A Bright New Leaf

ORGANIC TOBACCO: HOPE FOR A DYING INDUSTRY?

STORY BY CASSANDRA LING & DESIGN BY ASHLEY ANDERSON

“I told myself I would never marry a farmer,” Donna Thompson says with a chuckle.

Thompson says this as she looks out the window facing the tobacco fields of the Thompson Family Farm in Wake Forest, N.C., managed by her husband of 42 years. Jackie and Donna Thompson met in business school, but they didn’t go for corporate jobs.

“He knew that sitting in an office all day wasn’t for him,” Donna says.

Yet Jackie would not let his business skills go to waste. Jackie returned home to his father and grandfather to take over the family business, tobacco farming, just as his own son would do later.

Farming is in his blood, and he found a way to succeed in a diminishing tobacco market by growing organic tobacco plants.

The Thompson Family Farm is one of the dwindling number of successful tobacco farms left in North Carolina, and one of a small but growing number of organic farms.

Organic tobacco is a small market, but gaining ground with farmers because price per acre is higher. Sante Fe Natural Tobacco Company, based in Oxford, N.C., is the biggest corporate supporter of organic tobacco farming. The company buys approximately 2.7 million pounds of organic tobacco annually.

In this market, farmers do not have to grow large quantities in order to make a higher profit. Demand for organic tobacco is higher than for traditional tobacco, allowing farmers to sell organic tobacco for higher prices.

So why would some people rather smoke organic cigarettes? Perhaps consumers, even smokers, still care about what they are putting in their bodies. There is little hard evidence that proves why some smokers prefer organic tobacco. Could choosing the all-natural American Spirit brand (produced by Sante Fe Natural Tobacco Company) make people feel as if they are getting a better product because it is grown organically? While organic cigarettes have not been proved to be any healthier, a University of California, San Francisco, study says that the word “natural conjures up images of health,” giving smokers the perception that natural (organic) cigarettes are healthier. These perceptions lead companies to market natural cigarettes, and some have found that people will pay a higher price for organic cigarettes, simply because they have fewer additives and chemicals. As of 2008, Sante Fe was seeing its sales grow by more than 10 percent each year. This growth allowed farmers to break into the organic tobacco market.

“When it comes to tobacco, you could probably get $6,000 gross profit per acre,” Thompson says. “That is just on traditional tobacco.”

For organic tobacco, it could range from $8,000 to $10,000 gross profit per acre.

On average, growers can expect to earn up to $4 a pound for organic tobacco, compared to $1.80 for conventional tobacco.

What makes the tobacco organic depends upon the fertilizer and other substances used on the plants. All of the fertilizers, pesticides and herbicides that Thompson uses are natural products and have no manmade chemicals. For example, he uses chicken manure or palm oil in his growing process.

“Tobacco is under heavy attack anyway,” Thompson says. “We all know that, and it has been for many years.”

For more than a century, tobacco was the “golden leaf” that built universities, developed cities and supported families in North Carolina. But tobacco farming has declined rapidly in recent years, and many generational farmers who have tried to uphold family traditions are losing the battle to rising costs and diminishing demand.

North Carolina’s soil isn’t the best for most crops, but farmers found in the 17th century that the signature “bright leaf” tobacco, also known as flue-cured tobacco, could thrive in poor soil. Before long, tobacco became a leading cash crop across the state. Farms that were producing other crops turned to tobacco. In 1858, a small tobacco factory opened in Durham, N.C., around which the entire town grew. By 1880, there were 126 tobacco factories in North Carolina, producing 6.5 million pounds of chewing tobacco and 4 million pounds of smoking tobacco each year. Major cities, including Durham and Winston-Salem, grew up centered on the world’s largest tobacco companies.

During the Great Depression, tobacco was one of the crops protected under the Agriculture Adjustment Act of 1939, also known as the very first Farm Bill, and in tobacco farming circles as the federal tobacco program. The bill set production quotas for farmers, in exchange for price support loans and allotments, so that the farmers could survive. By limiting production, the program aimed to raise the value of crop. The federal tobacco program lasted for decades, encouraging farmers to keep growing the particular crop, even though the process was tough on soil and tough on workers. It guaranteed minimum prices for tobacco crops. Farmers could maintain growing on a smaller production scale and still count on profits.

Because of the federal tobacco program, farmers could survive despite the ups and downs of the market.

But in 1964, the first Surgeon’s General report linked smoking to lung cancer and other health problems, and smoking – and with it the tobacco industry – gradually began to decline. Yet North Carolina farmers continued to grow tobacco, still receiving aid from the federal government. With some sense of security, and a guaranteed income from tobacco, farmers failed to diversify their crops. There was little interest in expanding into other cash crops.

The government would not continue to support tobacco farmers forever, however, and the federal program ended in 2004, bringing a close to a 70-year-long support system for the crop. The program from the New Deal era ended with a buyout program compensating tobacco growers and people who had owned the quota allotments. The Tobacco Transition Payment Program (TTPP) offered farmers a series of annual payments, starting in 2005 and continuing until 2014. North Carolina’s concentration on tobacco as a cash crop, however, had slowed the development of markets for other crops. With little interest in diversifying, many farmers simply stopped farming and sold land for development rather than trying new crops, causing even more of a decline in the industry.

But the Thompsons were among those who found a way to succeed by changing their approach to growing tobacco.

Tobacco farming has always been labor-intensive, but organic farming adds more steps and details to the process. Everything Thompson uses on his plants must be natural. The chicken manure he uses as one of his fertilizers must come from organic chickens. Traditional tobacco farming uses man-made fertilizers that come from petroleum products, adding harsh chemicals to the plants. The agents Thompson uses include palm tree oils that have a natural alcohol base. All of his materials and farming techniques must be approved and regulated by the U.S. Department of Agriculture.

Thompson says that even though he has several hoops to jump through to make his farm organic, he agrees the effort is worth the business he receives in return.

Thompson works under contracts with international companies such as R.J. Reynolds, Universal Leaf and Philip Morris. He also works with other leaf companies that buy his crop and then process it to sell it to a cigarette maker. Thompson has about 600,000 pounds of contracted tobacco on his farm in Wake Forest. Half of that amount is organic tobacco.

“We do this because there is a great market for it,” Thompson says.

It takes three years to prep the land in order for it to be considered certified organic. Even though he might be creating a smaller amount, Thompson says the value of each crop increases as he eliminates any man-made fertilizer and replaces it with natural products.

Tobacco consumption is declining all over the world, so even farmers who want to break back into the industry can’t because there is no room. In the heyday of the federal program, most tobacco was sold through auction at warehouses. Today, companies have contractual agreements set up with farmers who remained in the business through the long-term struggles of the market. Thompson feels fortunate he can remain profitable in this market.

“We can’t complain with our mouths full,” he says.

The tobacco industry has steadily declined because of negative attitudes toward smoking and a more health conscious society, but the cigarette industry continues to make profits.

Sante Fe Natural Tobacco Company, the maker of the Natural American Spirit cigarettes, mainly buys organic, natural tobacco products. The company recruits farmers who have extensive knowledge in traditional tobacco farming, as well as smaller-scale farms.

North Carolina still remains a giant in the tobacco industry, and since about 1997, organic tobacco has been a part of that. With this growing trend and increasing demand for organic tobacco, the Thompsons have found a way to maintain profitability in their cherished family business.

But Donna knows farming is more than just a business.

“It runs through his veins,” she says. “It’s part of who he is. It has raised our two kids and given us a great life.”

Despite the work, the long history and struggles with tobacco farming, the way of life is what keeps farmers like Jackie Thompson starting up the tractors,

Trends often come and go, but for now, the organic tobacco industry has developed a new market for farmers to remain in the business.

Thompson looks across the table and says, “You know what a guy told me one time? He said ‘You know what your problem with farming is? You’re in love with it.’”

Thompson pauses. “And that’s just what I am. I’m in love with it.”