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Tobacco Producing Families Adjusting to Change

Farm Management Update, June 1996

Dixie Watts Reaves and Wayne D. Purcell

The tobacco industry today is facing numerous and unprecedented challenges. From FDA regulation to no smoking policies in public areas, from lawsuits to proposed tax increases, the industry is under attack from all directions. Amidst the controversy and the negative headlines concerning tobacco manufacturers and the industry as a whole, the effects of tobacco program changes on the tobacco producer's family and way of life are often overlooked. A recent "tobacco communities" project focused on the impacts of a changing tobacco program on the individuals that could be most affected by change --- the producers, themselves.

A group of individuals from Virginia Tech and the University of Virginia, working with a grant from the Robert Wood Johnson Foundation, organized roundtable discussions in the tobacco-producing regions of Southside and Southwest Virginia. These discussions revealed the different ways that tobacco-producing families are adjusting to change. From these discussions, it became clear that different families have very different needs and interests, and may use very different means of adjusting to future change in the industry. Four alternative courses of producer actions were identified from the roundtable discussions and are identified below.

Remaining in Tobacco Farming

A number of families will remain in tobacco farming as their primary cash-generating activity because of age, farm size and efficiency, debt- to-equity ratio for the farm, or for other reasons. In adjusting to a changing industry, these individuals will first look for improvements in the technology of production, harvesting, and handling of tobacco to make their operations more efficient. This adjustment implies a need for first, research dollars to support development of these new technologies and second, capital availability so that producers can invest in the new technologies.


A second group of producers will likely choose to diversify their farming activities. Thus, there is interest in supplementary or alternative on-farm enterprises that have the potential to be competitive and profitable enterprises in today's marketplace. While there is no one enterprise that could ever replace tobacco in terms of profitability in the Southside and Southwest Virginia regions, there is a need for research support to determine which enterprises would be best suited for specific locations in the state.

Obtaining Financing

A third area of concern for producers is access to capital or credit, whether producers who want to continue in tobacco production, who want to diversify on the farm, or who want to consider some form of small business activity off the farm. Discussions revealed producer concerns about their ability to borrow money in the competitive credit marketplace. Thus, there is a need for the Commonwealth to consider its role in the provision of capital to these producers.

Finding Off-farm Employment

The fourth area that received attention in the roundtable discussions was the recognition that some farm family members will seek off-farm employment. This change leads to two needs in the rural communities. First, high quality jobs must be available, and second, there must be a mechanism for providing workforce enhancement and skill development for those producers who might need to sharpen their skills to be able to compete effectively in the modern workplace. These needs suggest the importance of a state-level program of economic development for rural Virginia, as well as the provision of skill development and training programs for agricultural producers, perhaps offered through the existing community college framework.

Recommendations in these four identified areas were shared with a special state legislative committee whose goal was to facilitate adjustments for tobacco producers. Based on initiatives from this committee, the 1996 Virginia General Assembly adopted resolutions to address the issues of access to capital and economic development in rural communities. Although it is not clear what programmatic follow- through will result from these resolutions, there is at least a broader understanding at the state level of the decisions facing tobacco- producing families, the needs facing them, and the possibility of the state having a role in meeting those needs.

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