Tobacco Auction Warehouse to Reopen in Danville

Source from:  Danville (VA) Register & Bee 07/23/2010

Piedmont Warehouse, a former tobacco auction warehouse, plans to reopen in August to give growers an alternative for selling their tobacco. If successful, the warehouse could mean more money in pocket for growers and an economic boost for Danville. Tobacco was last sold in the 125,000-square-foot warehouse in 1971. "It's too good of a building and represents too much opportunity to just let it slip," said warehouse operator Harry Lea. Lea and operator Jim Eggleston anticipate receiving baled flue-cured tobacco on Aug. 16 at 301 Trade St. Tobacco will be sold through sealed bids. Transactions will be confidential and the warehouse won't be open to the public. The warehouse will sell growers' unwanted, rejected or excess tobacco, Lea said. That niche wasn't being served. Nowadays, growers contract with companies for a specific amount of tobacco and they must meet certain conditions. In 2000, the contract system replaced the auction system that lasted for more than century. The contract system doesn't allow growers an opportunity to market excess tobacco, Lea of Danville said. Or, what happens to the grower who can't contract as much as he did in the past? "This setting will provide an opportunity for that grower to bring tobacco and place it on the floor," he said. Tobacco will be received by appointment Monday through Wednesday during the 12- to 14-week cycle. It will be weighed, USDA graded, moisture tested and then separated into lots based on stalk position and quality. Starting on Thursday, buyers will inspect the tobacco and submit sealed bids. At the end of these days, the bids are opened and the buyer and seller are notified of the results. The grower can accept or reject the bid. Both buyers and sellers pay a fee to the warehouse. A grower may offer tobacco on three occasions, but if there is still no sale on the tobacco, the grower must remove it from the warehouse. Piedmont Warehouse opened as a tobacco auction warehouse in 1951. In 1971, operations moved to an alternate site on Industrial Avenue while Corning Inc. leased the space for the next 38 years. The space stayed empty after Corning closed its Danville plant earlier this year, said Lea, who owns the warehouse with his brother and sister. Piedmont Warehouse has interested buyers and sellers, but success is highly dependent on the weather, he said. Even so, Lea said it's worth the risk to try and make it work. If it's successful to his expectations, it would mean millions of dollars coming through and more money for growers, Lea said. That has a multiplier effect as that money is spent and circulated in the Danville area. The warehouse would have six employees initially. "We're obviously testing the waters," Lea said. "If it works, we want to stay with it." Pittsylvania County tobacco grower C.D. Bryant sees the reopening as a positive for local growers and the economy. Bryant contracts with Philip Morris USA, but knows producers need such an outlet. He said not all tobacco growing this year is contracted as some growers lost parts of their contracts. "That's bringing money into the economy in this area," Bryant said. "I think it will help the grower and I think it will help the community and I wish everybody well with it." Enditem