After years of faithfully supplying leaf to tobacco giant Philip Morris International, farmer Jess Burrier received a postcard, thanking him for his contributions and telling him his service wasn't needed this year.
"They were very courteous, but a Dear John letter's still a Dear John letter," said Burrier, who has seen the amount of tobacco he grows under contract shrivel from about 600,000 pounds two years ago to 20,000 pounds this year with another leaf buyer.
Kentucky, the nation's top producer of burley tobacco, a common ingredient in cigarettes, could lose a fourth of its contracts this year, said Will Snell, a University of Kentucky agricultural economist specializing in tobacco. Many contracts also have been lost in North Carolina, South Carolina, Tennessee and Virginia as smoking continues to decline in the U.S.
U.S. farmers also are seeing more competition from overseas as worldwide burley production has grown in the past two years, Snell said. And, a 2009 federal law giving the Food and Drug Administration broad power to regulate tobacco has added to cigarette makers' uncertainty, making them even more conservative about purchasing, he said.
The cutbacks mean farmers who've lost contracts might not be able to pay mortgages and rural communities could lose jobs and income as farmers have less money to spend.