Georgia, the ratio declined, but farm wage rates 

 averaged only half the nonfarm level. 



In 1950, an hour's labor cost about 2'/i times the 

 value of 1 pound of filler tobacco, 1% times that of 

 binder, and about one-third that of Connecticut 

 wrapper. By 1971, these figures had increased to 

 about 6 for filler, 5 for binder, and .46 for Connecticut- 



wrapper. Tobacco prices also increased over this 

 period but did not keep pace with farm wages. Filler 

 and binder prices were held down by large supplies 

 and competition from imports. Cigar tobacco, which 

 accounts for only a minor part of farm income, 

 declined as a share of cash farm receipts in most 

 States that produce cigar leaf (table 2). 



ANALYSIS OF ACREAGE CHANGES 



Ordinary least-squares regression techniques were 

 used to relate harvested acreage of the three cigar 

 tobacco types in 1957-71 to various explanatory 

 factors. Either farm tobacco prices lagged 1 year or 

 farm tobacco price-wage ratio and trend explained 

 most of the year-to-year acreage changes. However, 

 for some types, additional variables aided in 

 statistically explaining the changes. Several 

 additional factors such as number of farm workers, 

 nonfarm employment and wage rates, ratio of farm to 

 nonfarm wages, beef prices, and fertilizer prices were 

 also examined. Many of these variables are believed 

 to have a considerable effect on tobacco acreage 

 changes although they were not detected to a 

 significant degree in the statistical analyses. 



Cigar Filler Acreage Changes 



Cigar filler is a medium- to-heavy body tobacco used 

 primarily for the core of the cigar. Flavor, aroma, and 

 burning quality are its important factors. In addition 

 to use in cigars, some is used in loose leaf chewing 

 tobacco. 



About 90 percent of the filler grown in the United 

 States is produced in Pennsylvania (type 41) and the 

 remainder in Ohio (types 42-44). Pennsylvania's 

 production is concentrated in Lancaster county, and 

 Ohio's in the Miami Valley. In both Pennsylvania 

 and Ohio, cigar filler acreage has declined since the 

 early 1950's. 



During 1950-71, acreage of U.S. cigar filler declined 

 from about 45,000 acres in 1950 to 17,000 in 1971. This 

 decline averaged about 1,200 acres per year. Yield per 

 acre increased during this period by about 15 pounds 

 per year — less than 1 percent annually. Due to the 

 acreage reduction, production declined from 66 

 million pounds in 1950 to 28 million in 1971. 



To supplement U.S. grown filler, Puerto Rican filler 

 is shipped to the United States in both leaf and 

 product form. Only 5,000 acres of Puerto Rican filler 

 were grown in 1971, compared with 17,000 acres in 

 1965 and 25,500 in 1950. Puerto Rican filler was not 

 included in the regression analysis, although many 

 of the same variables are believed to apply (7). 



Among the variables used for estimating cigar 

 filler acreage were farm prices of filler tobacco, farm 



wage rates, dairy product prices, harvested acreage, 

 and time. Price variables were lagged 1 year, for 

 when farmers make their planting decision early in 

 the year, the previous season's relationships are the 

 latest available. Dairying is a major farm enterprise 

 in the filler tobacco area. While filler tobacco 

 production has decreased, dairy production has 

 increased since 1950. Results from several of the filler 

 tobacco estimates for 1957-71 are contained in 

 table 5. 



In table 5, equation 1.1 (based on filler price, price- 

 wage ratio, index of dairy product prices, previous 

 year's harvested acreage, and time) gives a 

 satisfactory fit — that is, coefficient signs are as 

 expected, and two of the four t values are significant 

 at or beyond the 5-percent level. Apparently, the time 

 variable and the 1-year-lagged acreage are closely 

 enough related to reduce the coefficients. The 

 equation explains 98 percent of the year-to-year 

 acreage variation (R 2 =.98). 



According to equation 1.1, a 1-percent increase in 

 the price-wage ratio increased harvested acreage by 

 about 50 acres. The equation states that filler tobacco 

 acreage varies inversely with the index of dairy 

 product prices (1967=100). If dairy prices increase one 

 index point, tobacco acreage declines about 1 94 acres. 

 Since farmer's resources and facilities for production 

 are related to those available the previous year, 

 acreage is positively related to the previous year's 

 harvested acreage. In addition, a negative trend 

 variable picks up some of the variation not explained 

 by the other variables. 



Cigar Binder Acreage Changes 



Cigar binder tobacco (types 51-55) is used for 

 binding the bunched filler into the form of the cigar. 

 Natural binders must have good burning quality, 

 aroma, and elasticity. Reconstituted sheet tobacco, a 

 development of the 1950's, has rapidly replaced most 

 natural leaf binders. As a result, loose leaf chewing 

 tobacco is now the principal outlet for binder tobacco. 

 Binder tobacco is grown mainly in Wisconsin but also 

 in Connecticut and Massachusetts (2). 



During 1950-71, cigar binder acreage declined by 



