From Foresight, Vol. 7, No. 1
published 2000
In 1994, the Kentucky Long-Term Policy Research Center published a report titled The Future of Burley Tobacco in which several counties were identified as being at especially high risk in the event of a significant decline in the burley tobacco quota. The future of these tobacco-dependent counties in Kentucky takes on renewed importance in light of the recently announced 45 percent cut in the burley quota for this year and recent discussions about how the tobacco settlement funds should be distributed.
Kentucky farmers have absorbed huge decreases in the amount of tobacco they can grow: a 9 percent decrease in 1998, a 28.8 percent drop in 1999, and a 45 percent decline this year. As a result, farmers are growing about one third of the burley they were growing just three years ago. Fortunately for Kentucky’s agricultural communities, it appears that a significant portion of the tobacco settlement funds will be used to cushion the blow of declining quotas through a series of initiatives designed to bolster Kentucky’s rural areas.
We identified 15 counties in 1994 that were at potentially high risk from a significant decline in the burley tobacco quota.(1) These counties were considered to be at risk because of their relatively high economic dependence on tobacco (over 5 percent of the county’s total personal income) and their relatively high poverty rates (over 25 percent). Since this study was done nearly six years ago, we decided to update the poverty and tobacco income data and employ a slightly different method to determine which counties are likely to be most affected by a reduction in the burley quota. This analysis can help determine where to focus agricultural development initiatives.
Our method attempts to address two questions: which counties are the most tobacco dependent and which counties are already in distress? By examining these two factors we can identify those counties that will likely be least able to cope successfully with future declines in the burley quota.
We define “dependence” as tobacco’s portion of the county’s total income. To get this number we divided tobacco’s value(2) by total personal income.(3) The average value for all 120 counties is 2.4 percent.(4) Robertson County has the highest value at 11.2 percent, followed by Owen (9.1), Nicholas (9.1), Bracken (8.7), and Fleming (8.5).
The county poverty rate(5) and unemployment rate(6) are used to determine whether a county is in “distress.” Kentucky’s poverty rate is estimated at 17.9 percent,(7) with the five highest county poverty rates found in Owsley (46.6 percent), McCreary (41.4), Lee (39.1), Wolfe (38.9), and Magoffin (38) Counties. The average unemployment rate for Kentucky was 3.7 percent in November 1999, with the five highest rates found in Monroe (16.2), Letcher (13.1), Harlan (12.1), Green (9.9), and Taylor (9.8) Counties. When we account for the poverty rates and unemployment rates, the five most at-risk counties are, in order, Monroe, Letcher, Harlan, Magoffin, and Owsley.(8)
There are a number of ways one might combine these two scales to identify the counties least able to handle a large decline in the burley quota. For example, one could focus only on those counties with above-average dependence and above-average distress. However, this would not include a county that is highly dependent on tobacco but just below average on the distress scale, such as Robertson County. Consequently, our method combines the two scales and identifies a county as vulnerable if it ranks high on one scale and at least average on the other.
Our analysis shows that the 15 counties most vulnerable to a large decrease in the burley quota are (in alphabetical order): Bath, Bracken, Cumberland, Elliott, Fleming, Green, Hart, Lewis, Metcalfe, Monroe, Morgan, Nicholas, Owen, Owsley, and Robertson. Nine of these counties were identified in the 1994 study.
Figure 1 shows the relationship between county distress and tobacco dependence. Each point in the figure represents a county. A high positive number on either scale indicates that the county is relatively more distressed or tobacco-dependent when compared to all Kentucky counties. The figure shows that Robertson County is our most tobacco dependent county but its distress score is about average. In contrast, Monroe County is Kentucky’s most distressed county using our definition, but its tobacco dependence is just above average.
Figure 1: Tobacco Dependence and County Distress
Table 1 shows the value of tobacco, the poverty rate, and the unemployment rate for the 15 counties most vulnerable to a large decline in the burley quota.
Table 1: Fifteen Counties Most Vulnerable to a Large Decline in the Burley Quota
These numbers illustrate the extent to which these counties are dependent on tobacco as a source of income and are already in distress as evidenced by high poverty and unemployment rates.
What can be done? Since these counties tend to be clustered in the south central and northeastern parts of the state (see Map 1), regional economic development initiatives offer the best hope. We discuss the virtues of regional rural development approaches in a Center report published in 1995.(9) In it, we point out that collaborative multi-community approaches offer a bevy of benefits not otherwise available. In short, the future of Kentucky’s tobacco-dependent communities rests with their ability to embrace the notion of collaboration and to resist the temptation of parochialism.
Map 1: Kentucky Counties Most Vulnerable to a Decline in the Burley Quota
* Michael Childress is Executive Director of the Kentucky Long-Term Policy Research Center. Return to text.
Michael T. Childress, The Future of Burley Tobacco: Potential Outcomes, Points of Leverage and Policy Recommendations (Frankfort, KY: Kentucky Long-Term Policy Research Center, 1994): 35. Return to text.
Kentucky Agricultural Statistics, 1998-1999 (Louisville, KY: Kentucky Agricultural Statistics Service, 1999): 23, 33. We multiplied the average value per pound, $1.903, times the 1998 production estimates for burley tobacco to estimate the value of burley production for the county. Return to text.
Kentucky Deskbook of Economic Statistics, 1999 (Frankfort, KY: Kentucky Cabinet for Economic Development, 1999): 46-9. The total personal income data are for 1997 and were originally produced by the U.S. Bureau of Economic Analysis, REIS Regional Economic Information System, 1969-1997, CD-ROM released May 1999. Return to text.
This is an unweighted average. The average for the state (i.e., weighted average) is actually 1 percent. It is lower because the counties with the largest total personal income tend to grow little tobacco (e.g., Jefferson). Return to text.
U.S. Department of Commerce, Bureau of the Census, County Estimates for Persons of All Ages in Poverty for Kentucky: 1995, revised February 1999. The data are the percentage in poverty in 1995. Return to text.
The unemployment rates are the preliminary estimates for November 1999. These data were obtained from the Kentucky Department for Employment Services web site at http://www.des.state.ky.us/agencies/wforce/des/lmi/lfd/clf/nov99p.htm. Accessed on 3 Feb. 2000. We did not account for the unemployment rate in our 1994 analysis. Return to text.
The (unweighted) average for counties is 21.2 percent. Return to text.
The poverty rate and the unemployment rate for each county is converted to a z-score and then combined into a single index by weighting each z-score by 0.5. The z-score is equal to the county value minus the average of all counties which is then divided by the standard deviation. The statistic allows one to gauge the position of any one county relative to the other counties. The poverty rate and unemployment rate are correlated at 0.41. Return to text.
Michal Smith-Mello, Reclaiming Community, Reckoning with Change (Frankfort, KY: Kentucky Long-Term Policy Research Center, 1995): 46. Return to text.