• TABLE OF CONTENTS
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 Copyright
 Title Page
 Table of Contents
 Acknowledgement
 Economic situation of the...
 Purpose of this economic analy...
 Research procedure
 Results
 Major conclusions
 Appendix






Group Title: Agricultural Economics report 11
Title: Florida shade tobacco economics of production, 1969
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Permanent Link: http://ufdc.ufl.edu/UF00027472/00001
 Material Information
Title: Florida shade tobacco economics of production, 1969
Physical Description: ii, 21 leaves : ; 28 cm.
Language: English
Creator: Plath, C. V
Publisher: Dept. of Agricultural Economics, University of Florida
Place of Publication: Gainesville Fla
Publication Date: 1970
 Subjects
Subject: Tobacco industry -- Florida   ( lcsh )
Tobacco farms -- Cost of operation -- Florida   ( lcsh )
Tobacco workers -- Florida   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
non-fiction   ( marcgt )
 Notes
Statement of Responsibility: C.V. Plath.
General Note: Cover title.
General Note: "October 1970."
Funding: Florida Historical Agriculture and Rural Life
Additional Physical Form: Agricultural economics report - University of Florida Dept. of Agricultural Economics ; no. 11
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Bibliographic ID: UF00027472
Volume ID: VID00001
Source Institution: Marston Science Library, George A. Smathers Libraries, University of Florida
Holding Location: Florida Agricultural Experiment Station, Florida Cooperative Extension Service, Florida Department of Agriculture and Consumer Services, and the Engineering and Industrial Experiment Station; Institute for Food and Agricultural Services (IFAS), University of Florida
Rights Management: All rights reserved, Board of Trustees of the University of Florida
Resource Identifier: aleph - 001615901
oclc - 21028323
notis - AHP0346

Table of Contents
    Copyright
        Copyright
    Title Page
        Title
    Table of Contents
        Page i
    Acknowledgement
        Page ii
    Economic situation of the industry
        Page 1
        Page 2
        Page 3
    Purpose of this economic analysis
        Page 4
    Research procedure
        Page 4
        Page 5
        Page 6
    Results
        Page 7
        Page 8
        Page 9
        Page 10
        Page 11
        Page 12
        Page 13
        Page 14
        Page 15
        Page 16
        Page 17
    Major conclusions
        Page 18
        Page 19
        Page 20
    Appendix
        Page 21
        Page 22
Full Text





HISTORIC NOTE


The publications in this collection do
not reflect current scientific knowledge
or recommendations. These texts
represent the historic publishing
record of the Institute for Food and
Agricultural Sciences and should be
used only to trace the historic work of
the Institute and its staff. Current IFAS
research may be found on the
Electronic Data Information Source
(EDIS)

site maintained by the Florida
Cooperative Extension Service.






Copyright 2005, Board of Trustees, University
of Florida






er 1970
. -', fl/


Ag. Econ. Report 11


Florida Shade Tobacco


Economics


of Production, 1969


HUME LIBRARY


MIR 9 I/


I.F.A.S. Univ. of Florida


nent of Agricultural Economics
Cooperative Extension Service
of Food and Agricultural Sciences
ity of Florida, Gainesville


/-


C. V. Plath


p..


s I C I I s I~ C I t ~I ill 1
Ilpllraslll~l~a~e~br~11111~~
















TABLE OF CONTENTS

Page

ACKNOWLEDGMENTS. . ... . . .... ii

Economic Situation of the Industry. . . .. 1
Purpose of this Economic Analysis . . 4
Research Procedure. . . ........... 4

The Sample .... .. . . ... 4
Obtaining the Data .. . . 5
Economic Analysis . .......... 6

Results . .. * .................. 7

Summary of Selected Inputs and Outputs . 7
Capital Investment ...... . . . 10
Annual Cash Costs. .... . . 12
Typical Labor Inputs . . . 14
Typical Investment and Annual Costs. . ... 16

Major Conclusions .... .. . . . 18

Appendix . . * . 21

















ACKNOWLEDGMENTS


The four shade-tobacco growers of Gadsden County who cooperated

so fully and effectively with me in this economic analysis, both in

obtaining the data and in reviewing the results, are the ones to whom

we owe our greatest appreciation. However, the errors, and the form

of the conclusions, are my responsibility, not theirs.

The Director (W. H. Chapman), the Plant Pathologist (R. R.

Kincaid), and the Agricultural Economist (W. T. Menasco) at the North

Florida Experiment Station, as well as the County Agricultural Extension

Agent (J. Russell), gave me the guidance that was essential for the

field work in Gadsden County.

The administrative guidance was thoughtfully provided by K. R.

Tefertiller and C. D. Covey, and the skillful technical leadership was

tactfully supplied by J. Holt, all in the Department of Agricultural

Economics, University of Florida.

















FLORIDA SHADE TOBACCO
Economics of Production, 1969

C. V. Plath1


Economic Situation of the Industry2

Cigar-wrapper tobacco growers face not only the rather common

cost-price squeeze but also an uncertain and stagnant demand for their

product; in fact, the market for natural, shade-grown cigar-wrappers

appears to have begun a declining trend. In common with various other

lines of agricultural production, the shade-tobacco growers face

steadily, and rapidly, rising labor costs, as well as other production

costs, in their labor-intensive production of the large, thin, fragile,

uniform tobacco leaves used as the outer wrapper of cigars.

These rising costs of production, without an equivalent increase

in the prices paid for the product, are confronting an industry in which

the benefits of past and current research already have been put into

practice by the high-level managers among the shade-tobacco growers.

This situation, plus increasing competition from foreign producers and

from sheet (manufactured) wrappers, is the basic cause for the economic




Visiting Professor, Department of Agricultural Economics, Uni-
versity of Florida, March-May, 1970.

2
Much of this section was taken, directly or indirectly, from
Kincaid, Randall Rich, Jr., "Economics of Cigar-Wrapper Tobacco,"
(Unpublished Ph.D. dissertation), Department of Economics, Duke
University, 1967.












dilemma confronting the shade-tobacco growers of the Florida-Georgia

cigar-wrapper production area (Type 62 Tobacco). In recent years, the

production had increased to a value of $16 million annually in Florida

and about $5 million more in Georgia, grown under similar conditions

in the contiguous area.

The two shade-tobacco production areas in the U. S. are the

Connecticut Valley of Connecticut-Massachusetts and the Florida-Georgia

area along the border of Southwest Georgia and North Central Florida.

Gadsden County, Florida is the main production center of this latter

area. As Kincaid says,

There are no governmental price-quantity controls in either
area. About 90 percent of all cigars have a natural leaf
wrapper produced in one of the two areas; most of the other
10 percent have a sheet tobacco wrapper, except for about
1 percent with an imported wrapper.


The demand for cigars has been in a long-term down trend;
most cigar makers have been forced out of the industry,
leaving an oligoposony of buyers in the wrapper market. In
Connecticut, these cigar companies own most of the production
facilities themselves. In Florida, the facilities are pri-
vately owned by about 150 growers, but the cigar companies
exercise nearly absolute control over both price and quan-
tity because they furnish the growers financial backing for
production of the crop.

About three-fourths of the crop is sold domestically, and
the other one-fourth goes into export, but this latter mar-
ket is shrinking slowly.

On the supply side, production in Connecticut and Florida is
quite different. There are about 25 growers in Connecticut
with an average acreage of 350; in Florida, the 150 growers
have an average 30 acres.


3Kincaid, R. R., Jr. Op. cit., pp. iii-vi.
Kincaid, R. R., Jr. Op. cit., pp. iii-vi.











In Connecticut, the labor force is a seasonal one, consis-
ting of young people and adults from the area, young peo-
ple recruited interstate, Puerto Ricans, and migrant wor-
kers. Wage rates averaged $1.40 per hour in 1966. In
Florida, the labor force consists mostly of Negroes who
are residents of the various farms. Wage rates are less
than half those in Connecticut. Labor productivity is
more than half again as high in Connecticut as in Florida.

A number of problems in the two areas bear on the future
of each. In Connecticut, land has- a high and growing
opportunity cost because of the demand for homesites.
Connecticut growers also have some labor problems. But
despite the problems, the future of tobacco growing in the
area appears bright. There will, no doubt, be a continua-
tion of the trend toward greater control of acreage by
cigar manufacturers.

In Florida, the principal problem is labor. Wage rates
have nearly doubled in two years since 1965, being forced
up by the emigration of the resident laborers to areas of
higher wages. Alternative labor sources are largely
closed to Florida growers; low wages eliminate some poten-
tial laborers and the crop timing eliminates others, such
as students. The wage level will probably continue to
rise in the Florida market so that it will be competitive
with other jobs. There is little scope for mechanization
because of the problem of damage to the leaf.

A second problem in Florida is the tendency of buyers to
finance a bit more acreage than they need--a practice
quite economically justifiable because of the inelastic
demand for cigar-wrapper tobacco. But the practice keeps
price below the total cost of many growers, so the process
of exit which has existed for many years is likely to con-
tinue. If the increasing size of the surviving firms gives
them much market power, the cigar companies will probably
enter production on a large scale in Florida, just as they
have done in Connecticut.

Sheet cigar-wrapper tobacco is made from stems and leaf
scrap which are ground into a powder, combined with adhe-
sives, and rolled into sheets. It came into commercial
use in the early 1960's, and has grown in market share at
a fairly rapid rate. Cost differentials in cigar manu-
facture are the principal reason for the substitution.
Sheet wrapper will probably grow in market share because
of increasing levels of demand for smaller cigars, most
of which use sheet wrappers.

Historical data for both of the U. S. production areas are

given in the Appendix. Included are data for recent years concerning









Acreage harvested, amount produced, yield per acre, and the average

price per pound received by growers (See Appendix).


Purpose of this Economic Analysis

Fundamentally, the reason for this analysis was to provide

information and guidance in the making of decisions concerning the

future of the shade-tobacco industry of Florida. Not only the

growers, but also a considerable social-economic community, are

vitally concerned over the plight of this $16 million production,

and the cigar manufacturing to which it is attached. The future

looks uncertain; therefore an economic study was requested by the

industry, since previous economic studies are limited in scope or

are outdated.

Two main purposes for the economic analysis can be identified:


a. Analysis of the current economic situation of cigar-
wrapper tobacco production on Florida farms.

b. Consideration of possibilities or alternatives within
the industry. (Alternatives outside of shade-tobacco
are included in other research by the University of
Florida.)


Research Procedure


The Sample

Four growers were purposely selected to show the production

operations and economic situation of a high level of management being

applied on medium-sized tobacco operating units. The acreage of shade-

tobacco grown in 1969 on the units analyzed in this study ranged from

38 to 68 acres. On two of these farms, the operating unit studied

did not represent all of the shade-tobacco being managed by the operator

but in each case it did represent a distinct and separate operating









Acreage harvested, amount produced, yield per acre, and the average

price per pound received by growers (See Appendix).


Purpose of this Economic Analysis

Fundamentally, the reason for this analysis was to provide

information and guidance in the making of decisions concerning the

future of the shade-tobacco industry of Florida. Not only the

growers, but also a considerable social-economic community, are

vitally concerned over the plight of this $16 million production,

and the cigar manufacturing to which it is attached. The future

looks uncertain; therefore an economic study was requested by the

industry, since previous economic studies are limited in scope or

are outdated.

Two main purposes for the economic analysis can be identified:


a. Analysis of the current economic situation of cigar-
wrapper tobacco production on Florida farms.

b. Consideration of possibilities or alternatives within
the industry. (Alternatives outside of shade-tobacco
are included in other research by the University of
Florida.)


Research Procedure


The Sample

Four growers were purposely selected to show the production

operations and economic situation of a high level of management being

applied on medium-sized tobacco operating units. The acreage of shade-

tobacco grown in 1969 on the units analyzed in this study ranged from

38 to 68 acres. On two of these farms, the operating unit studied

did not represent all of the shade-tobacco being managed by the operator

but in each case it did represent a distinct and separate operating






5


unit. All four growers had other business interests so that it was

necessary to separate the operations of the shade-tobacco unit being

analyzed from their other economic activities. The analysis was

more a study of four selected cases rather than a survey of the

production of shade-tobacco in Gadsden County, Florida.

Geographically, the four farms are located almost on an east-

west line running across the center of the county from Havana to

Greensboro. Although they are not all on the same kind of land,

nevertheless the soils and slope of the shades (shaded fields) ana-

lyzed in this study are among the best soils recommended for shade-

tobacco in Gadsden County.

The sample of four cases was purposely selected to show the

economic situation of the production of shade-tobacco under very

favorable conditions in 1969 in the Type 62 cigar-wrapper tobacco

area of Florida. This is, indeed, an economic analysis of some of the

best growers (high level of management), using modern production me-

thods on good land, and operating under physical-biological-economic

conditions that are considerably better than the average in the area.

This economic analysis does not represent an average, or modal,

situation of the production of cigar-wrapper tobacco in Florida. It

does show the operations, degree of reliance upon human labor, and

economic situation,(costs and returns). It provides a factual basis

for decisions concerning the management of the farms, including the

effects of changes in wage rates and possible mechanization.


Obtaining the Data

Primary data were obtained by personal interviews with each of

the four shade-tobacco growers. The interviews were made by appointment









and required from four to six hours each. Although no formal question-

naire was prepared, an outline was used that specified the data and

information sought regarding the 1969 shade-tobacco production. The

outline served as a guide in asking for the data, as a check-list to

make certain all data were obtained, and as a form to record the data

and information in an orderly and uniform manner. In reality, the

outline served in the same way that a more formal questionnaire is

used in a survey of a large number of growers.

Secondary data and information were obtained by interviews

with tobacco experts in the area and on the campus of the University

of Florida. Of course, much historical data and some descriptive

material were obtained from various publications from the USDA and

several state agricultural experiment stations, Very little has been

published about the economic situation of shade-tobacco in recent

years. The primary references used most for this analysis were the

Ph.D. dissertation of Kincaid, Jr. and the bulletin by Kincaid, Sr.4

Economic studies of shade-tobacco production in Connecticut are generally

outdated and are useful largely for historical references.


Economic Analysis

The analysis used in this brief and rapid economic study is a

simple tabular analysis. The four cases lend themselves to this kind

of analytical procedure by bringing out economic relationships, pointing

up differences and similarities, and indicating possible strong and

weak points for future changes in management. Tabular analysis provides

a form of analytical results that seems to be very useful for the




Kincaid, Randall R. Shade Tobacco Growing in Florida. Florida
Department of Agriculture. Bulletin No. 136. Revised May, 1960.









immediate needs of farm management extension, and to supply a guide

to direct future research aimed both at making the industry more

efficient (more mechanization, for example) and for selecting possible

alternative enterprises to shade-tobacco. However, it does not pro-

vide all of the data required for a complete budgeting of alternative

enterprises.


Results

The general picture of the economic situation in the production

of shade-tobacco at the farm level in Gadsden County, Florida is shown

in Table 1, Summary of Selected Inputs and Outputs.

The reader is cautioned that these four growers represent a

selected group of high-level managerial ability, they operate farm

(and non-farm) businesses that are much above the average. The four

farm units analyzed averaged 49 acres of shade-tobacco, are on land

that is better than average for tobacco production, and the degree of

mechanization and adoption of recommended varieties and cultural prac-

tices also appears to be above average for the County. Therefore,

Table 1 and this entire analysis does not represent a cross-section

of shade-tobacco production in Gadsden County; it is an economicc

analysis of high-level management.


Summary of Selected Inputs and Outputs

Some of the most important economic facts brought out in Table

1 may be summarized as follows:

1. Investment. The capital investment of $3,000-4,000
(average of $3,436) per acre of shade-tobacco grown
in 1969 is high. Even the amount of annual depre-
ciation reported by these growers, almost $200 per
acre, is higher than the total investment for some
kinds of farming.









Table 1

SHADE TOBACCO PRODUCTION
Summary of Selected Inputs and Outputs
High-Level Management on Medium-Sized Farms
Gadsden County, Florida, 1969


Production Item


Case A

$ M-hrs.


Case B

$ M-hrs.


Case C

$ M-hrs.


Case D

$ M-hrs.


Average
$ M-hrs.


investment 2983.
. Annual depreciation 267.
reduction Inputs
Shade construction 460.
SSeedling production 127.
Transplanting
Tying; wrapping
Harvesting; curing
Tying hands
Total labor (major operations) -
Annual Cash Costs
1. Hired labor 1494.
2. Hired supervision 50.
3. Taxes; social security 127.
4. Insurance 167.
5. Fertilizers 285.
6. Insect, disease control 117.
7. Supplies (cloth, twine, etc.) 337.
Total cash costs 3133.
Production Output
1. Tobacco delivered (Ibs/ac)
2. Tobacco sold ($/acre) 4146.
3. Av. Price Rec'd. ($/lb) 2.52


(Dollars
- 3397.
- 196.


22
152
742
56
1099


1645


435.
92.







1432.
153.
157.
143.
471.
127.
501.
3710.


3864.
2.99


- man-hours per acre of shade tobacco)


- 3376.
131.


390.
50.


40
180
812
82
1263


- 3988.
- 196.


(est.)-
24
107
885
131
1238


1359.
182.
206.
116.
337.
157.
366.
3170.


1291


1445
-


3779.
2.62


300.
30.







1129.
187.
105.
133.
400.
219.
391.
3062.



3896.


- 3436.
-198.


(est.)-
46
183
844
56
1278


1480


396.








1354.
143.
149.
140.
373.
155.
399.
3270.



3921.


2.63 -


Note: These farm units grew 35-70 acres (ave. 49) of shade tobacco in 1969.


33
156
821
81
1220


1465


2.69


I-


--










2. Total Labor. The use of man labor for the major
operations of the tobacco production averaged 1,220
man-hours per acre. Probably the total labor re-
quirement for all operations for the year, on these
farms that are mechanized more than those of most
shade-tobacco producers, is about 1400-1500 man-
hours per acre per year.

It is easy to appreciate the economic problem of
these growers when wage rates increase as rapidly
as they have in recent years. This rapid increase
in cash operating costs, plus the tendency toward
less-qualified laborers (the best workers go to
higher-paying and less-seasonal employment, even
though it may mean leaving the area), is causing
the most serious cost problem. Other production
inputs have increased in costs but not so much nor
so seriously as labor.

3. Harvest Labor. Well over half (55-67%) of the labor
required to produce tobacco on these well-managed
farmers is concentrated in the harvesting-curing
("priming-barning"). Over 800 man-hours of labor
are needed per acre during this 6-8 week period,
usually from about May 20 to July 8-15. Of course,
the problem is not only how to pay for the labor but
also how and where to obtain the number and experience
of the men, women, and children that constitute the
harvest crews, both in the fields (shades) and in the
curing barns.

4. Labor Costs. Wages constitute about 40% of the annual
cash costs. But to this expense must be added the
salary of hired supervisors and social security con-
tributions of the employer. Such cash and non-cash
costs as housing and transportation provided for workers
must also be added to the labor bill.

Although this analysis does not separate all of these
) expenses, still it appears that about half of all the
costs of producing shade-tobacco is for labor, even
on these modernized farms. On other farms that still
use relatively more human and animal power, the propor-
tion of total costs that are paid for labor would be
even higher. However, the cost per acre might not be
as high due to less intensive operations with resulting
lower yields than on the better-managed farms.

5. Production. Although the yields on the four farms appear
similar, still there is almost a 30% higher yields per
acre on Case A than on B. Partially offsetting the lower
yield of B is the highest average price received per
pound. Obviously good marketing opportunities can help
to balance lower production or somewhat higher production










costs. Nevertheless the goal of producers is to
produce, at low costs, high yields that can be sold
at high prices. Seldom can all three be accomplished
by the same producer.


This study did not include the marketing, but surely this aspect

is critical because the additional mechanization and efficiencies that

seem feasible in Florida shade-tobacco production in the near future

cannot compensate for the smaller amount that is being purchased and

at prices that do not truly reflect the increased production costs.

Both the marketing and the production must undergo changes if the

industry is. to survive without drastic curtailment.


Capital Investment

The degree of uniformity in the amount of capital invested per

acre among the four cases is immediately apparent (Table 2). Perhaps

this similarity should be expected among high-level managers in an

industry that is stabilized in its operations. Of course, the invest-

ment on the poorly-managed shade-tobacco farms could be expected to

be much lower, with less invested in irrigation and mechanization,

as well as in workers' housing.

Within the time limit of this economic analysis (the author had

an over-all deadline of three months for all aspects of the study), it

was not practical to separate the various investment items on all farms.

Once again it seems desirable to point out the heavy investment

per acre, an average of over $3,400. But, different from many types of

modern agriculture, less than one-quarter of this investment is in

tractors, vehicles, machinery, and equipment. Nearly half of the entire

capital investment is in tobacco curing barns and in housing for workers

and hired supervisors.






















Table 2

SHADE TOBACCO PRODUCTION
Capital Investment on High-Level Management
Farms of 35-70 Acres of Tobacco
Gadsden County, Florida, 1969


Investment Items



A. Land (shades)
1. Land only
2. Shade construction
3. Irrigation facilities

B. Buildings
1. Houses
2. Barns I
3. Sheds

C. Tractors, vehicles

D. Machinery, equipment

Totals


Case A Case B

(Dollars per


300
460
300


350
435
300


1300
15 1900
25

388 412

210

2983 3397


Case C Case D Average

acre of shade tobacco)


300
390
400


300
300
350


393
526 2103
39

289 -9
935
1039

3376 3988


312
396
338




1572




818


3436


I










The irrigation is an overhead sprinkler system with the distri-

bution pipes and sprinkler heads mounted on the same posts that support

the wires holding the cheesecloth for shade. These are not moved, so

that the irrigation requires very little labor, once the system has

been installed.


Annual Cash Costs

The annual cash costs shown in Table 3 represent, almost entirely,

the various cash expenditures reported for federal income tax deductions.

However, the individual expenses do not always include the same items

on each farm, e.g. "supplies," "miscellaneous," and "repairs" are not

uniform in the kinds of expenditures they include. Nevertheless, to the

extent that the bookkeeping was accurate, the total annual cash costs

are reliably comparable among these farm units.

If one or more of these managers can perform the operation at

a lower cost, then perhaps others can also. Therefore, it is useful to

point out some of these possible opportunities for more efficient, or

at least less expensive, operations. Of course, sometimes the individual

circumstances on a farm will not permit that manager to achieve low

costs in certain operations; hopefully his other operations show off-

setting efficiencies.

1. Fertilizers. Cases A and C show much lower fertilizer
costs for 1969, and their fertilizer practices were more
simple than the others. However, their yields per acre
were good (A was the highest among the four) and there
is no definite indication that the quality of the tobacco
was lower, at least not as a result of applying less
fertilizer. Also, apparently their shades are not located
on significantly better soils than B and D.

2. Labor. Does Case D offer a possible clue to less costly
labor? This analysis was not carried out in sufficient
detail to answer the question, but with this information
















Table 3

SHADE TOBACCO PRODUCTION
Annual Cash Costs on High-Level Management
Farms of 35-70 Acres of Tobacco
Gadsden County, Florida, 1969


Cost Items Case A Case B Case 'C, Case D Average

(Dollars per acre of shade-tobacco)

Hired labor 1494 1432 1359 1129 1354
Hired supervision 50 153 182 187 143
Taxes, social security 127 157 206 105 149
Insurance 167 143 116 133 140
Fees, comm., dues 19 37 14 30 25
Interest on oper. credit 125 137 51 66 95
Fertilizers, manure 285 471 337 400 373
Insecticides, fumigation 117 127 157 219 155
Supplies (cloth, twine,
seed) 337 501 366 391 399
Gas, oil, LP gas 128 1991 572 120 126
Rep. on bldgs., mach. 221 307 176 244 237
Mach., equip. hire 16 3 0 0 5
Miscellaneous 47 43 149 38 69


Totals 3133 3710 3170 3062 3270



1Includes LP gas for "candela" curing.

LP gas only; gasoline, oil, etc. with repairs.











the Experiment Station or the County Agent might be able
to investigate more fully the feasibility of such possi-
ble savings in labor.

3. Insect and Disease Control. There is great variability
in the occurrence of insects and diseases from farm to
farm and therefore in the application of chemical con-
trols. Nevertheless, the big differences between the
control practices and costs of Cases A and B in contrast
to C and D might indicate possible efficiencies.

Some of the other differences among the four cases shown in

Table 3 do not seem to offer as much possibility for greater efficien-

cies as the ones mentioned above, for various reasons' mainly related

to the manager's other business activities.


Typical Labor Inputs

The most important information in Table 4 is confirmation of

the fact that most of the labor used in the production of shade-tobacco

is employed for the harvest. The "priming and barning" (harvesting

and hanging in the curing barns) requires an average of 67 percent of

the labor needed for all of the major operations of production. Over

three-fourths (77%) of the man labor and three-fifths (62%) of the

labor supplied by women and children are used during the 6, 7, or 8

weeks of harvesting, depending upon the number of primingss" performed

on that farm.

Two important aspects of this harvest labor is worthy of emphasis:

(a) It now appears that only a very limited amount of
additional mechanization seems feasible in the near
future for the harvesting-curing operations.

(b) The harvest starts before some of the schools normally
begin the summer vacation, hence the opportunity is
lessened to hire school children for a number of the
tasks that they can perform capably. Harvest usually
begins about May 10-20 and continues until July 1-15.
Some schools have been cooperating with the harvest






Table 4

SHADE TOBACCO PRODUCTION
Typical Labor Inputs by Operations
High-Level Management on Medium-Sized Farms
Gadsden County, Florida, 1969


Times Annual Manual
Performed Labor Used
Operations Number Man-hours Woman-Hours


A. Shades
1. Construction
2. Cloth (sewing)

B. Soil Preparations
1. Cultivations, mech.
2. Hoeing/raking, hand
3. Post rows, mules
4. Middles

C. Fertility
1. Manure, compost, cover crop
2. Fertilizers (chemical)

D. Insect-Disease Control
1. Fumig., wireworm/cutworm
2. Dusting (ground)
3. Dusting (plane)

E. Transplanting

F. Tying (looping)

G. Wrapping

H. Harvesting (priming) and
Curing burningg)

I. Tying Hands

Total annual labor
(major operations)


(80)2
17



11
0
6
23



9
9


13

5
custom


311

0


403


0
29



0
42
0
0



0
0



0
0
0

22

21

112


510

81


817


Including children, especially on wrapping, priming,
tying hands.
2Not an annual operation.

Part of this operation is sometimes custom work.


warning, and





16


season; perhaps others could also. If the labor situa-
tion becomes critical perhaps varieties or cultural
practices could be selected to delay the harvest:

Other items of interest in the table showing typical labor

requirements for high-level management, are: (a) the rather large

amounts (112 hours per acre) of labor of women and children needed

for wrapping the vertical string around the plant to support the

delicate, shade-weakened plant against wind, rain, and mechanical

damage. Usually this wrapping is performed from 4 to 6 times,

weekly starting about a month after the tobacco was transplanted.

(b) The relatively small amounts of labor used in the 14 culti-

vations (11 hours per acre) and in the other major operations such

as fertility maintenance (18 hours), dusting (6 hours plus custom air-

plane applications), transplanting (32 hours), and tying (43 hours).

These operations are all rather completely mechanized on well-managed

farms.

The 81 hours of labor used to tie and box the cured tobacco

before transporting it to the packing house does not represent a

critical labor problem at present. No doubt some labor efficiencies

could be adopted when the need arises.


Typical Investment and Annual Costs

The annual costs to produce an acre of shade-tobacco ($3,848)5

is a little more than the capital investment ($3,436) on these well-

managed, medium-sized (35-70 acres) farms (Table 5). These data are

merely further verification that shade-tobacco production is an intensive



5If the average depreciation of $198 (T.1) is added, the total
cost of production averages more than the tobacco sales (T.1).





Table 5


SHADE TOBACCO PRODUCTION
Typical Investment and Annual Costs
High-Level Management on Medium-Size Farms
Gadsden County, Florida, 1969




Item Dollars per acre
of shade-tobacco
A. Investment Items
1. Land only 312
2. Shade construction 396
3. Buildings 1572
4. Vehicles, machinery, tractors, equipment 818
5. Irrigation 338
Total investment per acre 3436

B. Cash Costs
1. Hired labor 1354
2. Hired supervision 143
3. Taxes, social security 149
4. Insurance 140
5. Fees, commissions, dues 25
6. Interest on operating credit 95
7. Fertilizer, manure 373
8. Insecticides, fumigation 155
9. Supplies (cloth, twine, seed) 399
10. Gas, oil, LP gas 126
11. Repairs on bldgs., mach. 237
12. Mach., equip. hire 5
13. Miscellaneous 69
Sub-total cash costs 3270

C. Non-cash Costs
1. Owner/mgr. management 300
2. Interest on investment
Land, bldgs., irrig. (7.5%) 196
Veh., trac., mach., equip. (10%) 82

Sub-total non-cash costs 578
Total annual costs/acre 3848


Note: The farm units of this analysis each grew 35-70 acres of
shade-tobacco in 1969.







crop and that it requires a heavy capital investment. A farm producing

50 acres of cigar-wrapper tobacco would incur annual costs of almost

$200,000; most of it would be cash expenditures ($160,000) and the

remainder would represent a payment or a charge, whether actually paid

out or not, for management, and for interest on the capital investment

of about $170,000. A line of operating credit in the amount of $100,000

to $150,000 is the normal practice for a modernized shade-tobacco farm

of this size. In this area, much of the seasonal operating credit is

provided by the cigar company that buys the tobacco after it is cured.

Readers who desire to compare the economic situation of shade-

tobacco production in Florida with the Connecticut Valley should con-

sult the Appendix for a very general comparison, and the Ph.D. disser-

tation of Kincaid for a more complete presentation of the economics

of the cigar-wrapper industry in both production areas.


Major Conclusions

This section includes only the major conclusions that were

drawn, directly and indirectly, from the data and information obtained

in the economic analysis. A number of conclusions, as well as some

suggestions for making use of this study, appear in the Results, within

the discussion of each of the five sections and tables. Obviously

some aspects of the conclusions were not drawn entirely from the data

presented in the tables. Instead they represent an integration of the

data with other information gathered from both primary and secondary

sources during the study.



6
Kincaid, Randall Rich, Jr. Op. cit.









It is acknowledged that these major conclusions are a combination

of rather objective, factual data with more subjective, less precise

policy-level information.

1. This economic analysis represents the production of
shade-tobacco using high-level management with better-
than-average resources (land, size of farm, degree of
mechanization and modernization, capital and credit,
hired supervision, marketing facilities, etc.)

The data and results of this study do NOT represent
the average situation for shade-tobacco production in
Gadsden County, Florida.

2. More than half, and perhaps as much as two-thirds, of
the labor used to produce shade-tobacco is required for
the harvesting-curing operation ("priming-barning").
Because there appears to be very little expectation of
further substantial mechanization of this operation,
the shade-tobacco industry should not plan on any signi-
ficant relief from the rising labor costs in the near
future.

Mechanization has helped, and will help some more, but
the amount of labor that can be saved by subsequent
mechanization does not appear to offer hopes for much
additional relief from rising labor costs to those
managers who already are "modernized."

3. Additional economies, efficiencies, short-cuts, and better
ways to do things seem always to be possible, even on
well-managed farms. On these four farms, and even more
so on farms not so well managed, the data presented in the
tables offer clues to possible changes in various operations
to make them less costly, or more effective, or both.

As discussed in Results, these opportunities to use labor
more efficiently on the farms analyzed seem to focus on
harvesting-curing, on tying-wrapping, and to a lesser
degree on tying the hands after curing.

Other savings might be effected on some farms in the
fertilizer practices and in the control of insects and
diseases. This list of possible efficiencies would be
longer for farms that are not already as well managed as
these four.

4.' The recent trends in the amount of cigar-wrapper tobacco
purchased by cigar companies, and in the prices offered
for the tobacco, indicate that marketing may be at least








as critical as production to the future welfare of the
shade-tobacco industry of Florida. Certainly if re-
ductions in the acreage financed by the buyers continues
(30% decrease from 1969 to 1970), thereby reducing the
amount of tobacco that can be sold to these traditional
markets, then the opportunities for economies in pro-
duction costs are lessened, and the capital invested in
excess shade acreage will prove to be a serious burden.

Additionally, with the uncertainty of cigar sales, cigar-
wrapper buyers (cigar companies) have been and still are
in a weak position to offer increasing prices to producers.
The prices have not truly reflected the rapidly rising
production costs, especially labor costs, which are such
a large share (approximately half) of the total production
expenditures.

Also, the increasing competition from both foreign pro-
ducers and manufactured sheet wrapper adds to the problems
confronting the industry.

In view of these marketing and production problems, it
appears that:

(a) In the next three to five years, only the most
efficient shade-tobacco producers should plan
to continue producing shade-tobacco, especially
if there are any reasonable alternatives; and

(b) In the longer planning period (more than three
to five years), we should expect that only the
large, cigar company-owned or company-oriented
production will be able to survive the competi-
tion from foreign production and manufactured
wrappers.

Perhaps Florida shade-tobacco growers should
consider producing only the limited amount of
high-quality wrappers needed by the cigar com-
panies and leave the market for lower grades of
wrapper tobacco to foreign producers.

5. Considering recent changes in social legislation, it is
not realistic for Florida shade-tobacco growers to ex-
pect a continuation of the exemption from minimum wage
laws for their tobacco production. This is not to say
that some transitional relief cannot be arranged where-
by the full force of the law does not become effective
too quickly. Nevertheless, plans should be made to ab-
sorb these added labor costs if the grower chooses to
continue his production.

(Alternative uses of these agricultural production re-
sources are now being studied as a research project of
the Department of Agricultural Economics, University of
Florida.)






APPENDIX

U. S. CIGAR-WRAPPER TOBACCO
Historical Data from Both Production Areas


PART A: ACREAGE (acres harvested)


Production Area
Conn. Valley (Type 61)
Fla.-Ga. (Type 62)


1959
8,100
5,700


1968
8,400
5,050


PART B: PRODUCTION (1000 Ibs.)


Production Area
Conn. Valley
Fla.-Ga.


1959
10,587
7,698


1967

9,553
8,024


PART C: YIELD (pounds/acre)


Production Area
Conn. Valley
Fla.-Ga.


1938/47 1955/59
958 1,312
1,039 1,323


1967
1,124
1,573


1968
1,215
1,556


1969
1,435
1,569


PART D: PRICES (season average price received by farmers--cents/lb.)


Production Area
Conn. Valley
Fla.-Ga.


1949
205
195


1959
210
195


1967
360
245


1968
360


1969
390


280


Source: Tobacco Crop Estimates. Crop Reporting Board, SRS, USDA.
Various Issues.

Acreage indicated March, 1970.

Subject to revision when late sales are recorded.


1969
6,100
4,950


**
1970
6,100
3,500


1970/1968
73%
69%


1968
10,210
7,858


1969
8,755
7,766











Issued in furtherance of Cooperative Extension work, acts of May 8 and
June 30, 1914 in cooperation with the U. S. Department of Agriculture,
J. N. Busby, Dean of Extension, Cooperative Extension Service, Univer-
sity of Florida, Gainesville, Florida.


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