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Trade showdown

Weather and trade tensions worry tobacco farmers

Andy Uhler Oct 23, 2018
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A tobacco field in North Carolina. China is the largest consumer of the state’s tobacco.
Travis HEYING/AFP/Getty Images

Triple B Farms covers about 800 acres in Johnston County, North Carolina, about 45 miles southeast of Raleigh. Brandon Batten is one of the B’s. He’s 32 and runs the farm with his dad and uncle. They farm corn, wheat and soybeans, but their cash crop is tobacco. Talking from inside a barn down the road from the tobacco fields, he said right now, he’s stuck without a whole lot of farming to do.

“Normally around the middle to the end of October, we would be wrapping up harvest,” he said. “But, unfortunately, that was a bit early this year. The tobacco that we had in the field was destroyed when Florence came through.” 

Johnston County got about 18 inches of rain in three days, and the tobacco roots were washed out. Tobacco leaves are harvested annually three or four times a year. The last harvest, in October, renders the highest quality tobacco, and for Batten’s family, that harvest helps pay the bills. Batten said Triple B Farms probably lost between $400,000 and $500,000 because of Florence, but he said his farm’s tobacco sales will potentially be cut in half because of President Donald Trump’s trade war with China.

Last year, North Carolina exported more than $150 million in leaf tobacco to China, making China the largest consumer of the state’s tobacco in the world. In April, the Chinese raised the tariff on American tobacco from 10 percent to 35 percent. 

“Ninety percent of what we grow is for export,” Batten said. “Not only this year are we facing possibly reduced sales and reduced market prices because of the Chinese tariffs, we’re also looking at potential contract cuts for next year.”

Because if this year’s crop can’t be sold, it’ll remain on the shelf until it’s gone. Batten said his farm is unlikely to find a contract with cigarette companies for next year’s crop if that’s the case.

The effect of the tariffs is not lost on Larry Wooten, president of the North Carolina Farm Bureau.

“China is our largest export, or was our largest export customer for tobacco,” Wooten said from his office in Raleigh. “There are more smokers in China than we’ve got population here in the United States.”

China makes up a third of all cigarette consumption in the world. As domestic smoking continues to shrink, tobacco farmers in North Carolina have to look to international markets to fill the gap. Wooten said he doesn’t think the Trump administration knows what these tariffs are doing to tobacco farmers.

“Tobacco was an easy target. It doesn’t have many friends in Washington, but for our farmers here in North Carolina, it was devastating.” 

Brandon Batton’s the sixth generation in his family to farm. He said it’s in his blood. But he’s got a young son and twins on the way, so he’s struggling to decide whether farming is still a viable way of life.

“I did want to farm because I love it and I have a passion for it,” Batten said. “But at the end of the day, I can’t do it for free because I have to support my family, too. It’s definitely a struggle and something that’s always on my mind.”

He said if he does keep farming, he’s considering changing what he plants to better reflect market shifts.

“Tobacco is our cash crop, but we have talked about other things,” he said. “Hemp is obviously on the horizon. You know, with the new farm bill, it could become technically  legalized so that you could grow it. I think that’s an exciting new potential market.”

Tom Bollyky, senior fellow at the Council on Foreign Relations and former U.S. trade negotiator, understands that changing which crops go into the ground isn’t something folks in North Carolina can do immediately.

“What’s hard about this current trading environment, of course, is that China’s a big market for North Carolina farmers and this change has come suddenly for them,” Bollyky said.

The effects of the trade war likely won’t disappear as abruptly as they’ve emerged, said Colin Carter, a professor of agricultural and resource economics at the University of California, Davis.

“If the U.S. annoys China and China responds, they will not come back overnight,” Carter said. 

Because, he said, China can go elsewhere for its tobacco, like Brazil, Zimbabwe or Argentina.

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