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Chinese tariffs and bad weather continue to hammer North Carolina’s tobacco farmers

With tariffs from China hitting their export market, a spate of bad weather hurting crop production and labor becoming harder to find, North Carolina tobacco farmers have faced their share of adversity in the past few years.

If things continue as they are, the state’s farmers are expected to plant the smallest tobacco crop since before World War II, Larry Wooten, president of the N.C. Farm Bureau, told The News & Observer.

And relief doesn’t appear to be on the horizon, as a simmering trade war between the U.S. and China continues to escalate and a strong U.S. dollar has made it cheaper to buy tobacco from other countries.

In the past month, President Donald Trump raised tariffs on $200 billion of Chinese imports to as much as 25%, as he attempts to win a better trade deal between the two countries. In response, China announced its own plans to increase tariffs to as high as 25% on about $60 billion worth of U.S. goods starting in June.

But tobacco farmers here were already suffering before the latest round of tariffs. China’s tariffs announced last year on American tobacco decimated the export market in North Carolina, which is the country’s largest producer of the crop.

“It really can’t hurt more than it’s already hurt,” Wooten told The News & Observer.

That’s because 75% of the tobacco grown in the state is exported abroad, with a lot of it headed to China, Wooten said.

“There are more smokers in China than there is population in the United States,” Wooten said. “It has been a growing market. But contracts have been cut to our farmers by 75 to 80%.”

Those cuts have led to a massive decline for the crop.

In 2017, the state exported $162 million in tobacco to China, Wooten said. But last year, that number fell to $4 million, a 98% decline due in part to tariffs and weather.

Randy on tobacco bale.jpg
H.Cashion Courtesy of Randy Edwards

Randy Edwards, a tobacco farmer in Johnston County near Wendell, said he is worried about the future of his farm.

Last year, one of Edwards’ biggest customers, a Chinese importer of tobacco, canceled all U.S. orders. Edwards’ farm now has no opportunity to sell to Chinese companies, and he has half the amount of tobacco on his farm as he did last year.

“I farm with my son, daughter and nephew, and I worry a lot about them being able to be profitable,” Edwards told the N&O. “Being so close to Raleigh, we have experienced a lot of development pressure, and in the past two years have lost over a dozen of the farms we rent.”

“I also worry the ag(riculture) market won’t come back in time and our family would have to sell some of our land to be able to service the farm’s debts,” Edwards added.

Like many other farmers, Edwards has attempted to buffer the loss in tobacco with other crops, namely sweet potatoes, corn and soybean.

Hemp is also part of the equation now.

Tobacco’s decline

Before tariffs, smoking tobacco had been in decline in the U.S. for years, which is what made the export markets more important. And with a farm bill legalizing the growing of cannabis plants that contain 0.3% or less of THC — the compound in marijuana that gives you a high — many farms have begun planting hemp, The N&O previously reported.

“The farmer base is struggling at the moment in America, not just from tobacco but from all kinds of agricultural products,” J. Pieter Sikkel, CEO of Morrisville-based Pyxus International, told The N&O last year.

Pyxus, which has bought and processed tobacco for more than 100 years, has now expanded to hemp.

“When you can come in and offer the farmer an alternative crop in a rapidly growing new industry that allows them to have productive land and really be able to work their family farms, which they want to do, that’s a fantastic thing,” Sikkel said.

Edwards said he started planting hemp on his farm this year. “We are cautiously hopeful this could become a way to diversify a little bit,” he said.

Edwards said he thinks that the trade war could end anytime, but he hopes it’s soon so the farm doesn’t need to “keep selling assets to cover farm expenses.”

Wooten, the N.C. Farm Bureau president, said he understands why Trump is setting tariffs for China, but he doesn’t think it needs to hurt farmers.

“I understand we need to fix those (fair-trade) problems with China, but why should agriculture have to bear the brunt of retaliation,” Wooten said, noting that tobacco farmers were ineligible for subsidies meant to help farmers handle disruption from tariffs. “It happens anytime we have a trade war, no matter what administration it is.”

NC senators respond

North Carolina Sen. Richard Burr, a Republican from Winston-Salem, said last week that he thinks the president should carry on negotiations with China about trade.

“I think all of agriculture is pretty vocal about the tariffs,” Burr said in an interview. “But we also understand that fair trade doesn’t come without a price. I think that the president should carry on with the negotiations that needed to happen. I think the American people are tired of China taking advantage of us.”

North Carolina’s other senator, Republican Thom Tillis, expressed support on social media of Trump’s tactic against China.

“We can only have free trade when we have fair trade. (President Trump) is right to put America first by taking a tough stance on China, which has taken advantage of America and our intellectual property,” he said in a tweet.

But, Wooten said, if trade negotiations go on too long, farmers might not enjoy any rewards from the negotiations.

“Tobacco traditionally has brought in $600 and $700 million to tobacco farmers in North Carolina. ... That has a ripple effect across North Carolina,” Wooten said. “We have some farmers that are just hurting, and the long-term gain from this, they might not be around to benefit.”

Charlotte Observer reporter Deon Roberts contributed to this report and staff writer Brian Murphy contributed from Washington, D.C.

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Zachery Eanes is the Innovate Raleigh reporter for The News & Observer and The Herald-Sun. He covers technology, startups and main street businesses, biotechnology, and education issues related to those areas.
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