Southern Ag Today

Author: Will Snell

  • Trade’s Importance to Southern Agriculture

    Trade’s Importance to Southern Agriculture

    Agricultural trade has certainly been a major topic among farmers and farm organizations recently amidst declining U.S. ag exports, a new era of ag trade deficits, and disappointment over trade policy. Dating back to colonial days, trade has been a major part of the Southern agricultural economy. Historically, the Southern region has produced, marketed, and shipped various unique southern commodities such as tobacco, rice, cotton and sugar, along with grains, livestock products, fruits, and vegetables to markets around the globe.  

    How important is agricultural trade to various southern states today?  In reality, individual state or regional trade data are difficult to measure since agricultural production, processing, and trade can occur in multiple states and/or regions. For example, a calf born and backgrounded in a southern state, might be finished at a feed lot in the midwest, and proccessed/packaged for export in another state or region.  Which state/region gets credit for this export?

    USDA’s Foreign Agricultural Service (FAS) relies on data from Census where U.S. ag exports by state or region are based on the final origin of movement of the product to the export market. Given a large volume of U.S. grain shipped out of New Orleans, the FAS methodology results in Louisana being the nation’s largest ag exporting state, despite the vast majority of these grains being produced in other states. Thus, FAS export data will generally understate the relative importance of international markets for inland states. Over the past five years (2019-2023), the FAS database ranks the Southern region as the leading ag exporting region with 38% of the value of U.S. agricultural exports, followed by the Western region (31%), Midwestern region (25%) and the Northeastern region (5%).  According to the FAS database, five of the eight largest U.S. agricultual ports by volume are located in the Southern region which accounted for 60% of U.S. ag export volume over the past five years, with New Orleans being the largest ag port accounting for 36% of U.S. ag export volume and 18% of U.S. ag export value.

    Alternatively, USDA’s Economic Research Service (ERS) measures trade data by state based on the state’s share of production value (cash receipts). Using the ERS methodology, within the southern region Texas recorded the largest value of agricultural exports over the past five years, averaging $6.9 billion of ag exports annually (ranks 6th nationally), followed by North Carolina ($3.9 billion), Arkansas (3.5 billion), Florida ($3.4 billion), Georgia ($3.1 billion) and Kentucky ($2.7 billion). Regionally, the ERS database ranks the Midwestern region as the largest exporting region with 48.1% of U.S. ag exports over the past five years, compared to only 23.2% for the Southern region, reflecting a large percentage of the U.S. agriculture initially produced in the Midwest, but exported out of other regions. 

    What about the relative importance of agricultural trade? Adopting the ERS methodolgy, ag exports represents about 1/3 of ag cash receipts in the Southern region. Using this metric, Table 1 illustrates that over the past five years of ERS export data,, Louisiana is the most ag trade-dependent Southern U.S. state with ag exports accounting for nearly one half of the state’s ag cash receipts, followed by Tennessee, Florida, Kentucky, and Mississippi rounding out the top five.

    Table 1: Ag Export Trade Dependency


    Southern U.S. State    		Ag Exports as a Percent of
    Ag Cash Receipts 
    (2018-2022)*
    U.S. Rank
       
    1.   Louisiana49.0%5
    2.  Tennessee44.6%11
    3.   Florida42.8%14
    4 .  Kentucky42.2%16
    5.   Mississippi38.2%22
    6.   Arkansas35.5%25
    7.   South Carolina35.4%26
    8.   Virginia32.6%30
    9.   Georgia32.6%31
    10. Maryland32.4%32
    11. North Carolina31.7%34
    12. Texas29.6%37
    13. Oklahoma27.3%41
    14. Alabama24.5%46
    *Source:  Calculations based on ERS/USDA data

    Snell, Will. “Trade’s Importance to Southern Agriculture.” Southern Ag Today 4(18.4). May 2, 2024. Permalink

  • Census Reveals Tobacco Farms Disappearing from Southern Agriculture

    Census Reveals Tobacco Farms Disappearing from Southern Agriculture

    The southern region in the United States has been well known for several unique crops, including cotton, rice, peanuts, and tobacco.  However, the latest Census data reveal that farms growing tobacco are disappearing from the landscape of southern agriculture. 

    Tobacco has had a storied history in the formation of this nation as it quickly became the most important cash crop in Colonial America, serving as the leading export commodity and a form of currency for the emerging nation.  Over the years, tobacco remained a valuable crop for several Southern states, which enabled many small family farms to survive. 

    A federal tobacco program emerged as part of the New Deal in the 1930s to further protect small tobacco farms consisting of supply controls and eventually price supports.  Increased global competition from lower-cost producers in South America and Africa ultimately led to the demise of the program over time and eventually the 2004 passage of The Fair and Equitable Tobacco Reform Act, or more commonly known as the “tobacco buyout.”

    This act provided nearly $10 billion to purchase tobacco quotas and provide compensation to growers to transition to a market-based economy.  The landmark legislation was expected to result in a significant concentration of tobacco farms, a geographic shift in production to the lowest cost regions, and larger farms to benefit from economies of scale.

    This historic policy action, followed by two decades of increasing cost of labor, heightened government regulation, and declining consumer demand for tobacco products has led to depressed exports, growing imports, and arguably the most significant structural change in the history of U.S. agriculture.

    According to the Ag Census, the number of U.S. farms growing tobacco has declined from 56,977 farms in 2002 to 2,987 farms in 2022 – a loss of more than 95% since the passage of the tobacco buyout twenty years ago.

    While there was speculation that the elimination of tobacco quotas would lead to U.S. tobacco production moving out of the southern region to other areas, nearly 80% of U.S. farms growing tobacco today remain in southern states.

    Kentucky has historically been the state with the largest number of tobacco farms, with nearly 60,000 (of its 90,000) farms growing tobacco in the early 1990s compared to roughly half that number in 2002 and only 984 recorded in the 2022 Ag Census. However, Kentucky’s share has declined from 42% of U.S. tobacco farms in 2017 to 33% in 2022. North Carolina remains number two in tobacco farms, with 822 farms, followed by Pennsylvania (377), Tennessee (241), and Virginia (173). 

    As anticipated, acres of tobacco production per farm following the tobacco buyout has increased significantly – increasing from an average of 7.5 acres in 2002 to 69.5 acres in 2022, with the largest tobacco farms remaining in the flue-cured tobacco regions of North Carolina, Georgia, Virginia and South Carolina where production averages more than 100 tobacco acres per farm.

    The relative importance of tobacco in southern agriculture has declined considerably.  Today, tobacco accounts for less than 3% of Kentucky’s annual ag cash receipts compared to averaging 25% during the 1990s.  For North Carolina, the nation’s second largest tobacco producing state, tobacco has fallen from 15% of ag cash receipts in the 1990s to only 3% today.  

    Table 1. Changes in the Number of Tobacco Farms and Average Size (2022 vs 2002)

    Tobacco Farms% Change Average Size (acres)
    20022022  20022022
    Alabama80-100% 24.9 –
    Florida11514-88% 33.5114.6
    Georgia82244-95% 30.5138.0
    Kentucky29,237984-97% 3.844.9
    Louisiana61-83% 50.2 –
    Mississippi70-100% 22.6 –
    North Carolina7,850822-90% 21.4141.4
    South Carolina87348-95% 34.6119.4
    Tennessee8,206241-97% 4.451.4
    Virginia4,184173-96% 7.273.0
           
    Total Southern States51,3082,327-95% 7.985.6
           
    Other U.S. States5,669660-88% 4.213.0
           
    U.S. Total56,9772,987-95% 7.569.5
    Source:  Ag Census/USDA

    Snell, Will . “Census Reveals Tobacco Farms Disappearing from Southern Agriculture.” Southern Ag Today 4(13.3). March 27, 2024. Permalink