Historic, archived document

Do not assume content reflects current
scientific knowledge, policies, or practices.

CHANGES IN
CIGAR LEAF) ==.
TOBACCO es :
ACREAGE

ECONOMIC RESEARCH SERVICE® U.S. DEPARTMENT OF AGRICULTURE ® ERS 539

ABSTRACT

Cigar tobacco—filler, binder, and wrapper—was produced in seven States in 1971
and accounted for 3.9 percent of total U.S. tobacco production. General economic
trends, rising imports, and industrial developments brought a two-thirds decline in
cigar tobacco acreage during 1950-71, thus reducing acreage to 37,000. In six of the
seven producing States, farm employment declined. Farm wage rates more than
doubled, but tobacco prices did not keep pace. Regression analysis for 1957-71
explained 98 percent of the year-to-year variations in filler and binder acreageand 91
percent in wrapper. Farm tobacco prices and trend were the major factors associated
with acreage variations. Further acreage decline is likely in the future.

Keywords: Cigar tobacco, Acreage, Economic trends, and Regression analysis.

Washington, D. C. 20250 December 1973

CONTENTS

Page

Haichiichtsrees esse e ee eet wee hee ee a .
ATACROGU CE OM Nees itas ars eset oe tos rons edt Mie era Sead woe betwen ae, awere a 1
Broductionsbrendst «Ageia: otic ee nk SRE ce eae tates Sinaia’ wedee ancns 1
General HWeonomiceL Trends) 3 «i sis. bee ak fos ede gone sae ounce e p40 bh Guk es 3
Analysis, ot Acreage Chances. 05, 2.i,5,cee. 8 -schicg awn tene ee wih wis shin de aacneds 7
GCiearsilller Acreare:C han Ges) tis. act suee ae eeeaetal ees aosben ay ect aks an inGecnds eiesaetheait 7
@igar Binder Acreage Changes):s). icc oi ca Seek ie te ae es ben ce bbe Gaded es 7
Cigar-Wrapper Acreage Changes... <i c3 2s pans biunes a dlewae dlanberareree es 10
INCTEAL ELE OSDOCESN Miyata teate ch 8 ape Sree ors tube oe tee) dS caus, es ae By aaa oe 3
HOT Leracured@ iced oor ecr ty ct eR reer ea a eins spec Ske, cated latcins aucune 15

HIGHLIGHTS

General economic trends, rising imports, consumer preferences for smaller,
thinner, filter-tipped cigars, and the increasing use of reconstituted sheet tobacco
have led to a decline in cigar leaf tobacco acreage.

During 1950-71, acreage declined by about two-thirds, from 100,000 to 37,000
acres. This downward trend, which has been underway since the boom of cigar sales
in the 1920’s,is expected to continue.

Regression analyses of acreage changes during 1957-71 show that the farm
tobacco price-wage ratio and trend explained most of the year-to-year changes. For
the three cigar leaf types, the regression equations accounted for the following
percentages of annual acreage variation: 98 percent for filler and binder and 91
percent for wrapper.

In each of the seven States producing cigar leaf tobacco, farm wages more than
doubled from 1950 to 1971. Tobacco price rises, however, did not keep pace. Also, in
six of the States, farm employment declined.

ill

Table

Figure

Ie

z:

3.

4.

10.

Farm and nonfarm employment in selected States, 1950-71

TABLES

Harvested acreage of cigar tobacco (types 41-62) and percentage

of allotted acreage, by State, 1951-71

Cash receipts from cigar tobacco and share of cash receipts

from marketings, by State, 1955-71

Nonfarm-to-farm wage ratio and index of farm and nonfarm
wares in selected States: 1950-71 ons ae eed aisles ees oe eo ee

Comparison of linear equation results for harvested cigar
tobaccovacrea ees 195 7-1 i eee aos Oe ee Se eae

FIGURES

Cigar-Leaf Growing Districts of the United States...............
Farm-Wage: Rates: (Composite)i a: sta cae eon eee
Cigar Tobacco Prices by Type (Filler and Binder) ...............
Cigar Tobacco Prices by Type (Shade Grown) ...................
Pennsylvania Filler Tobacco Acreage and Price/Labor Ratio....

Ohio Filler Tobacco Acreage and Price/Labor Ratio.............

Connecticut Valley Binder Tobacco Acreage and

Price/ labor Rati. se. soak te ohes cet Pee ae

Wisconsin Binder Tobacco Acreage and Price/Labor Ratio ......

Connecticut Valley Wrapper Tobacco Acreage and

Price/ babor Watioteg9 os eens oe eee eee

Georgia-Florida Wrapper Tobacco Acreage and

Price/lbabor Ratioc. ssc ee os eee ae ee
Cigar Tobacco Yields by Type (Piller), 2c e024 6 hace cee
Cigar Tobacco Yields by Type (Binder)! ..;..; 2 ;..5222 ss cts

Cigar Tobacco Yields by Type (Shade Grown) ..................-

Page

14

CHANGES IN CIGAR LEAF TOBACCO ACREAGE

by

Johnny D. Braden, Agricultural Economist
Commodity Economics Division

Economic Research Service

INTRODUCTION

Production of cigar leaf tobacco in the United
States began during the late 1600’s in the Connecticut
Valley and in sections of Pennsylvania—areas
outside the southern tobacco plantation districts. But
it took more than two centuries to produce a good
quality cigar leaf tobacco and for it to become a
sizable crop. In the early 1800’s, the Connecticut
Valley was the chief district for production of cigar
tobacco and also the center of U.S. cigar production
(1).

As settlers moved west, they spread production to
areas where cigar tobacco became a cash crop on
general livestock and crop farms. Varieties and
cultural practices were improved, and best adapted
lands were planted. Eventually, three classes of U.S.

‘Italicized numbers in parentheses refer to items in
Literature Cited at the end of this report.

cigar tobaccos were recognized—filler, binder, and
wrapper—depending on their major use in cigars.
Each type, however, has secondary uses.

Connecticut Valley production fell off in the late
1800’s as preferences shifted to imports from
Sumatra. However, around 1900, U.S. farmers
erected cotton cloth tents for shade to achieve the
desired leaf qualities for cigar wrappers, and soon,
the Connecticut Valley became known as “Tobacco
Valley”.

Today, cigar tobacco production is reported in local
areas of seven States—Connecticut, Massachusetts,
Pennsylvania, Ohio, Wisconsin, Georgia, and
Florida (fig. 1). At one time, production of cigar filler
and binder was reported in New York, Indiana,
Minnesota, Georgia, and Florida, but this output is
now too minor to report by the U.S. Department of
Agriculture in crop estimates (6).

PRODUCTION TRENDS

Cigar tobacco is grown in well-defined areas where
the soil, climate, and cultural practices yield a
product with qualities desired by manufacturers and
exporters. In 1971, U.S. growers produced about
37,000 acres of cigar tobacco, or 4.4 percent of the total
U.S. tobacco acreage. Farm value amounted to $68.5
million and provided income to about 15,000 farm
families.

During the heyday of cigar sales in the 1920’s,
about 180,000 acres of cigar tobacco were produced,
accounting for 9 percent of U.S. tobacco acreage. By
the late 1940’s, cigar acreage appeared to stabilize
around 100,000 acres. However, during 1950-71,
harvested acreage declined by almost two-thirds.
Yields increased slightly, but production fell as
acreage declined.

Production of cigar binder tobacco in the
Connecticut Valley dropped rather sharply in the

mid-1950’s, following the introduction of
reconstituted sheet tobacco for cigar binder.? By the
late 1960’s, use of reconstituted sheet tobacco as
wrapper along with the trend toward smaller size
cigars began to reduce production of shade-grown
tobacco. In recent years, filler tobacco has also lagged
because of competition from relatively low-priced
imports.

In 1951, growers first approved Federal marketing
quotas (acreage allotments) for filler and binder
tobaccos grown principally in Ohio, Wisconsin,
Connecticut, and Massachusetts (types 42-44 and 51-
55). Since then, however, growers have increasingly

2Reconstituted sheet tobacco is manufactured by grinding
tobacco into a fine powder, mixing with a cohesive agent,
and rolling into a flat sheet of uniform thickness and
quality.

TOBACCO
CIGAR- LEAF GROWING DISTRICTS OF THE UNITED STATES

1
ye}
a 4

UNITED STATES DEPARTMENT
OF AGRICULTURE

AGFICULTURAL MARKETING SEPVICE

TOBACCO DiwiSi0=

CIGAR-FILLER TYPES
CLASS 4

CIGAR-BINDER TYPES
CLASS S

CIGAR- WRAPPER TYPES
CLASS 6

Valley shage grown

. DEPARTMENT OF AGRICULTURE NEG. AMS 545-64 (3) AGRICULTURAL MARKETING SERVICE

Figure 1

underproduced their allotments (table 1). Due to less
than normal supplies, USDA terminated quotas on
cigar binder (types 51-52) in 1970. Growers of
Pennsylvania filler (type 41) never approved quotas,
so that type has never been under allotment. Quota

legislation does not include cigar wrapper produced
in Connecticut, Massachusetts, Georgia, and Florida
(types 61-62). However, a marketing agreement
which limits leaf harvest per plant has applied for
many years in Georgia and Florida (type 62).

GENERAL ECONOMIC TRENDS

Conditions are unique in each tobacco-producing
area, but some general trends prevail. For many
vears, farmers and farm workers have been attracted
to nonfarm jobs by higher wages and more desirable
working conditions. With the high labor
requirements and the lack of mechanization, tobacco
production has become a less attractive farm
alternative (table 2).

During 1950-71, in the seven States producing cigar
leaf tobacco, the increase in nonfarm employment
ranged from 18 percent in Pennsylvania to 214
percent in Florida. Many farmers and farm workers,
including young people, have left the farms for
nonfarm jobs (table 3).

Farm employment also declined in six of the seven
States during 1950-71. Declines ranged from one-
third in Wisconsin to 70 percent in Massachusetts
and Georgia. The number of farm workers in Florida

FARM WAGE RATES

*—* CONNECTICUT
4&—A WISCONSIN

(6
as)
O
a=
[a ee
LL]
Os
ep)
|
=
LL]
OO

BIS = So so — oO

U.S. DEPARTMENT OF AGAICULTURE

NEG.ERS 6556-71 (11)

increased 25 percent from 1950 to a peak in 1958 but
declined 14 percent from 1958 to 1971.

Tobacco is a labor-intensive crop that requires 300
or more hours of labor per acre for filler and binder
and about 1,300 hours for wrapper. Many producers
hire labor, especially at harvest. In each of the seven
States, farm wages more than doubled from 1950 to
1971. Increases ranged from 105 percent in Ohio to
210 percent in Georgia.

Nonfarm wages normally average more than farm
wages (table 4). From 1950-71, the comparative
advantage of nonfarm wages. increased in
Connecticut, Massachusetts, Pennsylvania, Ohio,
Wisconsin, and Florida but declined in Georgia. In
Connecticut and Massachusetts, 1950 wages in
manufacturing plants were 59 percent higher than
farm wages; in Georgia, 134 percent higher. By 1971,

- this percentage had increased to 80 percent in

Connecticut and 73 percent in Massachusetts. In

(COMPOSITE)

ECONOMIC RESEARCH SERVICE

Figure 2

Table 1 --Harvested acreage of cigar tobacco (types 41-62)
and percentage of allotted acreage, by State, 1951-71

Connecticut
Massachusetts
Pennsylvania
Ohio

Wisconsin

Florida

Total 3/

a

Marketing

Harvested acreage

: 1955 : 1960 : 1965 ‘ 1971

eo ee 0
oo 08 eo

Thousand acres

: 16.9, 1.7 — (87 Bef “is;f0
G58. gOisl Salta « Seoe aldol
BHO $2925. Si sOut 2 rer 15230
4.9 yu 3 Bat °2.05
15.5 d4.1 14.9. 10.9 1036

Dede EO, 4 Teen ee .63
id 3.9 49 4.8 2.35
; 84.2 74.3 68.5 59.8 37.14

guotas were not in ef
wrapper tobacco and Pennsylvania filier.

fect before 1951.
3/ Percentages apply to tobacco under quota.

eo 08 of

Percent of allotted acreage

1951 : 1955 : 1960 : 1965 : 1971
"petecnt: =
88 70 32 50 24
89 80 32 Ta 22
69 69 79 79 ug
70 66 Ch 72 [ie
Do. 50 61 67 Bh

2/ Quotas not in effect for

Table 2 --Cash receipts from cigar tobacco and share of cash

receipts from marketings, by St

Cigar tobacco cash receipts

ate,

He oe aa Clery

Cigar tobacco as a percentage
of all farm commodities

State : 7 : i :
2%, 1955 1960 : 1965 : 1971 : 1955 : 1960 1965 21972

; ies ae WLion caries = -- Ste pevceue = =.-
Connecticut 24.0 19.3 27.0 26.1 nity) 12.9 U723 ete ose
Massachusetts Be 6.5 10.7 I150 4.9 3.6 6.3 657
Pennsylvania ae 16.8 12,4 9.9 228 222 125 9
Ohio a 1.9 ish 1.56 ml 22 oa rl
Wisconsin ¢ 6e7 TO 6.8 9.4 on 6 6 6
Georgia 225 S29 45 2.6 ot aS AS s2
Florida 925 144 14.1 9.8 1 alt 169 a tt 7
Total 65.2 69.8 16.3 70.4 a7 126 1.5 120

1/ Calendar y

Table 3 --Farm and nonfarm employment in selected States, 1950-71

State

Connecticut
Massachusetts
Pennsylvania
Ohio
Wisconsin
Georgia
Florida

Total

1/ Family and hired.

State :

: 1950
Connecticut : 1.59
Massachusetts: 1.59
Pennsylvania : 1.96
Ohio Mieka lat
Wisconsin ciel GL
Georgia 2 2534
Florida Sa OL:
Connecticut : 100
Massachusetts: 100

Pennsylvania : 100

Ohio : 100
Wisconsin : 100
Georgia 2" =L00
Florida $ 100

a, Wontarm manutscturing hourly

Farm

workers 1/

Nonagricultural employees

1965 :1971

1,166
2,255
285
3,828
155925
1,575
2,209

14,538 16,843

eee

3/ «305
472.020
2214
w2hh
296
/1.888
/1.818

holy

~

A hrg50" 1955) 2 1960's 1965: 1971 : 1960 + 1955 : 1960 ;
; Thousands
: 34 32 25 20 13 766 875 915 1,033
: 58 48 36 26 17 1;76b "1,818" “1,910 “2,019
2 302 « ually) 19h 137 1n2 3,643 3,748 3,713 3,914
: 320 289 ee =184 17 2,760 3,129 3,147 3,364
2 346 326 282 231 186 ¥,022 ~2,108 1,192" 1,332
2: 320 234 183 139 98 807 960 1,051 1,257
2 IOP «LUO S21 IPT “Ae 704 966 1,321 1,619
: 1,487 1,292 1,083 858 685 11,463 12,604 13,2%9
Sources: (4, 5, 8
Table 1 --Nonfarm-to-farm wage ratio and index of farm and
nonfarm wages in selected States, 1950-71
Wage ratio 1/ * Cigar tobacco price-farm wage ratio a
s 4955 2° 1960 + 1965 : 1971 2 1950 + 1955 +: 1960 +:.1965°
Number
1.68 nly eg 1.87 1.80 3/ 639... 3/2432) 9 3/339 3/5370
1568 - 2.72 -1.72 21.73 4/2.843 W/i.mk 4/1.714 4/2.026
2.04 2.16 2.25 anh «466 3h3 «340 -254
eal 2.41 2.28 2.45 -318 296 . 342 2291
1.95 Olin 22.13 2.09 433 327 346 - 303
2:39 251 2503 1.99 5/5319" 5/4075 5/3.738 .3/3,462
1.97 2.29 2.18 2.15 5/4.282 5/3.179 5/2.924 5/2.785
Farm wage index ; Nonagricultural wage index
1950=100
124 146 160 222 100 131 162 188
129 140 164 228 100 124 151 178
126 147 162 230 100 131 162 186
122 132 143 205 100 127 ay. 181
122 136 155 231 100 181 161 187
122 144 176 311 100 eu 154 186
125 1he 174 251 100 128 atval 198
wege rete divided by farm wage rate (without room and board).

2/ Average price of tobacco received by farmers (cents per pound) divided by farm wage rate (cents
_ per hour). 3/ Cigar binder (types 51-52). 4/ Cigar wrapper (type 61).

62).

Computed from: (@

2

& K a)
Oe Sets 8).

5/ Cigar wrapper (type

CIGAR TOBACCS FRleCes by are

— RENN: SE-EELER Cine eh) *—X CONN-MASS BINDER (TYPE 51-52)
---- OHIO FILLER (TYPE Ye-4) A—A WISCONSIN BINDER (TYPE SU-55)

U.S. DEPARTMENT OF AGRICULTURE NEG.ERS 8555-73 (6) ECONOMIC RESEARCH SERVICE

*—* CONNECTICUT VALLEY SHADE GROWN (TYPE 61)
---~ GEORGIA-FLORIDA SHADE GROWN (TYPE 62)

BGELARS- PER POUND

©

Lao: oS

U.S. DEPARTMENT OF AGRICULTURE NEG.ERS 8980-73 (6) ECONOMIC RESEARCH SERVICE

Figure 4

Georgia, the ratio declined, but farm wage rates
averaged only half the nonfarm level.

In 1950, an hour’s labor cost about 214 times the
value of 1 pound of filler tobacco, 1% times that of
binder, and about one-third that of Connecticut
wrapper. By 1971, these figures had increased to
about 6 for filler, 5 for binder, and .46 for Connecticut

wrapper. Tobacco prices also increased over this
period but did not keep pace with farm wages. Filler
and binder prices were held down by large supplies
and competition from imports. Cigar tobacco, which
accounts for only a minor part of farm income.
declined as a share of cash farm receipts in most
States that produce cigar leaf (table 2).

ANALYSIS OF ACREAGE CHANGES

Ordinary least-squares regression techniques were
used to relate harvested acreage of the three cigar
tobacco types in 1957-71 to various explanatory
factors. Either farm tobacco prices lagged 1 year or
farm tobacco price-wage ratio and trend explained
most of the year-to-year acreage changes. However,
for some types, additional variables aided in
statistically explaining the changes. Several
additional factors such as number of farm workers,
nonfarm employment and wage rates, ratio of farm to
nonfarm wages, beef prices, and fertilizer prices were
also examined. Many of these variables are believed
to have a considerable effect on tobacco acreage
changes although they were not detected to a
significant degree in the statistical analyses.

Cigar Filler Acreage Changes

Cigar filler isa medium-to-heavy body tobacco used
primarily for the core of the cigar. Flavor, aroma, and
burning quality are its important factors. In addition
to use in cigars, some is used in loose leaf chewing
tobacco.

About 90 percent of the filler grown in the United
States is produced in Pennsylvania (type 41) and the
remainder in Ohio (types 42-44). Pennsylvania’s
production is concentrated in Lancaster county, and
Ohio’s in the Miami Valley. In both Pennsylvania
and Ohio, cigar filler acreage has declined since the
early 1950's.

During 1950-71, acreage of U.S. cigar filler declined
from about 45,000 acres in 1950 to 17,000 in 1971. This
decline averaged about 1,200 acres per year. Yield per
acre increased during this period by about 15 pounds
per year—less than 1 percent annually. Due to the
acreage reduction, production declined from 66
million pounds in 1950 to 28 million in 1971.

To supplement U.S. grown filler, Puerto Rican filler
is shipped to the United States in both leaf and
product form. Only 5,000 acres of Puerto Rican filler
were grown in 1971, compared with 17,000 acres in
1965 and 25,500 in 1950. Puerto Rican filler was not
included in the regression analysis, although many
of the same variables are believed to apply (7).

Among the variables used for estimating cigar
filler acreage were farm prices of filler tobacco, farm

wage rates, dairy product prices, harvested acreage,
and time. Price variables were lagged 1 year, for
when farmers make their planting decision early in
the year, the previous season’s relationships are the
latest available. Dairying is a major farm enterprise
in the filler tobacco area. While filler tobacco
production has decreased, dairy production has
increased since 1950. Results from several of the filler
tobacco estimates for 1957-71 are contained in
table 5.

In table 5, equation 1.1 (based on filler price, price-
wage ratio, index of dairy product prices, previous
years harvested acreage, and time) gives a
satisfactory fit—that is, coefficient signs are as
expected, and two of the four t values are significant
at or beyond the 5-percent level. Apparently, the time
variable and the 1-year-lagged acreage are closely
enough related to reduce the coefficients. The
equation explains 98 percent of the year-to-year
acreage variation (R?=.98).

According to equation 1.1, a 1-percent increase in
the price-wage ratio increased harvested acreage by
about 50 acres. The equation states that filler tobacco
acreage varies inversely with the index of dairy
product prices (1967=100). If dairy prices increase one
index point, tobacco acreage declines about 194 acres.
Since farmer’s resources and facilities for production
are related to those available the previous year.
acreage is positively related to the previous year’s
harvested acreage. In addition, a negative trend
variable picks up some of the variation not explained
by the other variables.

Cigar Binder Acreage Changes

Cigar binder tobacco (types 51-55) is used for
binding the bunched filler into the form of the cigar.
Natural binders must have good burning quality,
aroma, and elasticity. Reconstituted sheet tobacco, a
development of the 1950’s, has rapidly replaced most
natural leaf binders. As a result, loose leaf chewing
tobacco is now the principal outlet for binder tobacco.
Binder tobacco is grown mainly in Wisconsin but also
in Connecticut and Massachusetts (2).

During 1950-71, cigar binder acreage declined by

PENNSYLVANDA FILEER TOBRGER
ACREAGE ANB PRICE7ZEASUR Raieo

-——— . HARVESRED

ECONOMIC RESEARCH SERVICE

NEG.ERS 8550-71 (LL)

U.S. DEPARTMENT OF AGRICULTURE

Figure 5

OIG. FILLER tOsACeO
ACREAGE AND PRICE/ZLABOR. RATIO

===> ARbOITED
——> HBRVESTED

a
D0
rei
‘Se:
m™
=
lg
a8)
OO
©
=
0
D
—
ri
G

U.S. DEPARTMENT OF AGRICULTURE NEG.ERS 8552-71 (11) ECONOMIC RESEARCH SERVICE

Figure 6

CONNECTICUT VALLEY BINDER TOBACCO
ACREAGE AND PRICE/LABOR RATIO

So AbeOieD
——7, HARVESTED

THOUSAND ACRES

nO GS" Oo oO Oe ee
O[TlbY YOGb 1/50TYd

S&S
boots “Se So 657

U.S. DEPARTMENT OF AGRICULTURE

oo: 61

NEG.ERS 8549-71 (11)

ECONOMIC RESEARCH SERVICE

Figure 7

WISCONSIN BINDER TOBACCO
ACREAGE AND PRICE/LABOR RATIO

a= AE OT LED
oe INARVESTED

oO
om
=)
on
os)
=
=)
Ww
oo
no

OITLYY YOdb1/S9TYd

U.S, DEPARTMENT OF AGRICULTURE NEG.ERS 8551-71 (11) ECONOMIC RESEARCH SERVICE

Figure 8

about 60 percent. The decline averaged about 1,300
acres per year. Also during this period, yields
increased about 4 pounds per year, but production
dropped about 4. Wisconsin growers produced about
'% of the U.S. binder acreage in 1950, but by 1971, they
produced 88 percent. During this period, acreage
declined by about 95 percent in Connecticut, 10
percent in Massachusetts, and 50 percent in
Wisconsin.

Among the variables used in the estimating
equations for cigar binder acreage were farm prices of
binder tobacco, farm wage rates, acreage in diversion
programs, time, and acreage reallocations
(beginning in 1970). Results of some of the equations
are summarized in table 5. Equation 2.3 (based on
farm price of tobacco lagged 1 year, diverted acreage,
time (1957=57), and reallocated acreage) gives a
satisfactory fit—that is, coefficient signs are as
expected, and two of the variables are significant at
the 1-percent level and one at the5-percent level. This
equation explains 98 percent of the year-to-year
acreage variations (R2=.98).

Equation 2.3 indicates that a farm tobacco price
increase of 1¢ per pound for binder tobacco brought
an increase of about 175 acres harvested the

—— HARVESTED

THOUSAND ACRES

1951 Oa. se cot

U.S. DEPARTMENT OF AGRICULTURE

2

CONNECTICUT VALLEY WRAPPER. TOBaGeS
ACREAGE AND PRICE/LABOR RATIO

PT ARS

61

NEG.ERS 8977-72 (LL)

following year. Introducing farm wage rates in the
statistical equations did not improve the fit as it did
for filler and wrapper.

The Soil Bank Program (1956-58) and the Cropland
Adjustment Program (beginning in 1966)
significantly reduced acreage. For each acreof binder
tobacco allotment idled under these programs, the
equation indicated .53 fewer acres were harvested.
Since 1970, USDA has allowed transfers of filler and
binder allotments from growers who do not wish to
use their allotments to growers who want to increase
their plantings. The equation indicates that for each
acre of binder allotment transferred, harvested
acreage increased 1.5 acres. Coefficients differ from
unity because other variables such as priceand trend
affect program participation.

Cigar Wrapper Acreage Changes

Cigar wrapper is the most difficult and costly
tsbacco to grow. Since it is used primarily for the
outside cigar covering, the leaves must be elastic,
thin, free of injury, smooth, uniform in color, and
have good burning qualities. To obtain these
qualities, the wrapper tobacco is grown in fields

Sama

OL SO ne Ss ie cao ic
OllbY HOE 1/490TYd

Ba-5. 65 sVo ly Oo mee:

ECONOMIC RESEARCH SERVICE

Figure 9

10

aa HARVESTED

THOUSAND ACRES

U.S. DEPARTMENT OF AGRICULTURE

GEOQRGIA-FLORIOA WRAPPER TOBACCO
ACREAGE AND PRICE/LABOR RATIO

NEG. ERS 8978-72 (11)

Oe So eee See tah
OllbY YOdb 1/s0T Yd

ECONOMIC RESEARCH SERVICE

Figure 10

enclosed in cloth-covered frameworks. Also, the high
quality standards require more labor.

Total. production costs of cigar wrapper are about
$4,500 per acre. With these high production costs, the
selling price is eight times or more the price of filler or
binder tobacco.

Virtually all wrapper is grown under sales
contracts or on farms owned by cigar manufacturers.
Most of the farms grow 60 to 100 acres of wrapper.
Connecticut, Massachusetts, Georgia, and Florida
are the wrapper-producing States.

Acreage of cigar wrapper tobacco declined 45
percent from 13,000 acres in 1950 to 8,000 acres in
1971. Most of the decline occurred from 1968 to 1971.
Growers cited declining labor force and rising wage
rates for the drop. Also, lower cost reconstituted sheet
wrapper has reduced the demand for natural
wrapper.

From 1950 to 1968, harvested acreage ranged

between 12,300 acres in 1953 and 15,600 in 1965.
Yields have changed relatively little since the early
1960’s because of controlled production practices.

Several estimating equations for cigar wrapper
tobacco acreage during 1957-71 are shown in table5.
Equation 3.1, based on farm price of wrapper tobacco,
farm wage rates, and acreage harvested (all lagged 1
year), gives a satisfactory fit—that is, coefficient
signs are as expected, and all variables are
significant at the 1-percent level. This equation
explains 91 percent of the year-to-year variations in
acreage.

Equation 3.1 indicates that a 1¢ increase in farm
prices for wrapper tobacco resulted in 40 more acres
harvested. Also, when wage rates increased,
production decreased sharply. According to the
equation, a 10-percent increase in farm wages was
associated with a decline in harvested acreage of
1,378 acres.

11

CIGAR (OBHCCUTCIEERDS <6 0a Gas

——— PENNSYLVANIA: FILEER “OnYPE 41)
: =<== QHIO FIULER: IhYRE teaue)

a
a
at
ae
feo

U.S. DEPARTMENT OF AGRICULTURE NEG.ERS 6553-71 (11) ECONOMIC RESEARCH SERVICE

Figure 11

eo

10

Ww)
=)
=
=>
&
As
O
uJ
a
&)
a
=3
a

U.S. DEPARTMENT OF AGRICULTURE NEG.ERS 8554-71 (11) ECONOMIC RESEARCH SERVICE

Figure 12

CIGAR TUSHECO YIELDS BY TYPE

— CONNECTICUT VALLEY SHADE GROWN (TYPE 61)
---- GEORGIA-FLORIDA SHADE GROWN (TYPE 6e)

ice)
S
Fi
=
©
[oles
E)
LJ
Ge
==)
=
—
ae

U.S. DEPRATNENT OF AGRICULTURE

NEG.ERS 6978-72 (11)

ECONOMIC RESEARCH SERVICE

Figure 13

ACREAGE PROSPECTS

Over the next few years, the downtrend in cigar
tobacco acreage is likely to continue. Farm prices are
a major factor affecting acreage of cigar tobacco
production, but leaf-economizing techniques of
manufacturers and increasing competition from
imports point to little increasein farm tobacco prices.

Consumers have switched from large to smaller,
thinner, and filter-tipped cigars and cigarillos that
reauire less tobacco leaf per unit of product.
Reconstituted sheet tobacco, now substituted widely
for natural binder and used increasingly for wrapper,
offers substantial savings both in leaf use and labor
cost. Therefore, manufacturers are likely to expand
its use rather than pay higher prices to increase
tobacco production. Use of sheet tobacco that offers
both potential leaf and labor savings is attractive to
manufacturers. Some cigar leaf goes into loose leaf
chewing tobacco, but substantial increases in total
cigar leaf use are unlikely.

Imports of cigar filler leaf and scrap have risen

since the early 1960’s to supply over half of the cigar
leaf market. They will probably continue to increase
and subject farm prices to pressure.

Since cigar tobacco production requires large
amounts of labor, farm and nonfarm wage trends
significantly affect acreage. Wages have doubled
over the past two decades, and some upward trend
will probably continue. Mechanized harvest of shade-
grown tobacco seems improbable. Changes in filler
and binder production probably depend on
mechanization and other developments in burley
tobacco—the chief air-cured type—and may be many
years away. As more nonfarm jobs become available
and workers’ skills increase, many growers will
continue to leave tobacco farms for other jobs.
Nonfarm wage rates are higher. Also, nonfarm work
is generally easier, steadier, and carries fringe
benefits. Changes in tobacco allotment programs
may increase acreage slightly in the short run, butas
labor becomes more costly and scarce, the effect will
probably be small over time.

13

Table 5 --Comparison of linear equation results for cigar tobacco acreage, 1957-71 1/

: See = : Price : Farm ; Price : Dairy
M * Time Acreage ; F Fear
: : $ : a, +: wage :wage ratio,: prices
Equation yIntercept Bae menyestedy: ri yee es ne is con

E
for)
&
g
5
z
%
i=]
=

; Cigar filler (Types 41-44)
; - 954 698 = 2k
niga : 42.750 -.212 «357 25.091 +194 0.95
: (1.61) (1.98) (3.09) (2.28)
12 : 62.919 -.178 31.3% =.339 13073) Oa esp
: (1.21) (3.73) (6.89)
ie : 29.847 1.130 17.035 1.595 .97 1.62
ene; Gaon) G18)
4 : 63.577 -.170 31.540 -3.532 1.423 .98 2.67
. : oe (2.13) (3.65) (6.48) (.67)
; -374 .95 1.90
Le : -6.096 2925 25.920 1.37
: : (9.88) (2.44)
: Cigar binder (Types 51-56)
Pa 51.043 - 488 4.915 -8.867 3.519 T487) | 285 +95
: (1.25) (.22) (. 74) (1.83)
: 54.510 =. 726 13.804 2.505 -.48h {656 Zo7)) Tes
ta ait (6 S (1.5%) (4.06) (6.69)
- ; 66.100 -.91 17.542 1.456 -.527 -567 .98 1.98
ae : Gan (2.56) (1.90) (7.91)
: - 35342 31861) 1537;
2.4 : 81.670 -.976 -7.190 18.705 -231 1.53
: (1.88) (.34) (.82) (1.10)
4 - 88
é : 72.380 -1.046 -13.079 4,065 1.309 548 ‘576. -98:1 “aX
ia : ee (6.22) (1.48) (.82) (1.64) (7.58)
; Shade-grown cigar wrapper (Types 61-62)
3.1 : 0.804 94g 4,Oll 13.789 3679 91! e222
: (5.72) (3.16) (4.42)
332 ; 4,289 -950 4,201 -12.797 -.049 .709. 91 2.2h
: (5.48) (2.90) (2.85) (.32)
3.3 : 3.475 - 1.036 4.438 -13.158 .765 +89 2.03
: (5.47) (2.69) (3.61
3.4 ; 8.890 1.032 4.613 -11.401 -.081 10 BOM rere sO3
: (5.47) (2.63) (2.11) (.45)
3.5 ; 918.436 6.095 1.386 1.013. .94 123
(2.25) (6.64)

1/ In thousand acres. Values in parentheses below regression coefficients are their t values.
2/ Average tobacco price received by farmers, dollars per pound.

3/ Dollars per hour. Wisconsin data for cigar binder; South Atlantic data for ecuations 3.1 and 3.2; New England data for
equations 3.3, 3.4, and 3.5

L/ Prices received, cents per pound divided by farm wage rate, and dollars per hour. Pennsylvania data for cigar filler; Wis-
consin data for binder; New England wage rates for wrapper.

ay Index of prices received by farmers for dairy products, United States, 1967=100.

6/ Index of prices paid, interest, taxes, and farm wage rates, 1967=100.

Sif. Reallocated acreage, by the Agricultural Stabilization and Conservation Service, 1970-71.
8/ Diversion to Soil Bank, 1957, and Cropland Adjustment Program, 1966-71.

9/ Coefficient of determination:

10/ Durbin-Watson statistic.

14

(1)
(2)

(3)

(4)

(5)

(6)

(7)
(8)

LITERATURE CITED

Akehurst, B. C.
1968. Tobacco. Humanities Press, Inc., New York, N.Y.
Hendrickson, Clarence L.
1966. The Changed Market for U.S. Cigar Leaf Tobacco. U.S. Dept. of Agr., Econ.
Res. Serv., ERS-292, July.
U.S. Department of Agriculture.
1967-72. Crop Production, May issue and annual summary.

1963. Farm Employment—Family and Hired Workers, Annual Averages: States

1950-59; United States, 1910-59 U.S. Dept. of Agr., Statis. Bul. 334, Aug.

1960-72. Farm Labor, Jan. and Mar. issues.

1970. Tobacco (United States and State Estimates, 1866-1965; Type and Class

Estimates, 1919-65). U.S. Dept. Agr., Statis. Bul. 454, June.

1970-72. Tobacco Situation, quarterly issues.

U.S. Department of Labor.
1971. Employment and Earnings—States and Areas, 1939-71. Bureau of Labor
Statistics, Bul. 1370-9.

15

UNITED STATES DEPARTMENT OF AGRICULTURE
WASHINGTON, D.C. 20250

OFFICIAL BUSINESS
PENALTY FOR PRIVATE USE, $300

POSTAGE AND FEES PAID
U.S. DEPARTMENT OF
AGRICULTURE

AGR 101
FIRST CLASS