THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Wednesday, December 20, 1995 TAG: 9512200426
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY MYLENE MANGALINDAN, STAFF WRITER
LENGTH: Short : 46 lines
Facing plummeting domestic consumption and increasing foreign production, Virginia's tobacco industry may be headed for a dive, according to a study by the University of Virginia.
The declining outlook for the state's most important cash crop will create economic adjustment problems, especially in the southern and western tobacco-growing regions of the state, said John L. Knapp, economic research director of U.Va.'s Weldon Cooper Center for Public Service.
Those areas of the state have already seen slower growth than the commonwealth as a whole.
``The fundamental economic dilemma is, tobacco remains such a high-income crop relative to other crops,'' Knapp said. ``The area does not enjoy locational, topographical or soil conditions that make it natural for other crops.
``That's not new, and people in the tobacco area have experimented with diversity, with not a lot of success. This is a long-run condition that's been going on for some time.''
With a 6.3 percent share of U.S. tobacco production, Virginia ranks as a major producer. The crop represents about 49 percent of the value of farm products sold in the major tobacco counties, Knapp said.
Knapp's study, funded by a grant from the Robert Wood Johnson Foundation to provide an objective current appraisal of the industry and its outlook for the future in Virginia, points to warning signs of the industry's decline.
They included:
Dramatically less cigarette-smoking in the United States as a result of health concerns. In fact, total domestic cigarette consumption peaked in 1981, Knapp said. U.S. consumption per capita peaked in 1963.
Growing foreign production and the establishment of manufacturing plants abroad give American producers more competition.
Import competition is making inroads in the United States, where the industry is threatened by higher taxes on tobacco consumption and the possibility of dismantled market controls on tobacco production.
KEYWORDS: TOBACCO by CNB