Auctioning Tobacco Without The Chant

Source from:  The Wilson Times 08/07/2009

Starting Wednesday, tobacco will once again be sold at auction at the former Liberty Warehouse in Wilson. Prospective tobacco buyers will walk among the bales holding this year's crop. But the auctioneer's chant won't be heard. Instead, the auction will be silent. Here's how it will work: Growers will first set a minimum price. Buyers will then come in one at a time and will have a sheet of paper with all of the lots and descriptions of the tobacco. The buyers will submit sealed, written bids for the leaf they want to buy. At the sale's conclusion, the bids will be opened, and the grower presented with the highest offered price. Growers will then have to decide if they want to accept the offer. "It's a different spin on the old ways," said Marty Owen of Harnett County. This new sales system is Owen's brainchild. For now, Wilson is the only place known to have this type of organized sales option available. Owen chose to open his business in Wilson because Wilson is world famous for flue-cured tobacco. Owen will get a 3 cents per pound commission on the tobacco sold. "If anybody in the world wants to come look at flue-cured tobacco, they come to Wilson," Owen said. "Wilson is the tobacco capital of the world. There is nowhere else you can go and have this many prospective buyers and this high quality of tobacco." Owen said he hopes to handle between 5 million and 10 million pounds of tobacco this season because this year's crop is considered to be good. If the idea catches on, Owen said he'll consider adding a sale on Mondays. Owen, 43, is promoting his business mainly by word-of-mouth. He started working on the project in March. Owen said he grew up in the tobacco warehouse business, and he's following in his father and grandfather's footsteps. "This thing is a new idea, but it's got a lot of merit to it," Owen said. "This will actually let growers put their tobacco in front of different prospective buyers, and it more or less puts a little competition back into it. Anytime you've two people bidding on something it's better than one person bidding on it." Owen sees the need for this way of selling tobacco because growers might produce more tobacco than the company they've contracted with needs to buy. A company might not want the grade, quality or style of tobacco a grower has produced, or a grower might not want to accept the price offered by the company with which they have a purchase agreement. Basically, there are several scenarios that can occur which lead growers to look for a sales option like Owen is offering. Owen said there's a saying in the farming community that farmers can't ever grow the crop the companies want because companies want different tobacco each year. "I think it's nice to have this type of market available for growers to move leaf they may need to sell," said Norman Harrell, Wilson County Cooperative Extension agent. Harrell said we had the auction system for a long period of time. At the end of the auction system, there was a transition period when sales were made by handheld computer. But in this "post tobacco buyout world," Harrell said, this is definitely a new alternative for growers to sell their leaf. "If it will work, it will work in this market here," Harrell said of Wilson. Graham Boyd, executive vice president of the Tobacco Growers Association of North Carolina, said this concept has been discussed in the past. But Boyd said he doesn't know of it happening in any organized fashion like Owen is trying to do. But there's a caveat as Boyd described it. Boyd explained that growers are obligated to present their tobacco grown under contract for sale. The grower doesn't have to accept the offered price. The grower can then take his leaf anywhere else and try to sell it. Boyd said it sounds like Owen is trying to consolidate the process. Boyd said that in 2009 most growers have contracts with more than one company. If they have tobacco that is returned or refused they can certainly contact any buyer out there who would be interested in buying it, Boyd said. Enditem