Virginia's economy, as well as its agricultural production, was dominated by tobacco for over three centuries.1
Tobacco is a labor-intensive crop. 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 10,000 plants a year,2 requiring bending over perhaps 50,000 times. 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 1998.3
Tobacco is a regional crop, concentrated in the Southeastern United States. It is also grown in Canada, Africa, China, Brazil, and the Middle East. Tobacco is 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.
Different types of tobacco are grown in different places, from Connecticut to Wisconsin and down south to Louisiana and Florida - plus 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:
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 you can see the different color tobaccos inside. 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.
Farmers would bring their crop to a warehouse, and bidders from different tobacco companies (such as Phillip 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.
| Type of Tobacco | 1999 | 2000 | 2001 | 2002 |
|---|---|---|---|---|
| Flue-Cured (Type 11) | 62,920,000 | 42,700,000 | 48,585,000 | 50,955,000 |
| Burley (Type 31) | 23,108,000 | 11,200,000 | 12,474,000 | 13,680,000 |
| Fire (Type 21) | 2,672,000 | 2,548,000 | 2,202,000 | 1,440,000 |
| Sun (Type 37) | 155,000 | 165,000 | 154,000 | 105,000 |
Four types of tobacco are raised by Virginia farmers. They 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.
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.
The International Tobacco Growers Association describes tobacco as "the world's most widely cultivated non-food crop." 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."5
Tobacco was grown on 10% of the average farm (29 of 290 acres) but generated 90% of the income for farms in that region. Statewide, tobacco was #5 in generating cash receipts for Virginia farmers in 1998 but lost ground by 2000, according to the Virginia Agriculture Facts & Figures:
| 1998 Rank | Commodity | 1998 Cash Receipts | 1998 % of Total | 2000 Rank | Commodity | 2000 Cash Receipts | 2000 % of Total |
|---|---|---|---|---|---|---|---|
| 1 | Broilers | $486,563,000 | 20.9% | 1 | Broilers | $441,320,000 | 19% |
| 2 | Milk (Wholesale) | $296,136,000 | 12.7% | 2 | Cattle and Calves | $307,862,000 | 13.2% |
| 3 | Cattle and Calves | $294,222,000 | 12.7% | 3 | Milk (Wholesale) | $278,832,000 | 12% |
| 4 | Turkeys | $207,870,000 | 8.9% | 4 | Turkeys | $237,941,000 | 10.2% |
| 5 | Tobacco | $178,315,000 | 7.7% | 5 | Greenhouse/Forest Products | $179,406,000 | 7.9% |
| 6 | Tobacco | $132,064,000 | 5.7% |
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. The Crop Production Table of Universal Leaf Tobacco shows that Brazilian flue-cured tobacco is has become a substantial part of the world total now.
The manufacturers blend tobacco material from different locations to get the preferred combination for taste, burning rate, and cost. Today, "unmanufactured tobacco" is one of the major commodities imported as well as exported through Norfolk.
A 1999 settlement between manufacturers and state Attorneys General 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. Between 1996-99, cigarette sales dropped over 10%. Domestic consumption dropped another 3% between 1999-2000, and exports of cigarettes dropped 20% as well. Over 70 percent of tobacco products are sold through grocery or convenience stores and gasoline stations.
Tobacco price supports have been cut by one-third in the same few years. Tobacco can only be grown by farmers with authorization from the Federal government, as part of an agricultural program ("market orders") dating back to the Depression. There are 17,500 tobacco growers with a tobacco allotment in Virginia. That averages out to $70,000 per Virginia farmer entitled to a portion of the tobacco settlement, mitigating the lost potential profits from future crops that will not be grown and sold over the next 25 years.
The General Assembly, following Governor Gilmore's recommendation, allocated 50% of that settlement to tobacco farmers. 10% goes to anti-smoking efforts, and the other 40% may go to roads, education, or a variety of initiatives determined through a standard political process over the next few years. The state's new Tobacco Indemnification and Community Revitalization Commission will allocate $1.2 billion from the tobacco settlement to the individual tobacco growers, and spend the other $800,000 on economic redevelopment in tobacco-dependent communities in Southside and Southwest Virginia.
Maryland is using some of the $4 billion it is receiving 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.
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. A "buy out" of Virginia tobacco farmers would exceed the funding available from the tobacco settlement.
