Hawkins gives Kiwanis Club history lesson

Hartsville native and President of Gold Leaf Seed Co. Marion Hawkins gave the Hartsville Kiwanis a lesson in the history of the tobacco industry and his company at the group’s weekly meeting on Thursday at the Hartsville Country Club.

During colonial days, Hawkins said, tobacco was one of the nation’s biggest exports. In the mid 1800s, tobacco was booming when Duke Co. in Durham. Since early 1900s it’s grown in lower part of South Carolina.

“U.S. tobacco is still sold at a premium. It has a different aroma, smell, and it’s excellent for making cigarettes,” Hawkins said.

U.S. tobacco has a unique quality compared to other places, even when the same variety is planted, he said.

In South Carolina, the majority of tobacco grown is flue-cured. The leaves are cured with heat, and the name comes from the flue in the back of the barn used to cure the tobacco. Flue tobacco makes up 75 percent of cigarettes. The second type of tobacco is burley, which is air-cured. The leaves are darker in color and are used mostly in pipes and snuff.

Today, there are 220,000 acres of flue-cured tobacco in the United States, which represents less than 5 percent of the world market. China and Brazil are now at the top of the market.

“Tobacco is a very unique plant,” Hawkins said.

In 90 days, under normal conditions, it should grow to 35 pounds.

“It’s a weed. No other plant grows that big that fast,” Hawkins said.

In 1900s, at mercy of discount tobacco companies, farmers would receive 5 cents a pound one year and 25 cents a pound the next. The farmer was at a disadvantage with the major companies.

In 1933, the government instituted price supports for tobacco, and tobacco was graded. From 1933 to 2004, farmers brought tobacco to auction sales that helped farmers hold the price.

Until the 1940s, the United States had 70 percent of the world’s tobacco production. Once the price supports were implemented, the U.S. technology went to Brazil, Canada and other countries.

Over the years, the U.S. flue tobacco acreage dropped from 440,000 acres in 1970 to 220,000 acres in 2004.

“We priced ourselves out of the market,” Hawkins said.

In 2004, tobacco was $1.86 per pound from the United States but only 96 cents a pound in Brazil.

To help fix the problem, farmers received a buyout financed by the major tobacco companies based on their market share in 2004. At the time, $10 billion was to be paid to farmers over a 10-year period to do away with the price supports.

“This opened a closed market,” Hawkins said.

Those with a quota were paid $7 to $10 per pound or around $20,000 per acre. Once the quotas ended, farmers had to get contracts from the major companies.

In 2004, the average age of farmers was 57, and most got out of the business with the buyout, Hawkins said. Now there are fewer farmers, but they’re bigger.

“It’s dropping down to just a few, but they’re very proficient,” Hawkins said. “You can make good money, but you have to have equipment, barns … it’s a lot of investment.”

In the United States today, there are two major companies, but internationally there’s a lot of competition.
“Our acreage has dropped,” Hawkins said. “We had to put emphasis on international sales.”

Tobacco is no longer grown from raw seed in the United States either. It’s done 100 percent in greenhouses.

Gold Leaf Seed sends raw seed to a California company that uses a float system to coat the seed to make them 25 times bigger, large enough to be picked up by machines. The machines place exactly one per slot in divided trays of potting soil.

The seeds can produce plants in 50 days that are ready to go to the field. The greenhouses allow a lot more control over the elements for farmers, Hawkins said.

Gold Leaf Seed Co.’s sales are 90 percent domestic and 10 percent international to countries such as Italy, Spain, Brazil, Argentina and Poland. It employs eight full-time and six part-time workers and has $2 million in annual sales.

A container of 180,000 open pollinated variety tobacco seeds retails to farmers for $250 with the hybrid version costing $360. That container can produce 25 acres of plants.

“There’s no other crop that the seed is as cheap as tobacco,” Hawkins said.

One acre of tobacco can produce 2,000 pounds of dry leaf that makes 400 to 600 million cigarettes. On average in the early 1990s, tobacco generated $46,000 per acre in state and federal taxes. As cigarette taxes climb, so do government revenues from the tobacco industry.

Gold Leaf Seed licenses varieties of tobacco seed to be competitive. The company ships seed by UPS and FedEx daily. In the four state area, Hawkins said, if he receives the order by 3 p.m., he can get the seed to you the next day.

“Our marketing strategy is to keep a low inventory,” Hawkins said.

Hawkins purchased his tobacco business from Norfolk King in 1995. At the time, the company, after several mergers, had 85 percent market share of flue-cured tobacco.

To those who may want to purchase Hawkins’ seed and make their own cigarettes, he warned, “I’m selling only one ingredient to cigarettes.”

Hawkins was born in Byrdtown, graduated from Hartsville High and Clemson University, and has been in agriculture his entire life. He lives in Hartsville with his wife Greta and three children.

source: http://www2.scnow.com

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