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Taking tobacco to market a longer trip

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Absence of receiving station affects farmers, businesses

By Stephen Lega

Ham Spalding remembers when the tobacco price support program was put into place. He remembers selling tobacco in hand-tied bundles, in 100-pound bales and later 500-pound bales.

But one thing had always been the same, as long as the 94-year-old St. Joe resident could recall.

"Ever since I was a kid, you've been able to sell tobacco in Lebanon," Spalding said.

That changed when Phillip Morris USA moved its receiving station from Lebanon to Danville. That meant none of the tobacco raised in 2011 would be sold in Marion County.

Spalding said Lebanon had five receiving stations operating at the same time, but today, for the first time anyone can remember, local farmers have to travel outside the county to sell their product.

Marion County Agriculture Extension Agent George McCain said the transportation costs could be detrimental to smaller growers, but he's hasn't heard many complaints.

"Throughout the state, we're still geographically located pretty well," McCain said.

Springfield has receiving stations for two companies, Hail & Cotton and Japan Tobacco International. While Danville has an auction floor in addition to the Phillip Morris USA receiving station.

"A lot of guys that have extra pounds, a lot of them will take that to the auction floor," McCain said.

Overall, he said most farmers have been content with the prices they have received, generally between $1.70 and $1.83 per pound.

Likewise, many farmers have contracts with multiple companies, and that competition is good for the growers, McCain said.

Steve Downs is one of those farmers. This year, he has contracts with four companies to sell 162,000 pounds of tobacco.

From what he's seen, many farmers have raised fewer pounds per acre than they did in 2010, but the quality of the tobacco has been better in 2011.

Downs said he's received an average of $1.80 per pound on what he has sold to date.

This is marked increase over last year, when he said he heard of farmers getting as little as $1.10 per pound.

"It left a black cloud over the industry last year," he said.

Spalding said multiple farmers have told him they did not raise any tobacco this year. This is a change from when he was a young farmer, when everyone raised at least some tobacco.

The federal government's price-support program, which started while Spalding was a teenager, made a big difference for local agriculture.

"We couldn't have made it without receiving some income from tobacco," he said, "and we were assured some income with the price support."

With the tobacco buy-out and the end of the price support system, most tobacco farmers have gone to selling their crops on a contract basis. That has given tobacco companies much greater influence over sales and production.

"They're in complete control today," Spalding said.

Downs said he's also heard more farmers were getting out of tobacco this year, but he doesn't think Phillip Morris USA's decision to relocate its receiving station was the only factor.

"That was the straw that broke the camel's back for some of them," Downs said.

While the change has affected local farmers, McCain said the biggest impact is likely being felt by businesses in Lebanon.

"I'd say our fast food industry has seen a difference from not having the warehouse," McCain said. "There's also a lot of seasonal employees. That's another economic impact that it's had."

Downs agreed. He said farmers typically grabbed something to eat while they were in town to sell their crops. He added that tobacco sales provide Christmas money for many farm families, and it's not unusual for farmers to do some shopping in town after selling their crops.

Richard Lawson, who raises a little tobacco himself, also deals with a lot of farmers through his work at Burkmann Feeds.

Like McCain and Downs, he agreed that local businesses will notice the effects of the absence of a local receiving station. Farmers used to travel here from Boyle, Casey, Green, Nelson, Russell, Shelby, Spencer and Taylor counties to sell their tobacco. Now, those farmers are heading to Danville instead.

"I really hate to see 'em leave because I think it makes an impact on business for our city," Lawson said. "Any time you got anything in your community that brings people, it's got to be a plus as far as I'm concerned."