Extension Service faces challenges helping tobacco growers, their communities

By Lindsey O’Donnell
UK Rural Journalism Class

SHELBYVILLE, Ky. -- After more than 65 years of willing participation in the federal government's efforts to control and support tobacco prices in the United States, Kentucky’s quota owners and growers are walking into a new era of uncertainty, with questions that are in need of educated answers.

When the federal tobacco buyout became a reality, tobacco growers started to consider their options and started asking extension agents around the state for educated advice and answers.

Kentucky’s tobacco growers are making pertinent decisions that will ultimately affect the state’s economy. The future of local economies of tobacco-dependent communities may depend on how the farmers choose to spend their buyout funds. Will they choose to invest the money into their local economies, to enable long-term benefits? Or will they splurge and purchase that brand new Dodge Ram they’ve been admiring from afar? But where do these people go to get the advice and information necessary to make a short term or long term investment?

Brittany Edelson, an extension agent from Shelby County, is concerned with how the farmers will choose to spend the money they receive from the buyout: “You can lead a horse to water and that’s what we’ll try and do through education, but people will make their own decisions in the end.”

Edelson said she does not try to tell former quota owners how to spend their money, but provides them options and opportunities. “We can preach all we want,” she said, “but the people will ultimately invest their money however they please.”

The national Cooperative Extension Service network consists of thousands of people who work to serve the daily needs of millions across the country. Kentucky is home to 80,000 farms and approximately 400 extension agents who work in agriculture, horticulture, and design and operate programs focusing on family and youth. The service was created in the early 1900s, at a time when the American economy was chiefly agriculture, to develop practical applications of research knowledge and offer instruction to people seeking educated guidance. It was a plan to bring the university to the people, and today the educational service has professionals in every state. The effort was financially supported by federal, state and local governments, so the service is called cooperative.

The country has gone through a complete makeover since the establishment of the service, and extension leaders at the University of Kentucky say they try to fulfill the service's mission and remain effective by adapting to fast-paced changes and emerging challenges. Agriculture is no longer the most widely practiced occupation, but it remains important to Kentuckians.

“Kentuckians have a unique desire to stay on the land,” said Larry Turner, UK’s associate dean for extension. “We need to help those folks who want to maintain an agricultural lifestyle.”

Will Snell, UK's extension economist for tobacco, said the biggest issue currently facing the university's extension service is the tobacco buyout. Snell has spent the last seven years preparing for the buyout, which involves America’s tobacco growers and quota holders, the federal government, state governments, big tobacco companies, financial institutions and cooperative extension agents. Snell said the buyout is probably the most significant and far-reaching piece of agricultural policy legislation for Kentucky farmers and rural communities since the development of the federal tobacco program in the 1930s.

The issue remains on the front burner with Kentucky’s extension service because so many people and so many communities are tobacco-dependent and therefore dramatically affected by the recent events. For many people, it’s all they know. But Turner expressed his confidence in Kentuckians, saying, “People are very tied to the state of Kentucky and have an allegiance to the state, and are very capable people.”

In Kentucky, 160,000 growers and quota holders will receive $2.5 billion from the buyout in the next decade. Some will receive payments exceeding $1 million while some small farmers will receive less than $2,000. Many feel that the buyout amount is less than desirable, and that the loss of direct "Phase II" payments from tobacco companies to growers is inexcusable.

The extinction of the federal program may cause great insecurity among growers who have never had to maintain detailed financial records that document the cost of their farming operations. For many tobacco farmers, it’s a new world that offers few guarantees. The UK service has started an Innovative Tobacco Growers Program in Russell, Hardin and Fayette counties to help growers remain competitive.

The extension service also worries about how people will choose to spend the money they receive from the buyout. They encourage the idea of investing the money into the local economy, especially in tobacco-dependent regions. Various extension leaders have expressed concerns about farmers splurging on news trucks or tropical vacations.

Turner wants the service to provide alternatives to people and make them take the long view. “I don’t think we’ve got the right to tell them what to do,” he said. “That’s one of the strengths of extension-our unbiased nature and the credibility we have through that.”

David Beck, executive vice president of the Kentucky Farm Bureau, agrees that Kentucky is going through a transition but is less worried about how farmers choose to spend their buyout money. “Some people are underestimating the tobacco farmer and it’s almost disrespectful,” Beck said. “They are good business people. They are survivors.” Beck said the driving force in farmers' decision making will be the future of their families and farms. “If they do choose to purchase that new F-150,” he said, “that will also have an impact on the economy.”

UK’s extension service works to answer a multitude of questions from its clients, but various barriers sometimes prevent the service from getting necessary information. Turner was surprised at how fast the buyout occurred. This spring, when the service and growers were still waiting for the federal government to issue regulations on how the buyout would be handled, Turner said, “We don’t have all the answers. At times it’s difficult for us to get the information needed.” When the buyout passed last fall, agents worked to figure out its parameters, including the effects it would have on the players involved in tobacco production.

“People wanted to know how they would be affected and agents had to scramble to try and understand the production contracts being offered by tobacco companies and to help their clients put the pencil to the paper as to whether the price offered would be profitable or not and under what conditions”, explained Lori Garkovich, a professor in the Department of Community and Leadership Development in UK’s College of Agriculture. “They want simple, authoritative answers that are not always available.”

Snell is the recognized expert on tobacco marketing in Kentucky, and many high-stressed farmers come to him for answers. He said, “It’s not our role to tell farmers how to spend their buyout money. My main concern is that the tobacco program over the years has provided a means to provide a steady stream of income to many individuals and to lots of relatively poor, lower educated communities. My hope is that individuals will invest this money in a manner that will maximize their benefits over a long time frame. Investment could be into future tobacco production, alternative agricultural enterprises, non farm enterprises, stock market, retirement, education, etc.”

Many people are seeking advice from extension agents because most tobacco farms in Kentucky were small operations that stayed in business with the support of the tobacco program. Now that the program is non-existent, people want to know what the future of tobacco farming holds and many are curious about possible alternatives to tobacco. “It is challenging to meet the needs of everyone, but we do what we can to answer everyone’s questions,” explained Turner. “It is our job to take the University to the people and serve them hopefully improving their quality of life. It’s our obligation to help people understand the opportunities and consequences.”

UK’s cooperative extension service has long been a popular resource of information for Kentuckians. Beck said he thinks UK has always been well connected with the people. “Over the last 30 years I have interacted with many members of extension,” he said. “They have always been involved in tobacco production benefits by researching tobacco varieties and disease control methods.” He said UK has continuously introduced new techniques to tobacco farmers. “Extension has a strong relationship with the farmers because they listen to the farmers,” he said.“They look into the future of tobacco farming.”

Extension has earned credibility by providing the people with unbiased information, Turner said. “We aren’t selling a product. We’re providing options for those in need.”

So how will the service measure success when dealing with an issue as big as the tobacco buyout? Jimmy Henning, assistant director of extension for agriculture and natural resources, said the measure of success in 2005 will be determined by the number of people who decide to diversify their agricultural operations.

Snell and Steve Isaacs, an agricultural economist from UK, have contributed to the decision-making by holding dozens meetings around the state, at which they evenhandedly discussed the future of tobacco farming with groups of concerned and frustrated farmers.

At a gathering of nearly 200 tobacco farmers in Shelby County in February, Isaacs opened the floor to questions and one farmer said, “Maybe our best alternative is to invest in a lot of rolling papers and then just smoking our own tobacco.” Isaacs responded calmly by saying, “ We have been dealt a deck of cards and it’s up to us to decide how we play them.”

Snell grew up raising tobacco on his family farm and realizes the economic impact that the golden-leafed crop has always had on Kentucky. He helped the farmers understand that cigarette companies' purchase of foreign tobacco is responsible for the decline of U.S. tobacco. Foreign tobacco has improved dramatically with the introduction of technological advancements and time. He told his Shelbyville audience, “Quality is something we have always had over these countries. Now they are catching up to speed and selling their product at costs more appealing to the tobacco companies.”

Isaacs explained essential bookkeeping practices that growers will have to learn if they are to remain in the business. Since the late 1930s, the federal government was responsible for determining growers' costs of production in order to set the level of federal price supports. The federal government made the life of a tobacco farmer more comfortable and reassuring. But with the buyout, the federal government shed itself of all financial responsibility, other than delivering checks to compensate farmers for their lost quotas.

Keeping detailed records appears to be new for most tobacco farmers. When Isaacs asked his Shelbyville audience how many could go home and retrieve a document giving their cost of production last year, only five or six people out of the 200 attending raised their hands. Results were similar at other meetings attended by students in the UK Rural Journalism class.

Isaacs introduced farmers to the bookkeeping skills needed to maintain an organized tobacco operation, but such instruction can go only so far. “It’s very individualized because everyone’s financial situation is different,” Edelson said. “We will spend the next year making sure that the people are aware of all their costs.” She said she will focus her efforts towards helping people “to understand things like labor costs versus blanket costs.”

Henning, who has been with UK’s extension program for 14 years, said he stays loyal to the profession because he enjoys getting the chance to help people. “It’s the concept of taking the University to the people. It really, really works, and that’s the exciting part! When livelihoods are on the line, people come to us.”

Henning said one of the biggest challenges has been to cater to the needs of highly tobacco dependent counties, especially in northeastern Kentucky. Counties like Mason, Fleming and Lewis have been forced to think about alternatives. Extension leaders designed new programs like an entrepreneurial coaches' program for the 19-county area, funded by money from the national tobacco settlement; a youth entrepreneurship program; and the New Crop Opportunity Center, to encourage alternatives to tobacco.

The youth entrepreneur program was established with to encourage youth, like those in the 4-H program, to stay in their hometowns after high school and college while increasing their economic opportunity. The program teaches youth certain skills, tools and knowledge that are necessary to become successful in both business and life. Today’s youth leave school without having learned important life skills and the entrepreneur program teaches such skills and encourages the youth to consider making a promising life for themselves in their hometowns.

The New Crop Opportunities Center was made possible by a special grant from the U.S. Department of Agriculture. The entrepreneurial coaches' program was funded by the Kentucky Agricultural Development Fund, which the 2000 General Assembly created to funnel half of the state's monies from the 1998 national tobacco settlement. The state Agricultural Development Board invests the money in promising, innovative proposals that it thinks will increase net farm income and help tobacco farmers, tobacco-dependent communities and agriculture around the state. It also works to stimulate existing markets by adding value to Kentucky agricultural products.

While Turner aims his concern towards alternatives for tobacco-dependent counties, Snell focuses on helping those who want to stay in tobacco. “I concentrate my attention on working with policy makers and farm groups, trying to develop safety net provisions for future tobacco growers,” he said.

For the first time in their lives, thousands of tobacco farmers have to face the new reality of making their own choices that will ultimately determine their financial futures. Lori Garkovich has faith in extension’s efforts. “In a period of multiple uncertainties, stress increases,” she said.“But so does creativity and innovation. The challenge is balancing these two processes.”