The burley tobacco market has changed in the last decade — to say the least. That change continues as new products, most notably the electronic cigarette, begin to expand in use by consumers.
While tobacco companies see it as just another product, some growers see it as one more thing to take away from their crop.
Todd Clark, a producer from Fayette County, said he feels the growing use of e-cigarettes could eventually affect how much burley tobacco is needed in the marketplace.
“The reason I think so now — and this could change — [is] currently it appears there’s minimal regulation on that versus traditional cigarettes,” he said.
That regulation would likely come from the Food and Drug Administration (FDA), which regulates all tobacco products but does not currently have regulations in place for the electronic versions.
According to information from the FDA, the agency has stated its “intent to issue a proposed rule that would extend FDA’s tobacco product authorities to products that meet the statutory definition of ‘tobacco product.’”
The e-cigarette basically is a nicotine-delivery device, and nicotine primarily comes from tobacco plants, although it is also found in other plants as well.
Traditional cigarettes are usually made from blended tobacco, including high-quality burley tobacco. Kentucky produces more burley tobacco than any other state, and as growers here will attest to, they grow the best burley tobacco in the world.
Clark said manufacturers of e-cigarettes can get the nicotine from anywhere and don’t necessarily need a high-quality product.
“In general, we’re known for a quality of leaf that can’t be replicated, for the most part, anywhere else in the world, but all of that is out the window with these,” he said. “Burley tobacco can be produced in other parts of the world cheaper than we can produce it here in Kentucky, but the characteristics of that tobacco [are] not the same as ours.”
Clark said that over time, the e-cigarette could overtake the traditional cigarette, and if it did, tobacco producers here would go, in much the way the horse-drawn wagon did as it was replaced by the automobile.
David Howard, a spokesperson for tobacco giant R.J. Reynolds, said the e-cigarette represents a very small portion of the industry right now.
“First and foremost, I think it’s important to put things in perspective of where they are, and in talking about e-cigarettes, they still represent less than one share point of a large tobacco business,” he said.
Howard also said that coming up with new products is key in the transition of the tobacco industry, which includes other products offered by Reynolds, but the company is still keenly focused on its cigarette business and doing business with tobacco farmers.
“We always evaluate our tobacco needs, and we’re going to continue to do that. ... The fortunate thing is we work with the best farmers in the business, and we look forward to continuing to work with them for many years to come,” he said.
That small share of the market is still big business. By some market analysts’ predictions, the sale of e-cigarettes this year could near the $2 billion mark.
Tobacco has been an economic force and an agricultural staple in Kentucky since before the commonwealth became a state, and at one time, more tobacco was grown here than in any other state. But a federal quota buyout in 2004 caused many producers to leave the tobacco business, and since 2009, the FDA has been the regulatory body for tobacco — something many producers did not want.
Whether or not the e-cigarette trade signals another drop in production remains to be seen. Clark said he hopes this doesn’t mean the end of an era when it comes to tobacco production.
“To some degree, that could happen slowly over the course of time,” he said. “The farm economy in general has changed, but I like this crop, and I hope to continue to raise it.”
Clark added that tobacco works well in his area and this climate, but he does think this could be the beginning of an end. Possibly the crop could already be on that path, he said, and not just because of the e-cigarette craze. He noted the tobacco flavoring bans in Canada and the European Union could also mean a drop in demand. Last month, the European Parliament issued a ban on menthol and other tobacco flavorings. Canada instituted a ban in 2009.
“A fear that I’ve had even before the e-cigarette is we have a limited market for this crop. It’s not like other commodities, where there are multiple uses for it,” Clark said. “They [tobacco companies] are under tremendous pressure to change and survive. My fear has been the companies may change and we may not be part of the equation.”
Referring to the small part e-cigarettes plays in the overall market, Clark noted that something that is small today could eventually take over the market.
“I plan to raise tobacco as long as it is profitable,” he said. “In fairness, I hope that’s my lifetime of work.”