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China buys 52 million pounds of tobacco
N.C. growers benefit from steady market
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Published: November 8, 2009
RALEIGH
North Carolina tobacco growers have reached agreement with China on the sale of 52 million pounds of tobacco leaf -- a sign of the increasing importance of the Chinese market for tobacco produced in the United States.
While the domestic demand for tobacco continues to wane, the demand in China remains stable and strong. There are more smokers in China than there are citizens in the U.S.
"They are a big, big player," said Mike Parker, the manager of member relations for the U.S. Tobacco Cooperative Inc., based in Raleigh.
The cooperative is one of the major sellers involved in the agreement with China Tobacco International, China's government-run tobacco company.
The sale of 52 million pounds represents a 25 percent increase over the amount of tobacco that North Carolina growers sold to China last year, said Steve Troxler, the state's commissioner of agriculture.
Officials would not disclose what the tobacco sold for. The average selling price last year of North Carolina flue-cured tobacco was $1.76 per pound, according to the N.C. Department of Agriculture.
Troxler said the sale is a result of the state's efforts to build better trade relations with China. In August, Troxler traveled to China to promote North Carolina tobacco and other agricultural products. Gov. Bev Perdue also went on a two-week trade and cultural mission to China and Japan last month.
And Troxler hosted more than 20 officials from the Chinese tobacco company, including the company's head buyer, at the recent State Fair. Troxler is lobbying the company to open an office in North Carolina.
"With a domestic market here that has shown decline in the last couple of years, we're going to be actively looking for export partners in the world," Troxler said.
Currently, Japan is North Carolina's largest overseas tobacco customer. China is No. 2.
China is also the world's largest producer of tobacco. But Chinese producers can't keep up with Chinese demand. Plus, there is a demand for cigarettes made with U.S.-grown tobacco because of its higher quality and flavor.
Nearly all of the tobacco that North Carolina exports to China is flue-cured tobacco, most of which ends up in Chinese cigarette brands. Chinese smokers prefer cigarettes made exclusively with flue-cured tobacco.
"The tobacco we have is good to help upgrade the quality of the cigarette," Troxler said.
And the growing middle class in China can increasingly afford higher-quality, more expensive cigarettes.
North Carolina's flue-cured harvest this year is expected to be about 418 million pounds, up from 385 million pounds last year.
Tobacco remains North Carolina's largest export crop, and tobacco growers are likely to continue to look overseas.
In the U.S., high taxes on cigarettes, strict regulations on smoking and an overall shrinking number of smokers have hurt tobacco growers. But those trends don't exist in China.
"If you look at declining demand in the United States, that would translate into less acres and less contracts" for North Carolina growers, Troxler said. Stronger ties overseas, he added, "keeps the farmer in business. It allows them to maintain a level of production that is going to help make a profit."
jromoser@wsjournal.com
919-210-6794
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