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UST Inc. posted higher second-quarter profit on Thursday, beating analysts' estimates, on increased sales of wine and smokeless tobacco, and raised its full-year earnings forecast.
Net income climbed to $139.9 million, or 87 cents per share, from $134.6 million, or 83 cents per share, a year earlier.
Excluding restructuring and other charges, the company earned 90 cents per share, 5 cents above analysts' average forecast, according to Reuters Estimates.
"The categories we compete in are growing," Chief Executive Murray Kessler said on a call with analysts. "We continue to control costs and are returning all of our cash and more to our shareholders."
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Tobacco warehouses dotted the landscape around Springfield’s public square, symbols of the big business that tobacco was.
Today, the metal arch is gone. With auctions a thing of the past, most of the old warehouses have been boarded up or converted into other businesses. Robertson County, like other counties in Tennessee, is experiencing a decline in the production of tobacco, a crop that once fueled the economies of farming communities across the state.
Tennessee may soon drop out of the club of the biggest tobacco producers altogether, state Agriculture Commissioner Ken Givens said. The end of federal price supports for tobacco farmers and the demise of Tennessee’s smaller-scale family farms are part of the story. . . .
According to a recently released USDA report, 750 fewer acres of tobacco will be planted in the Volunteer State this year than were set out last year. If the forecast is correct, 2007 will mark the eighth straight year that tobacco planting has fallen in Tennessee.
The state’s downward turn goes against the national trend — prices crashed in 2005, driving many away from the crop, but tobacco farmers across the country planted more acres in 2006 than they did in 2005, and are expected to plant more this year than last.
A federal judge in Abingdon has dismissed a lawsuit by two southwest Virginia farmers that accused the U.S. Department of Agriculture of illegally slashing the growers' tobacco-buyout payments.
U.S. District Judge Samuel G. Wilson wrote Thursday that the two burley-tobacco growers lacked standing to bring the suit because they had entered into contracts with the Agriculture Department. Even if they had standing, Wilson said, they would not be entitled to relief.
William J. Neese and Daniel M. Johnson contended in their lawsuit, filed in September 2005, that Agriculture Secretary Mike Johanns overstepped his authority by deviating from a formula set by Congress that allocates payments under the $10 billion buyout of tobacco quotas.
The farmers said the agency replaced a simple calculation approved by Congress with a complex formula that cuts payments to many farmers. . . .
Philip Morris USA had intervened in the case, filing a motion to dismiss it for lack of jurisdiction.
Leaf Production Rebounds
During the second season since the termination of the program, U.S. tobacco production recovered, gaining nearly 100 million pounds. From a low point of 647.3 million pounds in 2005, production for 2006 is projected at 743.1 million as of September 1.
Agriculture Department said in its monthly crop report Tuesday. . . .
Tobacco farmers are rebounding after the tobacco buyout in 2005; their crop should be about 15 percent bigger this year.
This study focuses on factors that led to changes in the estimated residual returns to management and risk from tobacco production in 2003-04. Residual returns per acre for flue-cured tobacco declined less than those for burley tobacco in 2004 because yield increases for flue-cured tobacco helped to offset increases in economic costs. Residual returns above economic costs were calculated using data from the last tobacco surveys, conducted in 1995 for burley tobacco and 1996 for flue-cured tobacco, and updated with 2004 data on prices, yields, marketing costs, and quota levels.
Slight Gain for Harvest Intentions for 2006
On March 1, 2006, tobacco growers indicated intentions to harvest 306,630 acres during the upcoming 2006 season, a 3-percent gain over 2005. Last season, harvest intentions were 319,860 acres, and 298,020 acres were actually harvested. Assuming average yields, production is expected to be around 650 million pounds, about 10 million pounds over last season. Growers are responding to favorable contract prices and adjusting to the post-buyout environment.
Tobacco leaf production during the current (2005) season is estimated at 639.7 million pounds, 27 percent lower than in 2004. . . .
The long-term decline in cigarette consumption continued in 2005 as 378 billion cigarettes were consumed, 3 percent below 2004. Yearend taxable removals were 363 billion pieces. Output for calendar 2005 was 489.4 billion cigarettes. Per capita consumption (18 years old and older) in 2005 was 1,716 cigarettes, 90 below 2004.
Cigarette exports in 2005 slipped about 5 percent
The USDA tobacco program, a fixture in Southeast agriculture since the 1930s, was terminated at the end of the 2004 crop year. With the 2005/06 crop year underway, the tobacco sector is entering a new era of minimal government intervention. Growers and buyers of tobacco are adapting to changes triggered by the lifting of the restrictions, including a 27-percent decline in production. . . .
With the end of the tobacco program, U.S. tobacco production is likely to decline for a few more years. After this adjustment period ends, U.S. producers will be fewer in number, but they will be more competitive in domestic and world markets than previously. As prices fall, demand for U.S. tobacco will increase, and in the long run, production should slowly increase as well.
An updated list of 2005 Undeliverable Phase II Checks that remain unclaimed has been made available. The Governor's Office of Agriculture Policy is seeing the results from the initial posting of the list a month ago.
In June 2005, Kentucky sent out over 164,000 checks to certified recipients of the Phase II Tobacco Settlement program. In the past month over 800 checks have been claimed and as of Wednesday, there remain approximately 2,400 checks that did not reach their intended recipients.
Agriculture Secretary Mike Johanns announced today that USDA will begin issuing more than $950 million in Tobacco Transition Payment Program (TTPP) payments to quota holders and producers. Also, quota holders and producers can enter into successor-in-interest contracts beginning Jan. 23, 2006 for subsequent payments which would enable them to receive lump-sum payments from private entities by selling the remaining eight TTPP payments.
"Approximately $1.9 billion in payments will have been paid to tobacco quota holders and producers when this second round of payments ends," said Johanns. "These funds are helping tobacco farmers transition to the free market and mark the end of the federal tobacco marketing program."
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
Tobacco Yearbook, 12.16.05 [ Summary |
Tobacco, TBS-259-01, 09.30.05 [PDF ] (Special Report: "U.S. Tobacco Import Update 2003/04")
The U.S. Department of Agriculture has denied claims made by two Virginia farmers in a lawsuit that accused the agency of slashing the growers' tobacco-buyout payments.
William J. Neese and Daniel M. Johnson, who farm burley tobacco in southwest Virginia, filed the lawsuit in September. They claim Agriculture Secretary Mike Johanns overstepped his authority by deviating from a formula set by Congress that allocates payments under the $10 billion buyout of tobacco quotas.
In a recent filing in U.S. District Court in Abingdon, the department denies that Johanns was outside his authority. The agency also denies other claims, including the farmers' calculations of money owed to them.
A lawyer and a spokesman for the Department of Justice, which is defending the USDA, declined to comment.
The U.S. Department of Agriculture is denying the allegations of two Virginia farmers who sued the agency over the disbursement of money from a $10 billion buyout of the federal tobacco-quota system.
The farmers of burley tobacco in Southwest Virginia filed the lawsuit in September, claiming that U.S. Secretary of Agriculture Mike Johanns overstepped his authority by deviating from a formula set by Congress to determine payments to farmers.
In a response filed in U.S. District Court in Abingdon, the department denies that Johanns overstepped his authority. The agency also denies other claims in the lawsuit, including estimates of the amount of money the farmers believe they were supposed to receive.
A lawyer and a spokesman for the Department of Justice, which is defending the USDA, declined to comment yesterday.
But in March, the 52-year-old farmer from Abingdon was stunned to learn that he would receive only a third of what he had expected from the $10.1 billion buyout.
Other longtime growers were getting similar unwelcome surprises.
Now Mr. Neese and another Virginia farmer have sued the U.S. Department of Agriculture, accusing it of steering away from Congress’ directives and effectively slashing their payments.
For Mr. Neese, that means he would receive about $190,000 rather than the $563,000 he expected.
The other burley farmer, Daniel Johnson of Meadowview, would get $217,000 versus $503,000.
The farmers say the agency replaced a simple calculation approved by Congress with a complex formula that cuts payments to many farmers.