Make way for the next generation
Now in their mid-fifties, Ralph and Richard Renegar were raised on tobacco. Today they have two grown sons of their own: Ralph’s son, Dustin, and Richard’s son, Justin. And like their fathers before them, Dustin and Justin were raised growing tobacco on Hoot ’N Hollar Farms, the family’s Harmony, N.C., operation. But with the exception of Hank Williams Jr., perhaps, tradition can only take you so far.
• Rather than continue to expand tobacco, the Renegars have diversified.
• The family will hold the line on tobacco acres in 2012.
• The Renegars’ organized hunting operation grows every year.
For some time, the Renegars have been adapting to a changing farm scene by diversifying to spread their risk. Today, in addition to tobacco, they grow corn, soybeans and other row crops, and they raise hogs and cattle. They also sell farm equipment and supplies through their Renegar Equipment Co. enterprise, including the brands Long, Vermeer, Krone, Schulte and RMP. And with their latest venture they established Hunting Creek Preserves 1&2, with organized hunts, shooting clays opportunities, parties and celebrations.
Around the table
Still, to listen to them talk you get a sense they feel a bit miffed that their longtime standby, tobacco, doesn’t pay better. They are contract growers who will continue to grow tobacco this year, but they expect to grow less of it. The four of them sit around a table and hash it out.
“I don’t see how you can make any money on tobacco this year,” Ralph explains. “Or, that is, I don’t see how we can make money on tobacco. Maybe people that are more efficient than we are can do better.”
Of course, that doesn’t compute. With the Renegars’ investment in tobacco, their lifetimes of experience and their connections, if anybody can make it in tobacco, it would seem they’d be the ones.
Still, without a healthy profit margin, they say they are now growing tobacco with a “wait-and-see” attitude — to see if, given a little time, things get better. There is plenty wrong with the market today, they say, and a lot of room for improvement. Inputs of all kinds are more expensive, but the price growers get for tobacco most often goes down, they say.
“There is not as much human labor in other crops as there is tobacco,” Justin says. “A human hand never has to touch a crop like corn. That means you have all kinds of labor costs with tobacco that you don’t have with other crops.” Growing tobacco made more sense when the corn price was at rock-bottom. But many crops can compete with it today.
Fertilizer costs are volatile, too; more often than not, that means they’re heading up. “Years ago, if you gave $120 per ton for fertilizer, you thought it was terrible,” Ralph says. “Now fertilizer might be $700, $800 or $900 per ton.”
“And land rents are very competitive,” adds Richard. “In just a few years, land rents have shot up around here, double, maybe triple what they were.”
On the other hand, the unknown variables can go either way. Richard recalls interest rates of 20% in the 1970s and 1980s. “I just wonder what would happen if those rates suddenly came back,” he says.
Ralph concedes that contract prices may have gone up a little bit this year — not enough — but then argues that doesn’t necessarily mean anything real in the price.
“Are you talking about what they [the company buyers] promise to pay for certain grades, or what they are actually going to pay?” he asks. “After all, it is nice if you’ve got a contract for $10 per pound for T1 grades; but if there aren’t any T1s, then your contract is actually what they are going to pay for lower grades.”
His point is that the tobacco companies control the prices. Right now, he says, the payoff isn’t there. It costs about $4,000, he says, to grow an acre of tobacco.
“Why would you go to Las Vegas and bet $4,000 on a $300 pot, hoping that you’d win the hand and get your $4,000, plus an extra $300 back?” Ralph asks. “Basically, that is what you are doing with every acre of tobacco you grow.”
Richard, who in recent years served as president of the Tobacco Growers Association of North Carolina, expects more and more tobacco growers to take the exit door.
“I’ve talked to a lot of people, some small farmers and some large farmers, that are just not going to grow tobacco this year,” he says. “If you lose money, you lose money. If you continue to lose money you go out of business.
“If they can make better on soybeans, corn or some other crop, and reduce their exposure for the amount of return they must have, then they have to do it,” Richard adds.
10 years in the making
The family’s farm equipment sales and hog operations have provided additional income. About a decade back, the Renegars began looking around at what might be the next best diversification for them. Now if it had been brothers Ralph and Richard alone, maybe they wouldn’t have felt the need. Ralph says he can live simply if need be. Why did they need to continue to expand, then?
He nods across the table toward Dustin and Justin. “We knew they were going to want to get into farming, too,” he says. “They were telling us they wanted to farm. And we knew that tobacco and row crops alone wouldn’t fill the bill.”
The Renegars asked themselves what they could give consumers that other businesses couldn’t. With the Hunting Creek Preserves, they are not only offering more than 2,000 acres of pheasant, quail and chukar partridge for hunting enthusiasts to enjoy, and not only offering shooting recreations like sporting clays, but also offering people a chance to experience nature. “You can’t do that at Walmart,” Richard says.
The family constructed a large rural-styled lodge facility with knotty-pine interiors and a great stone fireplace, where they can offer parties and dinners, and hold events such as weddings.
Harmony in Harmony
Dustin and Justin seem to have only a little of the traditional feeling left toward tobacco. They insist tobacco needs to pay for itself.
“I look at it like this: If it doesn’t pay, we should leave off with it,” Justin says. “After all, raising tobacco is a lot of work. ... I say there is too much work in it to do it if you aren’t getting paid for it.”
The Renegars will grow tobacco again this year because they want to stay involved and see where the tobacco industry will eventually head. Staying involved with tobacco for the time being keeps their hand in the game, and keeps their tobacco-growing muscles exercised.
But overall, none of them seems satisfied with the situation as it currently stands.
“When all is said, the one who makes or breaks you on the contracts is the man standing on the platform that puts the grade on your tobacco,” Ralph says. “You can have No. 1 tobacco. But if they don’t have a use for it, they can refuse to buy it. Or they can drop the grade to a No. 3 and buy it for a reduced cost.”
“All a contract amounts to is a piece of paper telling you that you can take your tobacco to a location and offer it to them,” Dustin says. “You have a place to take it, but that doesn’t mean you are going to get any certain price for it. You can take it and hope you get a good price. If you don’t get that good price, your options are that you can load it back up and bring it back home, or you can leave it for whatever they want to give you.”
“In other words, the fact is, we don’t have any control over it, none whatsoever,” adds Ralph. Their agreement on this point recalls the old saying, “Like father, like son.”
Read more about Hunting Creek Preserves at www.huntingcreekpreserves1.com/4.html.
This article published in the June, 2012 edition of CAROLINA-VIRGINIA FARMER.