Special circumstances lead to lower acreage of peanuts, tobacco in N.C.

by | Jul 1, 2009

N.C. farmers are growing fewer acres of tobacco this year.

N.C. farmers are growing fewer acres of tobacco this year.

The USDA released its June Crop Report Tuesday, and I can’t say I was surprised by the numbers. As expected, soybean acreage increased 7 percent over last year, to 1.8 million acres. That’s the highest acreage in North Carolina since 1985.

Because of high global demand, soybean prices are very good now, and N.C. farmers are going to plant crops they believe will bring the best return on their investment. On the flip side, that same philosophy explains the drop in acreage for corn and cotton.

Two other crops — peanuts and tobacco — also are down from a year ago, but for reasons that go beyond simple economics.

Peanut acreage is down 23 percent from a year ago, to 75,000 acres. That drop is the result of a couple of factors: 1) Last year’s N.C. peanut crop was a record, so some decrease this year was to be expected; and 2) the peanut industry was hurt by the salmonella outbreak earlier this year that saw the recall of lots of peanut butter products. The massive recall affected consumer demand for peanut butter and related foods. That has left a lot of N.C. farmers with peanuts in storage and no contracts for them. In other words, nobody’s buying.

N.C. farmers also aren’t planting as many acres of flue-cured tobacco this year (3 percent less, to be exact), mainly because their contracts with tobacco companies have been reduced. Companies lowered contracts when they realized that Congress was likely to pass legislation authorizing the FDA to regulate tobacco products, which Congress did earlier this month. Another factor was the 62-cent increase in the federal excise tax on cigarettes and other tobacco products that took effect April 1. Regulation and higher taxes are going to lower demand for cigarettes and other tobacco products, so the manufacturers are taking steps to lower their costs. Unfortunately, that means farmers who grow tobacco are seeing less demand for their crop.