Future of the Cooperative
Daniel Green
History of the Cooperative
• U.S. was primary producer of burley
• Great instability, uncertainty in prices
• Few buyers
– Low prices
– Producers unable to cover expenses
Burley Tobacco Growers Cooperative
Original System
• Contract arrangement for 5 years for at least
75% production
• 1921, Burley Cooperative formed
– 124 warehouses purchased or leased for
receiving centers
– contracted and purchased re-drying plants (14)
– built storage facilities
Burley Tobacco Growers Cooperative
Original System
• Very successful, handling 940 million pounds over
5 years
• Problems
– no limit on production/sales
– problems with contract breaching
• Contract ended in 1926, membership was 108,000,
but interest faded, prices were better
• No new contracts were signed
Burley Tobacco Growers Cooperative
1938 AAA System
• Over 60 years, very successful program
• Stable price, unstable supplies
• Cooperative borrows money from CCC and
pays farmer
• Tobacco is processed and sold and loan is
repaid
• Minimal cost to taxpayers
Burley Tobacco Growers Cooperative
Problem
GROWERS and QUOTA OWNERS
Burley Tobacco Growers Cooperative
Impact of the Buyout on Numbers
Out in
• What can be accomplished forThose
tobacco
the post-buyout
environment?
Growers Left
Burley Tobacco Growers Cooperative
Areas of Priority
•
•
•
•
•
•
•
•
Management of Inventory
Grower Organization and Advocacy
Export Promotion and Market Expansion
Contracting Support
Alternative Marketing Options
Production Technologies and Infrastructure Improvement
Communication, Education and Research Support
Enhanced Crop Insurance
Burley Tobacco Growers Cooperative
Management of Inventory
• BTGCA responsible for a portion of 160
million pounds of pool inventory after
buyout
• Goal: Maximize benefit from stocks while
minimizing negative impact on the market.
• No more than 20% domestic each year
• Focus on non-traditional markets
Burley Tobacco Growers Cooperative
Grower Organization and Advocacy
• Better organization of growers is essential
with smaller numbers
– Locating existing burley growers, obtaining
email addresses, etc.
– Redistricting our board representatives based
on where tobacco is being produced
– Effective system for alerting tobacco growers
and to get involved in issues
Burley Tobacco Growers Cooperative
Grower Organization and Advocacy
• The political environment and society will become
increasingly malevolent/restrictive towards
tobacco
• New restrictions and possible FDA oversight
• Keeping any potential production regulations
under USDA, trade, health issues, labor issues,
disaster assistance, federal crop insurance, etc.
Burley Tobacco Growers Cooperative
Export Promotion and Expansion
• Great opportunities exist for burley with
post-buyout prices
• Using current inventories to develop new
markets
• Serving as an agent for U.S. growers
Burley Tobacco Growers Cooperative
Contracting Support
• Toll-free contract number for info
–
–
–
–
Help with general information about contracts
Locations of contract stations
Contract prices & terms
Legal assistance
Burley Tobacco Growers Cooperative
Alternative Marketing Options
• Tobacco that is not contracted
• Tobacco not accepted by contractor for
various reasons
Burley Tobacco Growers Cooperative
Alternative Marketing Options
• “Clearinghouse” type market
– Tobacco not sold on contract
– Damaged tobacco
– Overproduction and undesirable stalk
positions?
Burley Tobacco Growers Cooperative
Alternative Marketing Options
• Alternative contracts
–
–
–
–
Replenishing supply of inventory
Adding value to the market
Specific varieties/characteristics
Other uses – ethanol, pharmaceutical,
etc.??
Burley Tobacco Growers Cooperative
Technology and Infrastructure
• Investing $3.5 million in infrastructure
improvement program
• Improving competitiveness in new market
environment
• Sustaining identity as world’s premier producer
of quality burley
• Retaining global leadership position in tobacco
production
Burley Tobacco Growers Cooperative
Communication, Education & Research
• Helping get information to producers
– Meetings, media, phone, internet, mail, etc.
• Support for expansion and increased
efficiency in tobacco production
• Support for new research and technology
development
Burley Tobacco Growers Cooperative
Enhanced Risk Protection
• Weather risk management products for
tobacco?
– Enhancing opportunities by insuring quality
Burley Tobacco Growers Cooperative
Summary
• Services must provide value to
membership and contribute something
new
• Tobacco Summit – October 8-9,
Savannah, GA
Burley Tobacco Growers Cooperative
http://www.burleytobacco.com