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J. Michael Moore,
Editor

Weather/Crop Conditions
Georgia plant producers have experienced unusual weather conditions for producing tobacco transplants so far in 2002. Extremely warm temperatures in February when plants were small and more sensitive to warm temperatures caused growers to be more attentive of their beds and plant houses than normal. Extremely cold temperatures during the last week have caused additional heating of plant houses and additional cover management on the part of bed producers. Plants in most beds and houses have been clipped several times and survived the recent cold temperatures without significant losses. Some reports of plant loss to rhizoctonia and pythium have been received from plant house production. Some growers who have their problem diagnosed by County Extension Agents and State Extension Specialists as Pythium are using the new product, labeled in 2001, Terramaster, for control of this problem in float type production. Terramaster is a Uniroyal Chemical Company product and is labeled for us two to three weeks after seeding as a preventative or curative for Pythium. Consult your County Extension Agent or dealer for labeling useage instructions.

Georgia Quota Numbers
According to FSA, the Georgia Basic Allotment for 2002 is 27,994 Acres, with an Effective Allotment after overmarketings of 27,762. Basic Quota for the year is 61,254,297 pounds with an Effective Quota of 60,708,720 pounds. With what is said to be one of the largest amounts of carryover tobacco in the state in recent times, it would appear that the planted acreage should not be the full Effective Allotment and may be reduced by as much as five to seven percent.

Mandatory Tobacco Grading Referenda
A mandatory referenda will be conducted by mail by March 31, 2002, to determine if producers favor the mandatory grading of all tobacco by USDA that is currently eligible for price support under the Agricultural Act of 1949. If a majority of the producers voting in a referendum favor the mandatory grading of that kind, USDA is directed to ensure that the tobacco is graded at the time of sale for the 2002 and subsequent marketing years. The USDA is also directed to establish user fees for any such inspections. These fees would be established in the same manner and be comparable to user fees for the grading of tobacco sold at auction.

Following is the notice which is to be enclosed with ballots and posted on FSA countertops. Ballots were to be mailed by March 6, 2002.

MANDATORY GRADING REFERENDA
(notice on FSA Countertops and enclosed with ballots)
The U.S. Department of Agriculture (USDA) is required under the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act (Appropriations Act) for 2002, enacted November 28, 2001, to conduct referenda, by March 31, 2002.

Its purpose is to determine if producers favor the mandatory grading of all tobacco by USDA that is currently eligible for price support under the Agricultural Act of 1949. Producers of each kind of tobacco will be eligible to vote in the referendum for that kind. Voting eligibility will follow the same criteria that apply to tobacco producers used by the Farm Service Agency to conduct referenda on continuation of the Quota Program.

If a majority of the producers voting in a referendum favor the mandatory grading of that kind, USDA is directed to ensure that the tobacco is graded at the time of sale for the 2002 and subsequent marketing years. The USDA is also directed to establish user fees for any such inspections. These fees would be established in the same manner and be comparable to user fees for the grading of tobacco sold at auction.

BLUE MOLD WARNING FOR N. FL & S. GA
Dr. Paul Bertrand has reported to County Extension Agents in Georgia that the NCSU Blue Mold System has issued notice of a bluemold threat for North Florida/South Georgia. The spore movements occured 1& 2 March into our area from Cuba. This means air currents were moving from Cuba over NFL/SGA with a potential for spore deposit and infection in this region. The NCSU Website is updated and will be helpful in following future Blue Mold activity. http://www.ces.ncsu.edu/depts/pp/bluemold/

TOBACCO NEWS
Following are news articles you may find interesting and helpful in keeping up with activities in the industry.

Cuba: Weeklong Habano Festival Ends
Hundreds of foreigners made the annual trip to the green tobacco fields and curing houses in Cuba to experience the country’s world-famous cigar business before the island-nation’s Habano Festival ended March 1st with a US$ 400-a-head “cigar dinner” in Old Havana. The Cuban cigar company Habanos S.A., owned by the government and the French-Spanish company Altadis, sponsors the annual event. Over 600 people from 47 countries traveled to Cuba for this year’s event. Many tourists also joined tobacco merchants in the celebrations. There was also a trade show, an art exhibition with a tobacco theme, and scientific seminars for those who grow tobacco, which has been an important cash crop in Cuba since the 16th century (AP 3/1, AP 3/2).

Brazil: Record Harvest Expected
Associação dos Fumicultores do Brasil (Afubra), the association of Brazilian tobacco growers, said the 2002 harvest in the States of Rio Grande do Sul, Santa Catarina and Parana will be 580,000-590,000 MT, surpassing the record 570,100 MT harvested in 1992-03. The association’s president Hainsi Gralow said that external factors prevented prices from dropping below the average R$ 2.80 (US$ 1.20) per kg despite a large harvest. He believes that prices could touch R$ 3 (US$ 1.30) per kg when high-grade leaf is ready for sale (Gazeta Mercantil 3/1).

Zimbabwe: Dry Spell Hits Tobacco Crop
The Tobacco Industry and Marketing Board (TIMB) in Zimbabwe said that the unusually hot and dry weather conditions are affecting tobacco, especially in the Trelawney and Darwendale districts in Mashonaland West. The board speculated that this year’s flue-cured tobacco crop size, currently estimated at around 165 million kg, might decline depending on the duration of the dry spell. The board also pointed out that in southern and central districts, tobacco yields have been revised downward because of the dry spell, although supplementary irrigation is being placed in order to resuscitate the dying crop. Smallholder tobacco growers who do not have adequate irrigation facilities are reportedly the worst hit, as they had planted more tobacco saplings this year in order to join the lucrative agriculture sector (Daily News 2/28).

Tobacco organization will operate markets
The Flue-Cured Tobacco Cooperative Stabilization Corp. will operate 14 tobacco auction marketing centers in flue-cured states this growing season, including two in the Cape Fear region -- in Clinton and Fairmont. Lionel Edwards, general manager of the corporation, told tobacco growers in Elizabethtown on Thursday that corporation’s board of directors wanted to ensure that leaf growers had alternatives to contracting this year. But the decision was not unanimous.

Three of 11 board members, including Jimmy Pate of Rowland, voted against the marketing centers. Last year, about 80 percent of tobacco growers signed contracts to sell their leaf directly to cigarette makers. That was an increase from 5 percent in 2000. The switch to contracting forced many tobacco auction warehouses out of business, leaving fewer choices for farmers who did not receive contracts or who did not want to sign contracts. In 2001, about 114.2 million pounds of tobacco was sold at auction.

About 440.5 million pounds was sold under contract. The average price paid for a pound of tobacco in 2001 was $1.86. Contract prices exceeded auction prices by 4.3 cents a pound.

April 15 deadline This year, farmers must designate by April 15 how and where they will sell their tobacco. Industry experts say contracting is here to stay. The Stabilization ran two marketing centers last year -- one in Wilson and another in Statesboro, Ga. Edwards said that the Stabilization will operate the centers not for a profit but to give farmers options. He said Stabilization will also absorb most of the fees that farmers have traditionally paid at auction. The emphasis will be on integrity and efficiency -- ensuring that buyers get what they purchase and that the sales are run as smoothly as possible, Edwards said.

Pate, a member of Stabilization’s board, said he does not like the idea of marketing centers that are run by the farmer-supported corporation. ‘‘I was against Stabilization using farmers’ equity in Stabilization to fund warehouses that would be in competition with privately funded warehouses,” Pate said. ‘‘I still believe in free enterprise.”

Work needed Pate said warehouses that remain in business need to work to be more competitive and improve the integrity of the system. He said he believes a consolidation of private warehouses, along with assistance from Stabilization, would make them more efficient and would be preferable to Stabilization-run centers.

Farmers at the meeting said they worry that some of them will be left out if more warehouses are driven under because the marketing centers are not close enough to them. Billy Harrelson, a farmer from Elizabethtown, said earning a few cents more for each pound of tobacco at auction doesn’t make up for having to travel 50 or 60 miles each way to sell it.

Edwards said the location of the marketing centers ‘‘doesn’t give access to all farmers but reaches a good percentage"” Stabilization staff members have met with representatives from all tobacco companies in the past few weeks to explain how the marketing centers will work", Edwards said. ‘‘Every one told us they will be on the market to buy tobacco (at auction) if there is enough tobacco there to justify keeping a buyer there", Edwards said.

The top two cigarette makers, Philip Morris and R.J. Reynolds, say contracting works fine for them, Edwards said. The marketing centers target the smaller cigarette makers and overseas buyers, who prefer to buy only the grade of leaf they have orders for. When a farmer sells directly to a company, that company usually agrees to purchase the entire crop, including the less-desirable lower-grade leaves.

For a list of the 14 marketing centers, log on to Stabilization’s Web site at http://www.ustobaccofarmer.com or call (800) 876-4560.

Tobacco Buyout Push Urged ; But Growers Urged To Keep Safety Net
Source: Richmond Times
Push for a buyout of tobacco quotas, but don't abandon your safety net. That was the advice given to hundreds of tobacco farmers yesterday at the Virginia Tobacco Growers Association's annual meeting in this Southside town. Cigarette companies may push to eliminate the nearly 70-year-old federal tobacco program in exchange for a multibillion-dollar buyout of U.S. tobacco quotas, an official with a farmer-owned cooperative said.

Losing the federal program, which controls the supply of tobacco and sets price supports, would put tobacco production in the pure free-market system, but it also could throw farmers back into the "boom and bust cycle" experienced prior to the program's inception in the 1930s. "You cannot produce tobacco that way in Virginia," said Arnold Hamm, assistant general manager of the Flue-Cured Tobacco Cooperative Stabilization Corp. "The last time you did this, you were subsistence farmers. We must retain a safety net."

Tobacco growers groups, cigarette companies and members of Congress from tobacco-growing states have been discussing a possible buyout of tobacco quotas, which could channel billions of dollars to farmers who own quotas and other people who own it and lease it to active growers.

Last year, a commission appointed by President Clinton recommended a 17-cent increase in the federal excise tax on cigarettes to generate about $15 billion over five years for a buyout. The commission also recommended government regulation of tobacco products. Funding has been the major barrier to the buyout. Tobacco companies are opposing a tax increase, and tobacco-state members of Congress haven't supported it either.

Further complicating the issue, only Philip Morris, the nation's top tobacco company, has endorsed the idea of government regulation of tobacco products. U.S. Rep. Virgil H. Goode Jr., I-5th, told farmers he supports a buyout but thinks the funding should come from existing cigarette taxes. He said there aren't enough votes in Congress right now to get buyout legislation passed. "In my opinion, it would take significant lobbying and grass- roots efforts by the health groups that have been aligned with tobacco interests in the past to organize and influence representatives from other states with no tobacco in them," Goode said.

Hamm and other farm leaders said farmers should be wary of any buyout proposal that would eliminate the current federal program without fully compensating them for quota. "We're asking for a safety net," said J.T. Davis, a crop insurance salesman and an officer with the farmer advocacy group Concerned Friends for Tobacco. "We know what happens in a true free market, a gravitation to lower-cost production areas."

Biotech Cigarettes Coming ; Tobacco Altered To Block Nicotine
Source: Richmond Times - Dispatch
From cereal to corn chips, Americans consume a variety of products made from genetically engineered crops. They can soon add cigarettes to the list - new smokes are due in the spring with tobacco genetically altered to be very low in nicotine. A new Agriculture Department study confirmed the low levels of nicotine, the chemical that gets smokers hooked, in the biotech tobacco and found the crop poses little risk to the environment.

Tobacco from crops grown on department-supervised test plots last summer is going into the cigarettes made by Vector Group, parent company of Durham, N.C.-based cigarette maker Vector Tobacco. The company has asked the Agriculture Department to remove restrictions on where and how the tobacco can be grown, and the agency probably will go along. The tobacco was genetically altered to block the production of nicotine in the plant's roots. "This thing could be a home run, and it could flop. We think the odds are that it is going to be a successful product," said Donald Trott, an analyst with the brokerage firm Jefferies and Company Inc.

Vector, which makes Eve-brand cigarettes as well as various generic and discount lines, has not said where it will sell the biotech cigarettes beginning in the spring or what they will be called. Trott said people who have tried the cigarettes say they light, smoke and taste like ordinary cigarettes. Tobacco-industry critics fear low-nicotine cigarettes could encourage more smoking. "A nicotine-free cigarette could still deliver very high levels of harmful toxic substances," said Matthew Meyers, president of the Campaign for Tobacco-Free Kids.

Many tobacco farmers and Vector's rival cigarette manufacturers are concerned about the product, too. Growers say the biotech tobacco could get mixed with conventional leaf and jeopardize U.S. exports. "It is a big issue. It has the potential to change tobacco and tobacco production and the production controls that we have had on tobacco for many years," said Larry Wooten, a partner in a tobacco farm and president of the North Carolina Farm Bureau. "Many of our farmers are not, I would say, aware of the serious implications that this has." Vector grew the crop on 5,200 acres in Pennsylvania, Illinois, Mississippi, Louisiana, Iowa and Hawaii. About two-thirds of the crop was grown on several dozen Amish and Mennonite farms in Pennsylvania that traditionally grow the conventional leaf. Company officials say there is no danger of contaminating conventional tobacco because the biotech version is grown and handled separately from conventional crops.

The Agriculture Department tests found small amounts of nicotine in the Vector tobacco of about 400 to 1,000 parts per million. Conventional tobacco has 20,000 to 30,000 parts per million. The Agriculture Department will take comments from the tobacco industry and other interested groups before deciding to release the tobacco from regulation.

Russia Will Import Fewer Tobacco Goods This Year
Source: Daily News Bulletin
Russia will import around five billion units of tobacco product this year against the seven billion it brought in last year, corporate relations director at British American Tobacco Russia Vladimir Aksyonov thinks. Russia imported 12 billion cigarettes in the year 2000, he noted. The reason for the reduced imports is that domestic tobacco goods production tops demand by more than a hundred billion units, Askyonov said. Also, international tobacco corporations with production facilities in Russia turn out product in the country as good as that made in the West.

Brazil becomes second country to place graphic picture warnings on cigarette packs Source: Associated Press
Following through on a tough anti-smoking campaign, Brazil on Friday became the second country in the world to require graphic picture warnings on cigarette packs. Beginning Friday, all cigarettes sold must carry the warning pictures which cover the entire side of a pack. Canada is the only other country that requires cigarette companies place picture warnings on their packages.

The warnings range from the mildly humorous to the shocking. One picture features a frustrated couple in bed under the headline ``Smoking Causes Sexual Impotency.'' Another warning shows a female cancer patient on breathing tubes in a hospital's intensive care unit. A major tobacco producer, Brazil has taken a very aggressive anti-smoking stance in recent years, banning cigarette advertising in newspapers and on television and prohibiting smoking in all public places.

The campaign was conceived of by Health Minister Jose Serra, who has also gained notoriety facing down international pharmaceutical companies over the high price of AIDS drugs. Serra announced his plans to run for the presidency earlier this month. According to the Health Ministry, 30 million of Brazil's 170 million people smoke. According to the National Cancer Institute, smoking kills about 80,000 Brazilians a year.

Universal Is Moving Operations ; Corporate Offices To Stay In Richmond
Source: Richmond Times - Dispatch
Universal Corp. is moving the headquarters of its U.S. tobacco operations from Richmond to Rocky Mount, N.C. The world's largest tobacco leaf merchant said its corporate headquarters will remain in Richmond, where the company has been based since it was founded in 1918, a company spokesman said yesterday. "We felt that moving the U.S operational headquarters to eastern North Carolina was important on a number of fronts," company spokesman Todd Haymore said yesterday.

Cites conveniences

"It puts us near the new processing plant. It puts us in the heart of the flue-cured tobacco growing area, and it puts us closer to our existing processing facilities and sales force," he said. Six executives who oversee the U.S. operations will move. Other Richmond area employees will go south, too, but Haymore said the exact number hasn't been determined yet. The overall impact on local employment is expected to be minimal, he said. Universal has about 220 employees at its headquarters on West Broad Street. The new office in Rocky Mount will employ 60 to 70 people, including some now working in Richmond, some from a Wilson, N.C., sales office, and new hires from the Rocky Mount area, Haymore said. $90 million in plant Universal is investing $90 million in the 1.2 million-square-foot processing plant in Nash County. The plant, expected to be completed in July 2003, is supposed to improve the company's processing efficiency in a U.S. leaf market that has shrunk drastically in recent years. It will replace existing plants in Wilson and Henderson, N.C., and a Rocky Mount plant that was badly damaged by Hurricane Floyd and not reopened.

Universal also owns businesses in lumber and agricultural products, such as tea and sunflower seeds. Its U.S. tobacco operations are part of a subsidiary, Universal Leaf Tobacco Co., which will maintain its headquarters in Richmond. W. Keith Brewer, senior vice president and director of processing for Universal Leaf North America, will become president of the U.S. operations division.

Connecticut governor signs off on 61-cent increase in state's cigarette tax
Source: Associated Press
Gov. John G. Rowland signed legislation Thursday that adds 61 cents to Connecticut's cigarette tax, making it the third-highest in the nation. Rowland proposed the tax increase to help close a two-year budget gap estimated at $1 billion. ``It's going to help us with this huge deficit we're facing,'' he said after Thursday's vote by the state Legislature. The tax increase is expected to generate $130 million in the next fiscal year.

The increase would raise the state tax on a pack of cigarettes from 50 cents to $1.11 starting April 3. Only New York and Washington will have higher cigarette taxes. The House approved the bill, 75-67, after it passed by a 24-10 vote in the Senate. Sen. Brian McDermott, a Democrat and smoker since age 13, was among opponents who said it was unfair lawmakers were financing their spending on the backs of smokers. ``I used to say, 'Do you mind if I smoke?' '' McDermott said. ``Now I'll say, 'Do you mind if I balance the budget?'''

At least 22 states have been looking at raising cigarette taxes, largely to generate revenue as they face budget shortfalls due to the recession, according to the National Conference of State Legislatures. Already this year, New York lawmakers approved raising that state's cigarette tax by 39 cents to $1.50 per pack. The increase, which goes into effect April 1, will make New York's the highest cigarette tax in the nation, followed by Washington, where voters last year approved a 60-cent increase to $1.425 per pack.

The tobacco industry, which has waged a state-by-state lobbying effort against the cigarette tax increases, has accused lawmakers of singling out a small percentage of the population for a greater tax burden. Rowland acknowledged that many smokers -- including his own mother -- will not want to pay the higher tax. ``My mother's been hard at work. She's got her bridge club e-mailing and writing letters,'' he said

Researchers Study New, `Less Harmful' Cigarette
Source: Richmond Times - Dispatch
A new cigarette designed to be less harmful to smokers delivers more nicotine than conventional light cigarettes, researchers at Virginia Commonwealth University said. The cigarette, Advance, was developed by Star Scientific Inc., a Chester-based company that started selling it in Richmond in October 2000.

Brown & Williamson, the third-largest U.S. cigarette company, is test-marketing Advance in Indianapolis. The cigarettes contain tobacco with drastically reduced amounts of cancer-causing chemicals called tobacco-specific nitrosamines, or TSNAs. Scientists don't know whether eliminating TSNAs reduces long-term health risks for smokers.

"It's possible that there could be a plus side, but we have demonstrated that there is a down side," said Thomas E. Eissenberg, head of the university's clinical pharmacology laboratory, part of VCU's Institute for Drug and Alcohol Studies. Star Scientific executives said yesterday they hadn't been able to review the study, and they questioned its conclusions. "I think the design [of the study] appears to be flawed, and their focus appears to be not equitable," said Paul Perito, Star's chairman and chief operating officer. "The only focus they seem to have is on the nicotine, and their data is different from ours." In the study, funded by a grant from the National Institute on Drug Abuse, researchers measured heart rates and carbon monoxide and nicotine levels in 20 smokers during three sessions.

The participants, who had not smoked for eight hours before the sessions, took eight puffs from a cigarette every 30 minutes for a total of four cigarettes per session. In one session, the participants smoked their own brands of light or ultra-light cigarettes. In another session, they smoked Advance. In the third session, they drew on an unlighted cigarette.

The study concluded that Advance produces slightly less of the harmful gas carbon monoxide, but the smokers' blood nicotine levels were more than 25 percent higher after smoking four Advance cigarettes compared with four conventional light cigarettes.

"To be perfectly honest, we were surprised with that finding," Eissenberg said. Eissenberg and William V. Corr, executive director of the Campaign for Tobacco-Free Kids, said the study highlights the need for the Food and Drug Administration to have regulatory authority over tobacco products. "People who smoke should not have to rely upon tobacco companies for critical information," Corr said. "They should have the assurance that independent scientific review has occurred so that claims made about new products in fact are supported by scientific evidence." The National Institute on Drug Abuse is a part of the National Institutes of Health and is taxpayer financed.

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