Major buyer quits Georgia tobacco

In an industry slowly fading in Georgia, tobacco growers got a recent kick in the pants when their major purchaser announced it would no longer buy from them.

At a meeting in Alma, Ga., Oct. 14, Philip Morris USA announced to more than 75 growers that it would honor the three- and five-year contracts it still has with growers, as long as they meet the contracts’ requirements. But it will not give new contracts, said J. Michael Moore, tobacco specialist with University of Georgia Cooperative Extension.

The company will stop buying from Florida growers, too, essentially ending its business in the two states.

“This was no doubt a major blow. Not only to participating growers, but also to south Georgia’s economy,” said Moore, who attended the meeting.

In 1996, Georgia’s tobacco crop was worth $206 million. Last year, it was worth $57 million.

The company buys roughly half of Georgia’s crop, Moore said. The announcement affects half of the 200 to 225 tobacco growers left in the state.

Growers and industry leaders are currently trying to get the remaining three companies still buying in Georgia to buy more or persuade new companies to do business in the state, Moore said.

“We hope this is something we can overcome,” he said.

But it’s going to be a challenge.

With higher federal taxes on U.S. cigarette consumption and the Federal Drug Administration’s newfound regulatory sway over the product, companies aren’t looking to carry a big inventory of tobacco. It’s estimated that some have enough low-quality tobacco now to last them for the next decade, Moore said.

The number of tobacco growers continues to decline in Georgia. There were around 350 two years ago. In 2004, there were 1,000.

That same year, the federal government ended its Depression-era tobacco quota program at the growers' request. It provided price support but restricted how much they could grow and where. Growers and quota owners were compensated for the end of the program. They now can grow as much tobacco as they feel they need to fill contracts.

Filling those contracts was a challenge this year in Georgia, where disease and wet, stormy weather hit springtime planting and summer harvest hard. Of the 15,000 acres planted, Moore said, 1,700 acres or more were lost.

According to the Georgia Agricultural Statistics Service, Georgia’s average yield this year is 1,500 pounds per acre, or 600 pounds per acre less than last year. This is the lowest average yield ever recorded in the state.

The decision to grow tobacco in Georgia has become harder and harder for growers to make in recent years, Moore said. Many have sold their tobacco-related equipment, which can’t be used for any other crop.

Canadian growers are looking to get back into the tobacco business, calling down their interest to buy good equipment. If a Georgia grower is too uncertain about next year’s crop, he said, they may want to think about selling equipment while they can get a good price for it.

By Brad Haire
University of Georgia

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Opinion: Tax Collections Sink Down Another Month: State's Ability to Fulfill Obligations Compromised

Governor Perdue released the revenue collections data for September, marking an entire quarter of dismal revenue -- an average of 14.2 percent decline from the previous year.

"Georgia's revenue has been in a consistent state of decline for the last nine months," said Alan Essig, executive director of the Georgia Budget & Policy Institute.

"This is evidence, along with Georgia's horrible unemployment rates, that the state will not reach the governor's recent goal of just a 3.5 percent decline from last year for this fiscal year."

"Georgia has already implemented over $2 billion in cuts from public services in this year's budget. The state must consider additional revenues for a more balanced approach to reducing our chronic deficit," said Essig. The vast majority of other states, including our southern neighbors, are combining raising revenues with cuts.

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Georgia tobacco yields worst in decades

Volatile spring weather and diseases have left Georgia’s tobacco crop hurting, as farmers prepare to harvest what could be their worst yields in decades, says a University of Georgia tobacco specialist.

Earlier this spring, farmers had one of the toughest times in recent memory just trying to get the tobacco crop securely planted, said J. Michael Moore, a tobacco expert with UGA Cooperative Extension. Repeated rain deluges of five and six inches across south Georgia, where the crop is grown, washed away planting beds, chemicals, plants and delayed planting all together.

“There were a lot of headaches just getting started this year,” he said.

Farmers eventually planted 15,000 acres by May 1, he said. Then came more rain followed by a hot, dry June. Then the diseases hit -- hard.

Tobacco’s deadliest foe is tomato spotted wilt virus, which is carried by tiny insects called thrips. Over the past few years, it has infected 15 percent of the plants. This year, as much as 30 percent of plants statewide have shown symptoms of the disease. Many plants have died and yields have been reduced, he said.

The increased damage from TSWV this year was likely due to the weather. “We know there is a relation to the type of weather we had and this disease pressure,” Moore said. “But at this point we don’t know exactly what that relation is.”

Due to the excessive rain, two other diseases called target spot and white mold also caused problems for farmers, he said.

Of the 15,000 acres planted, Moore said, 1,700 acres were lost either to extreme rain or disease. Due to weather- and disease-related problems, tobacco yields are expected to average 1,700 pounds per acre, or 400 pounds per acre less than last year. This is the lowest average yield since 1973.

In total, Georgia farmers are expected to harvest 23.8 million pounds of tobacco this year, or 29 percent less than last year. Harvest will start in the next two weeks, a month behind the typical schedule.

The number of tobacco farmers continues to decline in Georgia. Today, only 200 actively grow the crop. There were around 350 two years ago.

In 2004, Georgia had 1,000 tobacco farmers. That same year, the federal government ended its Depression-era tobacco quota program at the farmers' request. It provided price support but restricted how much tobacco farmers could grow and where. Farmers and quota owners were compensated for the end of the program.

Farmers now can grow as much tobacco as they feel they need to fill contracts they get directly from cigarette manufactures or marketing companies. For decades, south Georgia has been a place to get sweet-flavored, aromatic tobacco, the kind manufacturers add to tobacco blends to improve taste.

But delivering quality tobacco this year will be hard for Georgia, Moore said. And making any profit will be, too.

Tobacco quality is graded on a scale from 1 to 4, with No. 1 being the best, which has golden leaves and no blemishes. Most companies now only want No. 1- or No. 2-graded tobacco. They have enough of the No. 3 and No. 4 in storage to use for the next 15 years, he said.

“Growers are concerned that the companies are no longer seeing south Georgia as a reliable region for quality tobacco,” he said. “There is a demand for this style of tobacco, and there will continue to be. But it’s critical for us to produce the tobacco in this area to keep the market.”

For now, the remaining farmers are cobbling together a tobacco-growing industry in Georgia, scavenging from old, abandoned equipment to fix equipment currently in use.

“I’d hate to be a dealer trying to sell any tobacco-related equipment today,” Moore said. “Nobody has the money to buy anything new.”

By Brad Haire
University of Georgia

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Georgia Industrial Employment Declines Nearly 9% According to Manufacturers Directory

/PRNewswire/ -- Industrial employment in Georgia fell 8.8% over the past twelve months according to the 2010 Georgia Manufacturers Register, an industrial directory published annually by Manufacturers' News, Inc. (MNI) Evanston, IL. MNI reports Georgia lost 48,904 industrial jobs and 515 manufacturers between April 2008 and April 2009, the sharpest decline MNI has ever reported for the state.

According to earlier reports by MNI, Georgia suffered a 2.2% loss in manufacturing employment between 2006 and 2007, and a loss of 2.3% between 2007 and 2008.

Manufacturers' News reports Georgia is home to 10,893 manufacturers employing 507,866 workers.

"As with the entire nation, the recession continues to chip away at Georgia's core sectors. The faltering housing market has affected industries such as wood, furniture and building products, and has worsened an already suffering textile industry," says Tom Dubin, President of the Evanston, IL-based publishing company, which has been surveying industry since 1912.

Employment in the textiles/apparel sector saw the worst drop in employment, down 16.2%, or 13,219, and currently accounts for 68,562 industrial jobs. The loss is more than double what MNI had reported in previous years, with a 6% drop in textile employment recorded over the 2006-2007 survey period and a 7% percent decline over the 2007-2008 period. Textile/apparel companies shutting down include carpet manufacturer Shaw Industries, a Springs Global towel manufacturer in Griffin, and American Fibers and Yarns, which shuttered its plant in Bainbridge last year.

MNI reports food products manufacturing has replaced textiles/apparel as the state's top industrial sector, currently accounting for 69,560 of the state's jobs, down 2.7% or 1,903 jobs. Third-ranked industrial machinery and equipment accounts for 45,680 jobs, down 5.1% over the year, with employment expected to strengthen with the recently-announced relocation of ATM manufacturer NCR to Columbus.

Job losses were seen across all other sectors over the past twelve months and included rubber/plastics down 18.4%; printing/publishing down 16.8%; lumber/wood down 11.9%; stone/clay/glass down 9.6%; furniture/fixtures down 9.2%; fabricated metals down 7.2%; paper products down 6.4%; transportation equipment down 5.8%; electronics down 5.4%; and primary metals down 2.5%.

Manufacturers' News reports Northwest Georgia accounts for a majority of the state's decline, losing 10.6% of its manufacturing employment or 34,948 jobs. The region is currently home to 294,667 industrial workers. South Central Georgia lost 4,788 jobs over the year or 8.4% and currently accounts for 52,070 industrial jobs.

Southwest Georgia is currently home to 39,804 industrial jobs, down 6.9% over the past twelve months, while Northeast Georgia saw industrial employment decline 5.2% and accounts for 81,036 jobs.

Southeast Georgia lost the fewest jobs, down 4.2% or 1,780 jobs, and is currently home to 40,290 industrial workers.

MNI's city data shows Atlanta is the state's top city for manufacturing employment, home to 55,861 jobs, with employment down 11% over the year. MNI reports Atlanta ranks 18th among the nation's cities for number of manufacturing jobs and ranks 22nd nationally for number of manufacturers.

Second-ranked Dalton accounts for 25,446 jobs, with employment down 3.5% over the past twelve months. Alpharetta saw no significant change in manufacturing employment and currently accounts for 16,826 jobs, while Marietta is home to 16,580 jobs, down 2.5% over the year. Fifth-ranked Norcross is home to 14,388 jobs, down 9.3%, according to MNI.

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Latest Numbers: State Revenues Decline Further, Governor Should Veto Tax Cuts

In light of the continued decline in state revenues, the Georgia Budget and Policy Institute calls on Governor Perdue to continue his promise of fiscal responsibility and veto bills passed by the General Assembly that siphon dollars from the fiscal year 2010 budget, placing it into a deficit.

The FY 2009 collections through March are running 1.2 percentage points behind what the budget projects - a 8.0% revenue decline from FY 2008 total collections instead of a 6.8% revenue decline. If this decline maintains through the end of the year (April through June), the FY 2009 revenue shortfall will be at least $225 million.

Georgia has approximately $550 million in the Revenue Shortfall Reserve that automatically covers the shortfall this year, however this leaves little wiggle-room for the FY 2010 budget starting in July.

"Governor Perdue has been a good and reliable steward of Georgia's budget," said Alan Essig, GBPI's executive director. "He is the last chance Georgia has to prevent worsening the impending deficit."

A deficit is acutely relevant in light of so-called stimulus legislation the governor has on his desk. According to the official fiscal notes on House Bill 261 and HB 481, if these bills are signed into law they will cost the state treasury approximately $60 million in FY 2010, as well as hundreds of millions of dollars in FY 2011 and FY 2012.

"These bills devote millions of dollars to activity that will occur regardless of government intervention. They will also keep millions of dollars from important services that won't be offered to Georgians who need them, such as meals on wheels and care for Georgians with developmental disabilities, and to services that make our state strong, like the education system," said Sarah Beth Gehl, deputy director of GBPI.

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GAE Members to Ask Obama for Piece of Stimulus Package for Georgia's Public Schools

The Georgia Association of Educators (GAE), realizing the urgency of the ongoing economic climate and its impact upon Georgia¡¯s families and public education system, has developed a plan to help Georgia obtain a piece of the economic stimulus package being proposed by the incoming Obama Administration. Its members will be asked to lobby their U.S Senators and Representatives on behalf of Georgia's families and public schools.

"Our students, our educators, and their respective families, like all Georgia citizens and their families, are living with the realities of today's economic difficulties," said GAE President Jeff Hubbard. "These difficulties, which are forecast to only worsen, will continue to have an impact upon our state's ability to fulfill its budgetary obligations, which will impact public education both directly and indirectly....More

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Retired CNN Executive to Address 'Why Network News is Down the Tube' November 12

In the aftermath of an historic presidential election, a 40-year veteran of broadcast news will speak at Emory University about the current state of television news. Former CNN Headline News President V.R. "Bob" Furnad will address “Why Network News is Down the Tube” in a Nov. 12 lecture hosted by the Emory Center for Myth and Ritual in American Life (MARIAL). The talk is free and open to the public. It is at 4 p.m. at the MARIAL Center, 1256 Briarcliff Road, Suite 413E.

Furnad has covered seven presidents and 13 political conventions since 1972. He spent 18 years at ABC, and 17 years at CNN. His last position at ABC was senior producer for Good Morning America news. Furnad joined CNN in 1983 as its first political director and rose to the position of executive vice president and senior executive producer. He produced all live special event coverage including the first Gulf War, the explosion of the space shuttle Challenger, the fall of the Berlin Wall, the Moscow revolt, the Moscow coup, Tiananmen Square and the Oklahoma City bombing. In his last three years at CNN, Furnad was president of CNN Headline News, CNN Radio, CNN Airport Network and CNN Newsource. Furnad reorganized CNN Headline News to utilize the latest technologies, reduce costs, and make more resources available to gather news and create production elements.

Furnad retired in January 2001, and joined the Henry W. Grady School of Journalism at the University of Georgia as a visiting associate professor. He retired from UGA in May 2006. In 2001, Furnad worked on a television news project for the Kuwaiti government and, as part of Intelligent Media Consultants, worked with executives at the NDTV networks in India. Furnad also delivers a video exercise on ethics for broadcast news majors at journalism colleges across the country.

He has received two George Foster Peabody Awards, two Emmys and the DuPont-Columbia Award, and is chairman of FaithWorks, a ministry in Covington that provides emergency financial aid to help people pay electric bills and rent.

The Emory Center for Myth and Ritual in American Life (MARIAL) is one of five Sloan Centers on Working Families, supported by the Alfred P. Sloan Foundation. The Emory Center focuses its research on the functions and significance of ritual and myth in dual wage-earner middle-class families in the American South.

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National Trend of Home Price Declines Continues into the Second Half of 2008

Atlanta home pricing fell 8.5% over the last 12 months.

PRNewswire/ -- Data through August 2008, released today by Standard & Poor's for its S&P/Case-Shiller(1) Home Price Indices, the leading measure of U.S. home prices, shows continued broad based declines in the prices of existing single family homes across the United States, a trend that prevailed throughout the first half of 2008 and has continued into the second half.

"The downturn in residential real estate prices continued, with very few bright spots in the data," says David M. Blitzer, Chairman of the Index Committee at Standard & Poor's. "The 10-City Composite and the 20-City Composite reported record 12-month declines. Furthermore, for the fifth (5th) straight month, every region reported negative annual returns. This started when Charlotte, NC, was the last region to turn negative back in April 2008. Both the 10-City and 20-City Composites have been in year-over-year decline for 20 consecutive months. Of the 20 regions, 13 of them had their annual returns worsen from last month's report. As seen throughout 2008, the Sun Belt markets are being hit the most. Phoenix and Las Vegas are both reporting annual declines in excess of 30%, and Miami, San Francisco, Los Angeles and San Diego are all in excess of 25%."

Nine of the 20 regions have record annual declines. Phoenix and Las Vegas are now returning -30.7% and -30.6% versus August 2007, respectively. Each of the California markets -- Los Angeles, San Francisco, and San Diego -- are down more than 25% from their values 12 months ago. Miami and Tampa, the two Florida markets, are down 28.1% and 18.1%, respectively.

For the August/July period only 2 regions, Cleveland and Boston, had positive returns. Cleveland returned +1.1% and Boston returned +0.1%. Boston has had positive monthly returns for each of the past five months. Dallas and Denver's streaks of 4+ straight positive returning months ended in August. San Francisco was the biggest decliner for the month returning -3.5%. This worsened from its July/June return of -1.8%. From August 2007 to August 2008, Dallas and Charlotte have the best relative performance. Dallas is down 2.7% over the year and Charlotte is down 2.8%.


The S&P/Case-Shiller Home Price Indices are published on the last Tuesday of each month at 9:00 am ET. They are constructed to accurately track the price path of typical single-family homes located in each metropolitan area provided. Each index combines matched price pairs for thousands of individual houses from the available universe of arms-length sales data. The S&P/Case-Shiller National U.S. Home Price Index tracks the value of single-family housing within the United States. The index is a composite of single-family home price indices for the nine U.S. Census divisions and is calculated quarterly. The S&P/Case-Shiller Composite of 10 Home Price Index is a value-weighted average of the 10 original metro area indices. The S&P/Case-Shiller Composite of 20 Home Price Index is a value-weighted average of the 20 metro area indices. The indices have a base value of 100 in January 2000; thus, for example, a current index value of 150 translates to a 50% appreciation rate since January 2000 for a typical home located within the subject market.

These indices are generated and published under agreements between Standard & Poor's and Fiserv, Inc. The S&P/Case-Shiller Home Price Indices are produced by Fiserv, Inc. In addition to the S&P/Case-Shiller Home Price Indices, Fiserv also offers home price index sets covering thousands of zip codes, counties, metro areas, and state markets. The indices, published by Standard & Poor's, represent just a small subset of the broader data available through Fiserv.

(1) Case-Shiller(R) and Case-Shiller Indexes are registered trademarks of Fiserv, Inc.

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The Conference Board U.S. Leading Economic Index Edges Up Slightly

PRNewswire/ -- The Conference Board reports today that the Composite Index of Leading Economic Indicators edged up 0.3 percent in September, following a 0.9 percent decline in August, and a 0.7 percent decline in July.

Says Ken Goldstein, Labor Economist at The Conference Board: "This summer, before the financial market turmoil intensified, the overall economy was entering a period of decline. The extreme volatility in the financial market, and the near freeze-up of credit, will no doubt weaken the economy further. But latest data suggest that conditions in the non-financial economy are not falling apart. Data on hand reflect a contracting economy, but not one in free fall. More likely, what's going on in the financial market is a stretching of the recovery process - which could take a full year to develop."

The Conference Board reports that the Coincident Index fell by 0.5 percent in September, following no change in August, and a 0.2 percent decrease in July. The Lagging Index fell by 0.2 percent in September, following a 0.2 percent rise in August.

-- The leading index increased in September, the first increase in the
last five months. Real money supply, consumer expectations, the
interest rate spread, and the index of supplier deliveries all made
large positive contributions to the index in September, more than
offsetting the negative contributions from building permits, stock
prices, initial claims for unemployment insurance (inverted) and the
average workweek in manufacturing. From March to September, the
leading index decreased 1.3 percent (a -2.5 percent annual rate),
declining modestly slower than the 1.7 percent decrease (a -3.4
percent annual rate) that prevailed in the previous six months.
However, the weaknesses among the leading indicators have remained
widespread over the past six months.

-- The coincident index decreased sharply in September and it has
declined or held steady since October 2007. Industrial production fell
steeply this month, while employment continued to decline. The
six-month decline in the coincident index has picked up to 0.8 percent
(a -1.7 percent annual rate), from a decrease of 0.3 percent (a -0.6
percent annual rate) in the previous six months, while the weaknesses
among the coincident indicators remained very widespread. In
September, the coincident index decreased more than the lagging index,
and the coincident-to-lagging ratio continued to decline as a result.

-- With consistently widespread weakness among its components, the
leading index has been falling since July 2007. Following the leading
index, the coincident index, a monthly measure of current economic
conditions, has also been decreasing, and its rate of decline has
accelerated in recent months. Meanwhile, real GDP growth slowed to a
1.8 percent average annual rate in the first half of the year, down
from an average annual rate of 2.3 percent in the second half of 2007.
Taken together, the behavior of the composite indexes suggests that
the economy is unlikely to improve in the near term.


LEADING INDICATORS

Six of the ten indicators that make up the leading index increased in September. The positive contributors - beginning with the largest positive contributor - were real money supply*, index of consumer expectations, interest rate spread, index of supplier deliveries (vendor performance), manufacturers' new orders for nondefense capital goods*, and manufacturers' new orders for consumer goods and materials*. The negative contributors - beginning with the largest negative contributor - were building permits, average weekly initial claims for unemployment insurance (inverted), stock prices, and average weekly manufacturing hours.

The leading index now stands at 100.6 (2004=100). Based on revised data, this index decreased 0.9 percent in August and decreased 0.7 percent in July. During the six-month span through September, the leading index decreased 1.3 percent, with two out of ten components advancing (diffusion index, six-month span equals 20 percent).

COINCIDENT INDICATORS

Two of the four indicators that make up the coincident index increased in September. The positive contributors to the index - beginning with the larger positive contributor - were personal income less transfer payments* and manufacturing and trade sales*. The negative contributors were industrial production and employees on nonagricultural payrolls.

The coincident index now stands at 106 (2004=100). This index remained unchanged in August and decreased 0.2 percent in July. During the six-month period through September, the coincident index decreased 0.8 percent, with one out of four components advancing (diffusion index, six-month span equals 25 percent).

LAGGING INDICATORS

The lagging index stands at 112.2 (2004=100) in September, with two of the seven components advancing. The positive contributors to the index - beginning with the larger positive contributor - were commercial and industrial loans outstanding* and the ratio of manufacturing and trade inventories to sales*. The negative contributors - beginning with the largest negative contributor - were average duration of unemployment (inverted), change in CPI for services, and change in labor cost per unit of output*. The average prime rate charged by banks, and ratio of consumer installment credit to personal income* held steady in September. Based on revised data, the lagging index increased 0.2 percent in August and increased 0.5 percent in July.

DATA AVAILABILITY AND NOTES

The data series used by The Conference Board to compute the three composite indexes and reported in the tables in this release are those available "as of" 12 Noon on October 17, 2008. Some series are estimated as noted below.

* Series in the leading index that are based on The Conference Board estimates are manufacturers' new orders for consumer goods and materials, manufacturers' new orders for nondefense capital goods, and the personal consumption expenditure used to deflate the money supply. Series in the coincident index that are based on The Conference Board estimates are personal income less transfer payments and manufacturing and trade sales. Series in the lagging index that are based on The Conference Board estimates are inventories to sales ratio, consumer installment credit to income ratio, change in labor cost per unit of output, the consumer price index, and the personal consumption expenditure used to deflate commercial and industrial loans outstanding.

The procedure used to estimate the current month's personal consumption expenditure deflator (used in the calculation of real money supply and commercial and industrial loans outstanding) now incorporates the current month's consumer price index when it is available before the release of the U.S. Leading Economic Indicators.

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