Tobacco Farmer Interest and Success in Diversification

As U.S. farm income from tobacco production has declined in recent years, there has been increased interest in developing alternative sources of farm revenue to replace lost tobacco income, particularly in tobacco-dependent communities of the southeastern United States. The recent end of the tobacco quota program is expected to accelerate the exit of tobacco farmers and has heightened concern regarding the availability of profitable substitutes for tobacco. In this study, we examine the impact of farm, household, and market characteristics on tobacco farmer interest and success in on-farm and off-farm income diversification. Using survey data collected from a panel of North Carolina tobacco farmers in 1997, 1999, 2001, and 2004 combined with market data collected from secondary sources, we evaluate the influence of farmer preferences, resource endowments, market incentives, risk, and biophysical factors on tobacco farmers' attitudes regarding diversification into non-tobacco products, the extent to which they reallocated resources towards non-tobacco products, and their success in identifying profitable alternatives to tobacco production. Our research contributes empirical findings to the public dialogue concerning the ability of tobacco farmers and tobacco-dependent communities to adjust to structural changes taking place in the tobacco market.