U.S. Tobacco Cooperative

U.S. Tobacco Cooperative (USTC) was left out of Tobacco Reporter’s July 2016 Who’s who edition (“From the source,” page 50), which focused on leaf merchants. As a key player in the leaf tobacco industry, USTC should of course have been included. Tobacco Reporter regrets the omission. Below is the profile that should have run in our July issue.

Based in Raleigh, North Carolina, USA, and comprising more than 750 member growers throughout North Carolina, South Carolina, Virginia, Georgia and Florida, USTC is the largest grower-owned marketing cooperative in the U.S. The cooperative also has a compliant and efficient processing facility located in Timberlake, North Carolina.

Whereas the major leaf suppliers will return a dividend to their shareholders and investors, USTC reinvests most of its profits in its contracted tobacco growers. Since 2010, the company has declared patronage dividends of $46.2 million to its member growers, including $24.3 million in cash. USTC’s patronage dividend gives its growers the opportunity to invest in efficiencies, which improves the U.S. flue-cured production model in terms of the environment, people and the planet.

Volume and pricing predictability are essential for growers’ viability and the sustainability of their flue-cured crop. As global and domestic demand fluctuates according to sales of manufacturers’ smoking products, USTC’s patronage dividend helps growers offset the impact of supply/demand cuts in contract volumes and is paramount in their ability to invest in growing high-quality, compliant flue-cured tobacco.

The patronage dividend is not a premium, bonus or subsidy, and it does not increase the cost of the tobacco to the end user—it is purely the distribution of profits made by USTC from its sales of leaf and related products back to its grower members.

The company has also passed $14 million in tax deductions to its growers through the Section 199 Domestic Production Activities Deduction, which offsets most of the taxes owed on the dividend.

USTC’s efforts have not gone unnoticed. In 2015, the firm won a Golden Leaf Award in the Most outstanding service to the industry category for its contributions to the sustainability of the U.S. flue-cured tobacco production.