Tifton Gazette

Local News

October 19, 2009

Philip Morris to stop offering tobacco contracts

MOULTRIE — The outlook for Georgia tobacco farmers was clouded last week with the announcement that the largest cigarette manufacturer will not offer contracts and will close its Alma buying station.

Philip Morris USA told tobacco growers at a Wednesday meeting in Alma that it will no longer issue one-year contracts to growers. The company said it will honor three- and five-year contracts that are in effect as long as growers are in good standing.

“The folks that left that meeting Wednesday were pretty much in a state of confusion,” said J. Michael Moore, a University of Georgia extension agronomist. “There’s a lot of uncertainty.”

The closing of the Alma buying station reflects the tobacco giant’s decision to shift production to North Carolina and Virginia, Moore said. It is too early to determine how big the blow will be to Georgia tobacco growers.

Philip Morris USA purchased about half of the tobacco produced in the region. The remaining companies have not indicated any intention to purchase additional tobacco.

The company also has notified the owner of the Alma building where the buying station is located that it will no longer need its services under the current contract, Moore said. It did indicate it will purchase tobacco grown by long-term contract holders somewhere in Georgia rather than requiring the growers to transport their tobacco to North Carolina.

“It’s not good news because Philip Morris USA has been a major purchaser of Georgia and Florida flue-cured tobacco for a number of years,” Moore said. “Why did it happen is a common question. (Their) answer was they had continued to slice the salami. Rather than ask every producer to sell less from Florida to Virginia, they had decided to cut one of the buying stations.”

Philip Morris will retain buying stations in Lumberton and Wilson, N.C., and a third in Virginia.

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