TOBACCO YEARBOOK – SUMMARY December 16, 2005 ERS-TBS-2005 Approved by the World Agricultural Outlook Board ----------------------------------------------------------------- This SUMMARY is published by the Economic Research Service, U.S. Department of Agriculture, Washington, DC 20036-5831. The text of the Tobacco Yearbook will be available electronically about 1 week following this summary release. ----------------------------------------------------------------- Tobacco Production in 2005 Plummets As of October 1, 2005, total tobacco acreage for the 2005 marketing year was estimated to have slipped 27 percent from 2004 to 307,010 acres, about 100,000 acres below last season. Yields slipped 72 pounds per acre overall, reaching 2,083 pounds per acre for all types of tobacco, compared with 2,155 in 2004. Overall, weather conditions were excellent, although some flue- cured areas experienced heavy early rains, while burley areas were dry. Production of all types is estimated at 639.6 million pounds, about 239.7 million pounds below last season. Based on October 1 estimates, 91 percent of U.S. leaf were types used for cigarettes, 2-percent below last season. Cigar leaf, also used for other products such as chewing and smoking tobacco, accounted for 1 percent of production. Other types, mostly dark air- and fire-cured leaf, accounted for 8 percent of production. There will be no marketing quota or price support for 2005 and subsequent crops of tobacco. On October 22, 2004, President Bush signed into law the ‘American Jobs Creation Act of 2004’ which contains Title VI, titled Fair and Equitable Tobacco Reform, also known as the ‘tobacco quota buyout.’ Both tobacco quota owners and producers are being compensated for the changes brought about by the termination of the program. Assessments levied on manufacturers and importers of tobacco products provide the funds for the buyout. Unmanufactured tobacco exports slipped 11 percent during January- September 2005. Shipments were 223.7 million pounds (declared weight) compared with 252.2 million pounds during the same period in 2004. Value declined 8 percent, ending at $666 million. Flue- cured volume lost 34 percent and burley increased 14 percent. Shipments of fire-cured leaf advanced. Exports of Maryland (type 32), stems, other leaf and cigar wrapper, and binder all declined. U.S. burley continues to be the most competitive U.S. tobacco on the world market. More competitive prices in 2005 are likely to result in increased shipments during 2006. Unmanufactured tobacco imports (consumption) for January- September 2005 declined 13 percent, reaching 365.9 million pounds (declared weight). Last year, January-September import volume declined 7 percent, and yearend imports were down 12 percent. General imports advanced 21 percent, more than recouping the 17- percent lost during the 9-month period last year. General imports ended at 421.4 million pounds for the January-September period. Stocks of imported cigarette leaf were 3 percent lower on October 1, 2005, compared with a year earlier at 693.9 million pounds (farm-sales weight). U.S.-cigarette output in 2004 was 492.8 billion cigarettes, down 1 percent from 2003. For 2005, expected output is about 490 billion pieces, a 1-percent drop. Domestic consumption in 2004 slid 3 percent to 388 billion cigarettes. Consumption in 2005 is expected to shrink 3 percent again to reach 375 billion pieces. During the first 9 months of 2005, 83.9 billion cigarettes were shipped overseas, compared with 94.2 billion during the 9-month period in 2004. Yearend shipments are expected to be close to last year’s at about 120 billion cigarettes. The export market for cigarettes is expected to continue at this level for a few years. During January-September 2005, cigarette imports slipped to 13.9 billion pieces, compared with 17.0 billion pieces during the same 9-month period last year. Cigarette imports are competing with increased production of lower-priced cigarettes in the United States.