Future of the Cooperative Daniel Green. History of the Cooperative Burley Tobacco Growers Cooperative U.S. was primary producer of burley Great instability,

Future of the CooperativeFuture of the Cooperative

Daniel GreenDaniel Green

History of the Cooperative

Burley Tobacco Growers CooperativeBurley Tobacco Growers Cooperative

• U.S. was primary producer of burley

• Great instability, uncertainty in prices

• Few buyers– Low prices– Producers unable to cover expenses

• Contract arrangement for 5 years for at least 75% production

• 1921, Burley Cooperative formed– 124 warehouses purchased or leased for

receiving centers– contracted and purchased re-drying plants (14) – built storage facilities

Original System


• Very successful, handling 940 million pounds over 5 years

• Problems– no limit on production/sales

– problems with contract breaching

• Contract ended in 1926, membership was 108,000, but interest faded, prices were better

• No new contracts were signed

Original System


• Over 60 years, very successful program

• Stable price, unstable supplies

• Cooperative borrows money from CCC and pays farmer

• Tobacco is processed and sold and loan is repaid

• Minimal cost to taxpayers

1938 AAA System


Problem


GROWERS and QUOTA OWNERS

Impact of the Buyout on Numbers


• What can be accomplished for tobacco in the post-buyout environment?

Those Out

Growers Left

Areas of Priority


• Management of Inventory• Grower Organization and Advocacy• Export Promotion and Market Expansion• Contracting Support• Alternative Marketing Options• Production Technologies and Infrastructure Improvement• Communication, Education and Research Support• Enhanced Crop Insurance

• BTGCA responsible for a portion of 160 million pounds of pool inventory after buyout

• Goal: Maximize benefit from stocks while minimizing negative impact on the market.

• No more than 20% domestic each year

• Focus on non-traditional markets

Management of Inventory


• Better organization of growers is essential with smaller numbers– Locating existing burley growers, obtaining

email addresses, etc.– Redistricting our board representatives based

on where tobacco is being produced– Effective system for alerting tobacco growers

and to get involved in issues

Grower Organization and Advocacy


• The political environment and society will become increasingly malevolent/restrictive towards tobacco

• New restrictions and possible FDA oversight• Keeping any potential production regulations

under USDA, trade, health issues, labor issues, disaster assistance, federal crop insurance, etc.

Grower Organization and Advocacy


• Great opportunities exist for burley with post-buyout prices

• Using current inventories to develop new markets

• Serving as an agent for U.S. growers

Export Promotion and Expansion


• Toll-free contract number for info– Help with general information about contracts– Locations of contract stations– Contract prices & terms– Legal assistance

Contracting Support


• Tobacco that is not contracted

• Tobacco not accepted by contractor for various reasons

Alternative Marketing Options


• “Clearinghouse” type market– Tobacco not sold on contract– Damaged tobacco– Overproduction and undesirable stalk

positions?



• Alternative contracts– Replenishing supply of inventory– Adding value to the market– Specific varieties/characteristics– Other uses – ethanol, pharmaceutical,

etc.??



• Investing $3.5 million in infrastructure improvement program

• Improving competitiveness in new market environment

• Sustaining identity as world’s premier producer of quality burley

• Retaining global leadership position in tobacco production

Technology and Infrastructure


• Helping get information to producers– Meetings, media, phone, internet, mail, etc.

• Support for expansion and increased efficiency in tobacco production

• Support for new research and technology development

Communication, Education & Research


• Weather risk management products for tobacco?– Enhancing opportunities by insuring quality

Enhanced Risk Protection


• Services must provide value to membership and contribute something new

• Tobacco Summit – October 8-9, Savannah, GA

Summary


http://www.burleytobacco.com

Documents

Future of the Cooperative Daniel Green. History of the Cooperative Burley Tobacco Growers Cooperative U.S. was primary producer of burley Great instability,