Tobacco Farming (United States) — NAICS 111910

An investor's primer for a general audience — relevant to both public-market and private investors. NAICS (the North American Industry Classification System) code 111910 covers U.S. establishments primarily engaged in growing tobacco and performing the on-farm curing (drying) that readies the leaf for sale. [27]

1. Overview

Tobacco farming is the business of growing and curing leaf tobacco — the raw agricultural input that eventually becomes cigarettes, cigars, pipe tobacco, and smokeless products. It is one of the oldest cash crops in the United States and, for a general audience, one of the clearest examples of a shrinking, mature agricultural niche in structural decline: the number of U.S. tobacco farms fell more than 95% in two decades, from 56,977 in 2002 to 2,987 in 2022. [2][3]

The farming layer itself is small and almost entirely private, but it sits at the bottom of a large, cash-generative global tobacco supply chain. Farmers sell mostly to leaf merchants (middlemen who buy, grade, process, and store leaf), grower-owned cooperatives, and, in some cases, directly to manufacturers. The economics that matter to an investor — how leaf is priced, contracted, and consolidated — flow through to a handful of companies you can actually own.

• Public ways in: there is no pure-play "U.S. tobacco farm" stock. The nearest listed exposure is the leaf-merchant middlemen who buy from farmers and sell to manufacturers, plus the downstream cigarette and smokeless makers whose demand ultimately drives leaf prices. These are upstream/downstream proxies, not farm pure plays.
• Private ways in: the actual farms are family- and individually-owned operations, plus producer cooperatives and independent processors. They change hands as farmland, equipment, and businesses, not as securities. This is a direct-ownership, operator-run business.

The investment reality: returns in this industry depend far more on yield, grade, labor, curing cost, contract terms, and buyer access than on the retail price of a pack of cigarettes.

2. What it is and how it's structured

In scope (111910): establishments primarily engaged in planting, cultivating, harvesting, and on-farm curing of tobacco leaf. The main U.S. leaf types are flue-cured (also called "Virginia" or "bright" tobacco, heat-cured in barns; the dominant type by volume, centered in North Carolina) and burley (air-cured, centered in Kentucky and Tennessee), plus small volumes of dark, fire-cured, and cigar-leaf tobaccos. [8]

Explicitly excluded — which matters, because tobacco's value is created downstream, not on the farm:

• Cigarette and other tobacco-product manufacturing → NAICS 312230 (Tobacco Manufacturing). [27]
• Stemming, redrying, threshing, aging, and blending of leaf by processors → treated as manufacturing/processing, not farming, once the leaf is worked into a product. [27]
• Merchant wholesaling of tobacco products and e-cigarettes → NAICS 424940; the growing of other field crops (cotton, sugarcane, hay, peanuts, etc.) has its own separate NAICS codes. [27]
• Tobacco retailing → retail-trade codes.

Ownership mix: overwhelmingly private and owner-operated — family farms, partnerships, and grower-owned cooperatives. No authoritative federal dataset provides a current tobacco-specific split among family, corporate, and institutional ownership, so none is asserted here. What is clear is that there is no meaningful REIT (real estate investment trust) or private-equity ownership of the growing itself — the corporate money sits one link up the chain, in the leaf merchants and manufacturers, which are far more concentrated than the fragmented farm base. Large merchants routinely buy from many small farms, provide seed/input financing and agronomic support, and process and store the crop before selling it on. [13]

3. How big it is

Read the numbers with care: federal business statistics understate this industry. Most tobacco operations are farm proprietorships without paid employees, so they fall largely outside the Census Bureau's employer-business datasets and are instead counted by the U.S. Department of Agriculture (USDA). From our ingested federal ground-truth file, the only business-statistics datapoint available is the U.S. Small Business Administration (SBA) size standard of $2.5 million in annual receipts — the ceiling below which a tobacco farm counts as a small business (essentially all of them do). [1] We have no ingested federal figures for establishments, employment, payroll, or industry revenue, so none are invented here. Core scale instead comes from USDA's two relevant programs — the five-yearly Census of Agriculture (farm structure) and the annual crop reports from the National Agricultural Statistics Service (NASS).

• Farms: 2,987 in 2022, down from 56,977 in 2002 — a decline of more than 95%. [2][3] Over the same period the average operation grew from 7.5 harvested acres to 69.5 acres — roughly a ninefold increase — as production consolidated into fewer, larger, more mechanized farms. [2]
• Production (most recent): about 358.6 million pounds of leaf from 171,300 harvested acres in 2025, an average yield near 2,093 pounds per acre. [5] For scale, the 2022 crop was roughly 431 million pounds; output is volatile — the weather-hit 2024 crop was down sharply. [8]
• Crop value: the preliminary 2025 farm-gate value was about $831.5 million, at an average price near $2.32 per pound. [6] This is farm-gate crop value — what farmers received — not NAICS industry revenue or downstream product sales. The trajectory has been down and volatile: roughly $1.0 billion in 2022, dipping to about $0.78 billion in the drought-hit 2024 crop, and near $0.83 billion in 2025. [6][9] A private industry-research estimate (IBISWorld) puts sector revenue near $763 million and contracting at about 5% a year. [10]
• Geography — highly concentrated, and it splits two ways. By farm count (2022), Kentucky leads with 984, then North Carolina (822), Pennsylvania (377), Tennessee (241), and Virginia (~170). [4] By pounds produced (2025), North Carolina dominates with 248.1 million pounds (flue-cured, high-yield, mechanized), followed by Kentucky (66.0 million), Virginia (28.8 million), and Tennessee (15.7 million) — so those top two states alone grow roughly seven-eighths of the crop. [5] Kentucky has the most (mostly smaller, burley) farms; North Carolina grows the most leaf.
• Forward signal: farmers reported intentions to harvest about 171,600 acres for the 2026 crop — a planting intention, not final production. [7]

Two caveats on the counts. County Business Patterns (CBP), the Census Bureau's employer-establishment series, covers only firms with paid employees and therefore undercounts owner-operated farms, unpaid family labor, and the smallest operators. [29] And NASS discontinued estimates for several smaller tobacco states in 2024; those blanks should not be read as zero. [5]

The takeaway: this is a small, geographically concentrated crop whose farm-gate dollar value is now below what a single mid-sized U.S. factory generates — but whose leaf still feeds a multi-billion-dollar global product industry.

4. The investable universe

There is no listed pure-play U.S. tobacco-farm operator. Public exposure runs through the merchants who aggregate and process leaf and the manufacturers who consume it. The scale figures below are indicative (most-recent filings) and are context, not recommendations.

Private and producer-owned participants (the more direct farm-layer exposure, none listed):

• U.S. Tobacco Cooperative — a grower-owned marketing cooperative with 550+ member growers and a processing operation handling 35+ million pounds of flue-cured leaf. [16]
• United Tobacco Company — a grower-owned business that grows, buys, processes, and markets U.S. leaf. [17]
• Tobacco Rag Processors — an employee-owned private processor and cut-rag maker (a processing/purchasing node rather than a NAICS 111910 farm). [18]

There is no reliable national ranking of private tobacco-farm owners; the ~3,000 farms change hands as farmland, equipment, and contracts through private sale or lease. General-purpose farmland REITs (e.g., Gladstone Land, Farmland Partners) do not target tobacco acreage, so there is no clean listed real-asset proxy either. The private market is better understood through regional grower networks, cooperatives, processors, and contract relationships than through a list of dominant landowners.

5. How the money works

Since the 2004 quota buyout (see §7), tobacco is grown on annual production contracts, not sold at open auction. A farmer signs a contract — with a leaf merchant such as Universal or Pyxus, with a cooperative, or directly with a manufacturer — specifying volumes, grades, and a price (or pricing formula) per pound before planting. That contract is the business model. [25]

Grower economics. The basic revenue equation is pounds harvested × realized price per pound.

• Price depends on tobacco type, grade, moisture, color, leaf position (stalk height), physical defects, chemical-residue compliance, and contract rejection/quality adjustments. The 2025 average was about $2.32/lb. [6]
• Yield ran near 2,093 lb/acre on average in 2025; flue-cured typically yields ~2,000–2,300 lb/acre in a normal year, dropping toward ~1,800 in a drought year like 2024. [5][8]
• Cost is dominated by labor. Tobacco is among the most labor-intensive U.S. crops — hand-work at transplanting, topping, harvest, and curing. Most large operations rely on H-2A seasonal guest-worker labor (the federal agricultural visa program), whose wage floor and housing rules make labor the single biggest and least-controllable expense. Other major costs: seed, fertilizer, crop protection, land (owned or rented), machinery, curing barns and the fuel/electricity to run them, repairs, insurance, and interest on operating capital.
• The margin lever is scale and yield, not price. Because prices are set in the contract and the buyer side is concentrated, growers make money mainly by spreading fixed labor and barn costs over more acres and protecting yield — which is exactly why average farm size rose roughly ninefold as small growers exited. [2]
• Risk buffers: federal crop insurance covers weather and yield losses. The USDA Risk Management Agency (RMA) sets separate price elections for contracted versus non-contracted production and requires qualifying processor/contract relationships for certain coverage. [26] There is no longer a government price-support floor (that ended with the buyout).

Merchant economics (the public side). Leaf merchants earn a processing-and-trading margin: they buy or finance leaf, process it to customer specifications, store it, and sell it at a spread or for processing fees. Unprocessed leaf is semi-perishable and North American buying/processing is seasonal, so inventory and working capital are central. Merchant profits tend to firm when leaf is scarce and soften when it is abundant — but carrying the wrong leaf is costly: Universal reported $52.0 million of tobacco inventory write-downs and ~27% uncommitted (unsold) tobacco inventory as of March 31, 2026, amid oversupply in some styles. [11]

6. What drives demand

Farm-level demand is derived demand — it depends on what happens to finished tobacco products.

• Domestic cigarette consumption is in secular decline. U.S. adult cigarette-smoking prevalence fell to 9.9% in 2024 (from 10.8% in 2023) — the first single-digit reading on record — while ~6.9% of adults used e-cigarettes. [19] Fewer smokers means less domestic leaf needed over time.
• Product-mix shift. Growth is in vapes and nicotine pouches (e.g., Zyn), which use little or no farm-grown leaf. Pyxus explicitly flags the move to smoke-free products as a risk because they generally require less tobacco per unit of consumer revenue. [13] So the shift away from combustible cigarettes is a structural headwind for leaf demand even where total nicotine use holds up.
• Exports are a lifeline. The U.S. exported over $1 billion of unmanufactured (leaf) tobacco in 2023, to buyers including the Dominican Republic, the EU, Japan, and China. [24] High-quality flue-cured leaf for export partly offsets domestic decline.
• Grade, chemistry, and traceability. Manufacturers contract for specific types, grades, residue profiles, and supply-chain traceability — premium, traceable, export-grade leaf can hold value even as total conventional volumes fall.
• Global leaf supply cycles. U.S. growers compete with lower-cost origins — Brazil, Zimbabwe, India, Malawi. When global leaf is scarce, U.S. contract prices and volumes firm; when it is abundant, they soften. Heading into 2026, Universal cited firm demand for most styles alongside oversupply in flue-cured, burley, and some dark air-cured tobacco. [11]

7. Regulation

Tobacco is unusual: the farming is lightly regulated as ordinary agriculture, but the product is among the most heavily regulated consumer goods in the country — and that downstream regulation sets the ceiling on leaf demand.

• The 2004 quota buyout (FETRA). The Fair and Equitable Tobacco Reform Act ended the Depression-era system of production quotas and government price supports. Growers and quota owners received about $9.6 billion in transition payments over ten years, financed by assessments on manufacturers and importers. From the 2005 crop on, anyone could grow tobacco anywhere in any amount — ending guaranteed prices and pushing the industry to today's contract model. [22][23] This is the single most important event in the industry's modern history and a direct cause of the farm-count collapse and the shift toward regions with better agronomic and processing economics.
• Master Settlement Agreement (MSA), 1998. The settlement between major manufacturers and 46 states raised cigarette costs and accelerated the long demand decline that squeezes growers.
• FDA authority (downstream). The Family Smoking Prevention and Tobacco Control Act of 2009 gave the U.S. Food and Drug Administration (FDA) broad authority over tobacco-product manufacturing, marketing, and sale via its Center for Tobacco Products; the federal minimum sales age is 21. [20] Two proposals bear on leaf demand: a menthol-cigarette ban (proposed 2022, then withdrawn in January 2025) and a very-low-nicotine product standard for cigarettes (~0.7 mg/g), which the FDA has periodically pursued and whose status remains uncertain. [21] A binding nicotine cap in particular could cut domestic leaf needs sharply and faster than the gradual trend.
• Light touch on the farm. Federal tobacco law generally carves out leaf growers, warehouses, and grower cooperatives from product-level requirements so long as they are not manufacturing a tobacco product or holding leaf on a manufacturer's behalf. [28] Farm operators still face pesticide, environmental, worker-safety, labor, insurance, and state agricultural rules — and H-2A guest-worker wage and housing requirements are a live, rising cost driver.
• Excise taxes (federal and state) raise retail prices and depress consumption, indirectly capping leaf demand.

8. Competitive dynamics and consolidation

Two forces define the structure.

• Farm-side consolidation. The 95%+ collapse in farm numbers alongside a roughly ninefold rise in average farm size means the crop is now grown by a small number of large, specialized operators — those with the scale to run H-2A labor crews and modern curing barns economically. [2]
• Buyer-side concentration (oligopsony — few buyers). Pyxus describes itself as one of only two publicly held global leaf merchants (the other being Universal). [13] With so few merchants and a concentrated set of manufacturer customers beyond them, contract terms and prices are effectively set by the buyers. Growers are largely price-takers with limited bargaining leverage — a classic squeeze that has driven marginal farms out and rewarded only the most efficient.

Competition really plays out at three levels: farms compete on reliable yield, grade, cost, labor access, and contract performance; merchants compete on purchasing networks, financing, processing technology, quality control, and inventory management; manufacturers compete on brands, pricing, distribution, and regulatory compliance. Contracting gives growers stability and input financing, but reduces price transparency and ties them to a small number of qualified buyers. Direct sourcing by manufacturers can bypass merchants; merchant consolidation and vertical integration raise buyer power. The likely path is continued consolidation — especially in processing, storage, financing, and contract administration — with the strongest private assets being those with reliable grower access, specialized curing/processing capacity, and diversified buyers.

9. Risks

• Secular demand decline. Falling U.S. smoking rates and the shift to leaf-light products (vapes, pouches) shrink the addressable market year after year. [13][19]
• Regulatory shock. A federal very-low-nicotine standard or a revived menthol ban could cut domestic leaf demand faster than the gradual trend. [21]
• Buyer concentration. With two dominant merchants and concentrated downstream customers, growers face persistent pricing pressure and limited alternative buyers. [13][14]
• Labor. Availability and cost of H-2A seasonal labor is the top operating risk; tobacco cannot easily be fully mechanized.
• Weather, quality, and curing risk. Drought, storms, disease, and curing failures can wipe out a season's margin or push leaf into lower-value grades, as the poor 2024 crop showed. [8]
• Inventory risk (merchants). Merchants can be stuck with uncommitted or poorly matched leaf — Universal's $52.0M FY2026 write-downs and ~27% uncommitted inventory are the live example. [11]
• No price safety net. Since the buyout, there is no government floor under prices. [22]
• Global competition, trade, and currency. Lower-cost origins can undercut U.S. leaf in export markets, and the public merchants are exposed to tariffs, exchange rates, shipping, and export restrictions. [13][24]
• Reputational / ESG. Tobacco exposure is screened out by many funds (ESG = environmental, social, and governance investing criteria), limiting capital and raising headline, litigation, and labor/human-rights scrutiny across the chain. [13]
• Measurement risk. Federal business statistics omit many small owner-operated farms, and some state crop estimates are now unavailable — treat both with care. [5][29]

10. How to invest and the outlook

Public routes (exposure to the farm economics is indirect):

• Leaf merchants — the closest proxy. Universal Corporation (UVV) is the most direct listed link to global and U.S. leaf; it is a "Dividend King" (56 straight years of increases, ~6% yield) whose fortunes track leaf volumes, prices, and inventory positioning. [11][12] Pyxus (PYYX) offers similar exposure but with far more balance-sheet risk and no dividend. [13]
• Manufacturers — the demand side. Altria (MO), Philip Morris International (PM), and British American Tobacco (BTI) are large, high-yield cash generators, but they are bets on nicotine consumption, brands, and the smoke-free product transition — not on U.S. farming. [14][15]
• Diversified agriculture. Broad ag or farmland vehicles give only trace, incidental exposure — tobacco is too small a crop to move them.

Private routes. Direct ownership means buying or leasing tobacco farmland and operating (or contracting out) a growing operation, or investing in a cooperative or processing asset. It is a hands-on business gated by access to H-2A labor, curing infrastructure, and — critically — a contract with a merchant, cooperative, or manufacturer, without which there is no buyer. The most defensible private targets have verified buyer contracts, adequate curing capacity, experienced labor, crop insurance, manageable debt, and a clear exit path. Any buyer contract should be reviewed for price formulas, quality standards, delivery obligations, input advances, rejection rights, and termination provisions.

Key diligence questions (public or private):

• How much production is contracted versus uncommitted, and how concentrated are the customers and suppliers?
• What are the yields, grade mix, rejection rates, and realized prices per pound?
• Are inventories rising because of demand growth or oversupply?
• How much capital is tied up in barns, processing equipment, and inventory?
• Is the exposure to conventional cigarettes, smoke-free products, exports, or multiple end markets?

Near-term drivers to watch: whether the FDA revives a binding nicotine-reduction standard (the biggest single swing factor for U.S. leaf demand) [21]; global leaf supply/price cycles, which set contract prices and merchant profitability [11]; export strength, especially for high-grade flue-cured leaf [24]; and labor cost and H-2A policy, which set the floor under grower margins.

Base case: continued slow contraction — fewer, larger, contract-bound U.S. farms selling to a two-merchant buy side, with domestic demand grinding lower while exports, premium grades, and episodic tight global supply provide partial support. Near-term acreage looks broadly stable (2026 intentions ~171,600 acres), but the conventional-demand base is structurally declining. [7][19] For most investors, the practical exposure is a leaf merchant or a manufacturer — the farm gate itself remains a private, operator-run business.

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Sources

1. U.S. Small Business Administration, "Table of Size Standards" (NAICS 111910 = $2.5 million in receipts), 2023. https://www.sba.gov/document/support-table-size-standards
2. Southern Ag Today, "Census Reveals Tobacco Farms Disappearing from Southern Agriculture," 2024. https://southernagtoday.org/2024/03/27/census-reveals-tobacco-farms-disappearing-from-southern-agriculture/
3. USDA National Agricultural Statistics Service, 2022 Census of Agriculture. https://www.nass.usda.gov/Publications/AgCensus/2022/
4. University of Kentucky Dept. of Agricultural Economics, "2022 Tobacco Census Data for Kentucky," 2024. https://agecon.ca.uky.edu/2022-tobacco-census-data-kentucky
5. USDA NASS, "Crop Production 2025 Summary," Jan. 2026 (tobacco pounds, acres, yield, and state detail). https://www.nass.usda.gov/Publications/Todays_Reports/reports/cropan26.pdf
6. USDA NASS, "Crop Values 2025 Summary," Feb. 2026 (2025 farm-gate crop value and average price). https://esmis.nal.usda.gov/sites/default/release-files/795791/cpvl0226.pdf
7. USDA NASS, "Prospective Plantings," Mar. 2026 (2026 intended harvested area). https://www.nass.usda.gov/Publications/Todays_Reports/reports/pspl0326.pdf
8. NC State Extension, "U.S. Flue-Cured Tobacco: Situation and Outlook," Jan. 2025 (2024 crop, yields, leaf types). https://content.ces.ncsu.edu/us-flue-cured-tobacco-situation-and-outlook
9. Statista (citing USDA), "U.S. tobacco production value since 2000," 2025. https://www.statista.com/statistics/192025/tobacco-production-value-in-the-us-since-2000/
10. IBISWorld, "Tobacco Growing in the US — Industry Analysis," 2025. https://www.ibisworld.com/united-states/industry/tobacco-growing/36/
11. Universal Corporation, "Reports Fiscal Year and Fourth Quarter 2026 Results," May 28, 2026 (revenue, inventory write-downs, uncommitted inventory). https://www.businesswire.com/news/home/20260528926072/en/Universal-Corporation-Reports-Fiscal-Year-and-Fourth-Quarter-2026-Results
12. Sure Dividend, "Dividend Kings in Focus: Universal Corporation," 2026. https://www.suredividend.com/dividend-kings-uvv/
13. Pyxus International, "Form 10-K, fiscal year ended March 31, 2026." https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000939930&type=10-K
14. Altria Group, "Form 10-K, year ended December 31, 2025." https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000764180&type=10-K
15. Philip Morris International, "2025 Annual Report" (direct-sourcing share of global leaf). https://www.pmi.com/investor-relations/reports-filings
16. U.S. Tobacco Cooperative, "About Us." https://usleaf.com/about/
17. United Tobacco Company, "Our Company." https://www.utcleaf.com/our-company
18. Tobacco Rag Processors, "About." https://www.tobaccorag.com/about
19. Centers for Disease Control and Prevention (CDC) / NEJM Evidence, "Tobacco Product Use Among U.S. Adults, 2023–2024," 2025 (9.9% cigarette, ~6.9% e-cigarette prevalence). https://www.cdc.gov/tobacco/php/data-statistics/adult-data-cigarettes/index.html
20. U.S. Food and Drug Administration, "About the Center for Tobacco Products." https://www.fda.gov/tobacco-products/about-center-tobacco-products-ctp
21. Tobacco Law Blog, "FDA Withdraws Proposed Bans on Menthol Cigarettes and Flavored Cigars" and nicotine-reduction coverage, 2025. https://www.tobaccolawblog.com/2025/02/fda-withdraws-proposed-bans-on-menthol-cigarettes-and-flavored-cigars/
22. Congressional Research Service, "Tobacco Quota Buyout" (RS22046) / Fair and Equitable Tobacco Reform Act (FETRA). https://nationalaglawcenter.org/wp-content/uploads/assets/crs/RS22046.pdf
23. USDA Economic Research Service, "The Post-Buyout Experience: Peanut and Tobacco Sectors Adapt to Policy Reform," 2009. https://www.ers.usda.gov/publications/pub-details/?pubid=44442
24. Statista, "U.S. exports of tobacco, 2023." https://www.statista.com/statistics/1097931/us-exports-of-tobacco-products/
25. USDA Economic Research Service, "Farm Structure and Contracting." https://www.ers.usda.gov/topics/farm-economy/farm-structure-and-organization/farm-structure-and-contracting
26. USDA Risk Management Agency, "PM-24-077: Tobacco Contracting Entity Eligibility," 2024. https://www.rma.usda.gov/policy-procedure/bulletins-memos/product-management-bulletin/pm-24-077-tobacco-contracting-entity
27. U.S. Census Bureau, "North American Industry Classification System" — definitions for NAICS 111910 (Tobacco Farming), 312230 (Tobacco Manufacturing), and 424940 (Tobacco/E-cigarette Merchant Wholesalers), 2022. https://www.census.gov/naics/
28. U.S. Food and Drug Administration, "Section 901 of the FD&C Act — FDA Authority over Tobacco Products" (leaf-grower carve-out). https://www.fda.gov/tobacco-products/rules-regulations-and-guidance-related-tobacco-products/section-901-federal-food-drug-and-cosmetic-act-fda-authority-over-tobacco-product
29. U.S. Census Bureau, "County Business Patterns" (employer-establishment coverage; undercount caveat). https://www.census.gov/programs-surveys/cbp.html