ridge
Source: National Agricultural Statistics Service
counties growing flue-cured tobacco, 2010
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, plus some southwestern Virginia counties (and starting in the 1990's, in Piedmont counties as well).5

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 foreign tobaccos are also added to almost every cigarette. The use of Turkish tobacco led to one brand being named Camels. Many different brands use that same tobacco, blending it with other types in different ratios to create unique flavors.

Local regions in the Southeastern United States that grow 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.

tobacco planting/harvest dates, starting in south and migrating north
tobacco planting/harvest dates, starting in south and migrating north
Source: US Department of Agriculture, Field Crops Usual Planting and Harvesting Dates (October 2010)

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.

flue-cured leaves knotted into hands, piled on tobacco warehouse floor for auction
flue-cured leaves knotted into hands, piled on tobacco warehouse floor for auction
prior to being "prized" into hogsheads (visible in rear)
Source: Virginia Commonwealth University Libraries Digital Collections, Rarely Seen Richmond

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. 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.

After a farmer sold his tobacco, the leaves were shipped to processing plants, where chopping and blending created different combinations with different flavors. Major centers of tobacco manufacturing were Lynchburg, Petersburg, and Richmond. After the Civil War, North Carolina emerged as the center of tobacco processing, and cigarette brands named after Winston and Salem commemorated manufacturing centers in that state.

One cigarette factory in Richmond remains, visible on Interstate 95 south of the James River. That facility is owned by Phillip Morris USA, a subsidiary of Altria. Altria sells Marlboro, which has 44% of the market in the United States. The company closed its North Carolina production plants in 2010, shifting production of cigarettes for European markets to non-American factories and placing all US production in Richmond. Altria also relocated its headquarters from New York to Richmond, making Richmond "Tobacco Town" again.6

Altria's plant along I-95, first built in 1973, now produces half of all the cigarettes sold within the United States, and that Richmond facility may be the largest cigarette production plant in the world. Competition for that title comes from cigarette manufacturing in China, where production of the dominant Hongta ("Red Pagoda") brand is concentrated in the city of Yuxi.7

Richmond is still dotted with old tobacco facilities. The Liggett and Myers cigarette manufacturing plant in downtown Richmond is now an office building. Tobacco storage warehouses on the slopes of Church Hill are being converted into housing for young, upwardly-mobile professionals. Twenty-five years ago, it was common in the early morning for the whole downtown to smell of ripening tobacco. The closest warehouses now are several miles south of town - as you drive by on I-95, look for the blue sheds with "Shh! Tobacco sleeping" sign.

declining Virginia tobacco production (in pounds), 1970-2010
declining Virginia tobacco production (in pounds), 1970-2010
Source: National Agricultural Statistics Service, Quick Stats

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, east of the Blue Ridge).

Burley (Type 31) tobacco is grown primarily in Southwestern Virginia. The Blue Ridge separates the bright and burley regions. Until the mid-1990's, 98% of the burley in Virginia was grown west of Patrick County.

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.

counties growing tobacco of any type in 1999

counties growing flue-cured 
tobacco in 1999

counties growing burley 
tobacco in 1999

Bright tobacco leaves are picked as they ripen, the bottom leaves first. The requirement to make 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 barns, in a process similar to smoking 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."8 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.9

burley tobacco air-curing in barn
burley tobacco air-curing in barn
Source: National Park Service

types of tobacco in cigarettes, 1990-1999
types of tobacco in cigarettes, 1990-1999
Source: US Department of Agriculture - Economic Research Service, Trends in the Cigarette Industry After the Master Settlement Agreement

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:

estimated leaf production (in million kilograms of uncured green tobacco)
estimated leaf production (in million kilograms of uncured green tobacco)
Source: Universal Leaf Tobacco, World Leaf Production as of 4 August 2011

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:

tobacco: major import commodity at Hampton Roads
tobacco: a major import commodity at Hampton Roads (in short tons)
Source: Virginia Port Authority, Comprehensive Annual Financial Report for the Fiscal Year Ended June 20, 2010, p.92

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.

Trends in Cigarette Smoking Among Virginia Adults
Trends in Cigarette Smoking Among Virginia Adults
Source: Robert Wood Johnson Foundation, Cigarette Smoking Prevalence and Policies in the 50 States: An Era of Change, p.198

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.

41 tobacco-dependent localities where Virginia Tobacco Indemnification and Community Revitalization Commission made investments to revitalize the region
41 tobacco-dependent localities where Tobacco Indemnification and Community Revitalization Commission made investments to revitalize the region
Source: Virginia Tobacco Indemnification and Community Revitalization Commission 2010 Annual Report

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).

Tobacco Indemnification and Community Revitalization Commission revitalization grants through 2010, including over 1,000 miles of high-speed Internet cable
Tobacco Indemnification and Community Revitalization Commission revitalization grants through 2010,
including over 1,000 miles of high-speed Internet cable
Source: Joint Legislative Audit and Review Commission (JLARC) Review of the Tobacco Indemnification and Community Revitalization Commission

According to the state's legislative oversight agency in a 2011 audit:10

the $756 million in economic development grants awarded by the commission has yet to revitalize the region..., in part because $756 million awarded by TICR over its first 11 years represents about two percent of the region’s annual economy.

The allocation of economic development funds to localities within the Southside region is based on historical tobacco production in 1998. This formula has been in place since TICR’s formation. While TICR is charged with revitalizing the once tobacco dependent economies of the State, dividing these resources based on tobacco production in 1998 seems to be no longer relevant.... Four localities receive two-thirds of the funding and 14 localities each receive less than two percent.

Funding for the economic development grant program is divided between the Southside and Southwest regions according to historic tobacco production levels. As a result, the Southside region has received 67 percent of economic development funds to date, and the Southwest region has received 33 percent. Funding for other grant programs is not divided between the two regions.

Funds for the Southside economic development program are further divided among Southside localities using a formula that takes into account historic tobacco production and other tobacco-related factors. Localities and entities within them then compete for funds from this annual allotment. Allocations from the Southside formula vary widely, with approximately two-thirds of Southside economic development funds allocated to four localities: Pittsylvania, Halifax, and Mecklenburg Counties, and the City of Danville. Other Southside localities, such as Appomattox, Nottoway, Prince Edward, and Sussex Counties, receive less than two percent of economic development funds each year. By contrast, localities in the Southwest region compete equally for economic development grants from the Southwest economic development fund.

Of the 41 localities in the tobacco region, 18 lost population between 2000 and 2010, according to the Census Bureau. Three of the localities (Danville, Martinsville, and Buchanan County) lost more than ten percent of their 2000 population.

The report recommends that TICR eliminate the current Southside allocation formula, and use measures of a locality’s economic stress to prioritize awards to the most challenged localities. This would enable TICR to distribute funds more strategically throughout the tobacco region, not just to localities in Southside Virginia.
Virginia's tobacco-dependent communities traditionally have higher-than-average unemployment rates
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)

commission grants vs. unemployment rates in jurisdictions
commission grants vs. unemployment rates in jurisdictions
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.11

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.

research and development centers in 41 tobacco-dependent localities
research and development centers in 41 tobacco-dependent localities
Source: Virginia Tobacco Indemnification and Community Revitalization Commission 2010 Annual Report

Tobacco and Staple Agriculture

Tobacco and Colonial Population

Tobacco Markets in Virginia

Links

References

1. Joseph C. Winter, Tobacco Use by Native North Americans: Sacred Smoke and Silent Killer, University of Oklahoma Press, 2000, p. 4, http://books.google.com/books?id=UGI4hxx6mTQC (last checked October 28, 2012)
2. Lois Green Carr and Russell R. Menard, "Land, Labor, and Economies of Scale in Early Maryland: Some Limits to Growth in the Chesapeake System of Husbandry, The Journal of Economic History, Vol. 49, No. 2, June 1989, p.413http://www.jstor.org/stable/2124072 (last checked October 29, 2011)
3. Gale, H. Frederick Jr., Foreman, Linda, Capehart Thomas, Tobacco and the Economy: Farms, Jobs, and Communities, Economic Research Service, U.S. Department of Agriculture. Agricultural Economic Report No. 789. September 2000, p. 1; US Department of Agriculture, National Agricultural Statistics Service "Qick Stat," http://quickstats.nass.usda.gov/ (last checked October 29, 2011)
4. Tobacco and the Economy: Farms, Jobs, and Communities, p.1
5. "Burley tobacco belt stretches east," Southeast Farm Press, March 8, 2006, http://southeastfarmpress.com/burley-tobacco-belt-stretches-east (last checked October 26, 2013)
6. "Factory shows that Richmond is still a tobacco town," Virginia Business, September 27, 2013, http://www.virginiabusiness.com/opinion/article/factory-shows-that-richmond-is-still-a-tobacco-town; "Cigarette making still going strong in South Richmond," Richmond Times-Dispatch, August 30, 2013, http://www.timesdispatch.com/business/manufacturing/cigarette-making-still-going-strong-in-south-richmond/article_27bad786-788e-570a-b837-b008519c1c39.html (last checked October 26, 2013)
7. "China Dependent On Tobacco In More Ways Than One," National Public Radio, February 18, 2011, http://www.npr.org/2011/02/18/133838124/china-dependent-on-tobacco-in-more-ways-than-one (last checked October 26, 2013)
8. International Tobacco Growers Association, "Tobacco Types," http://www.tobaccoleaf.org/conteudos/default.asp?id=18 (last checked October 29, 2011)
9. Tobacco and the Economy: Farms, Jobs, and Communities, Appendix 2, p. 37
10. Joint Legislative Audit and Review Commission (JLARC), "Review of the Tobacco Indemnification and Community Revitalization Commission" June 2011, p.i. p. iv http://jlarc.state.va.us/reports/Rpt412.pdf (last checked October 30, 2011)
11. Hayley Boriss and Marcia Kreith, "Tobacco Profile," Agricultural Marketing Resource Center, http://www.agmrc.org/commodities__products/specialty_crops/tobacco_profile.cfm (last checked October 30, 2011)


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