Question-and-Answer Session
Operator
(Operator Instructions). Your first question comes from the line of Ann Gurkin.
Karen Whelan
Hi Ann. How are you?
Ann Gurkin - Davenport & Company LLC
I am fine. How are you? I want to start to see outlook, as we go into '09, you talk about this continued work. Do you think it is possible to generate improved operating margin in '09 versus '08?
Karen Whelan
Well, as you know, margin is so affected by the price of grain, and the price of grain is going up. So if we pass through that grain side, our margins would -- the calculation, they would go down. So you are asking whether we can pass through more than the grain side, and I do not know how to answer that question.
Ann Gurkin - Davenport & Company LLC
About how are your negotiations going in South America with customers.
Karen Whelan
Oh, we are not finished yet. I mean, our customers know what is going on in the world. They understand and appreciate but agricultural products, the prices are going up and that tobacco is not the only crop that farmers can grow. So, we are working on it.
Ann Gurkin - Davenport & Company LLC
Okay, well my next question is, I am hearing more and more comments that farmers are at a great risk to divert land to grow other crops, so??
Karen Whelan
I am sorry Ann, your call is breaking up a bit.
Ann Gurkin - Davenport & Company LLC
I hear more and more comments that farmers are considering diverting more of their lands from growing tobacco to other crops. So how do you keep your farmer base intact in these South American regions?
Karen Whelan
Well, I think, we need to continue to provide the economic incentive to farmer to continue to do this. Tobacco has long been a good crop in developing worlds. They require some expertise to grow, it is not easy to grow, that is fairly labor intensive. So, we are working very hard to keep the farmers with the crop.
Ann Gurkin - Davenport & Company LLC
Okay, the $8 million number you accrued in Malawi, is that in your $9.6 million number or is that a separate number?
Hart Roper
Its separate.
Ann Gurkin - Davenport & Company LLC
Its separate, okay. My next question is over the past year, we have seen an increase in production of Dark Air-Cured tobacco in the US. What is the risk that we go into an over supply of production of this kind of tobacco?
- To read the full transcript on Seeking Alpha, click here »
