Tobacco Operation Puts Down New Roots

Source from:  Central KY News 12/31/2011

The owners of one of the few remaining independent tobacco warehouses operating in the state have moved on from one historical site to another building used by another former tobacco auction mainstay during the fall selling season. Months after Farmers Tobacco Warehouse No. 1 was demolished, owner Jerry Rankin has set up shop and held auctions in what had been Peoples Tobacco Warehouse on Harding Street behind Toliver Elementary School. Since November, there have been eight auctions at the renovated warehouse, which Rankin is leasing from Robert Hamlin, with another held at Farmers Warehouse No. 2. It is the first time the Peoples building has been used in almost a decade. Growers have come from as far away as Indiana, Virginia, Ohio and Indiana, and Rankin said about 2 million pounds of tobacco have been sold at the two warehouses. Prices have been strong so far following a year when many farmers were fortunate to get $1.49 per pound before Christmas. Prices have stayed close to $1.79 per pound so far this year. Rankin, whose father Tommy helped run Farmers for more than half a century, said he looked at other options, including in Harrodsburg, in the old ATR building on the Danville bypass, and trying to run all of the auctions out of Farmers Warehouse No. 2. It has become an increasingly chaotic market for growers after the 2004 federal tobacco buyout and the loss of price supports, which prompted many families to get out of growing tobacco and hastened the decline of the traditional auction system. Rankin said some farmers also have switched to crops like corn and soybeans, which were rare in the state until recently. Auctions once brought more than 20 million pounds to market annually in Danville, with 6-8 million of that coming through Farmers on a regular basis, Rankin said. This year, he believes auctions at the renovated warehouse and Farmers No. 2 could total about 3.5 million pounds. Today, those who still grow tobacco can contract directly with tobacco companies, among other options. Many farmers now contract to take their crop to the Philip Morris receiving station on the Danville bypass near the former ATR plant. The company moved its receiving station from Lebanon to Danville earlier this year. This year, Rankin said the only other independent auctions he knows of are planned for Lexington, Mount Sterling and Maysville. Quality rebounded dramatically along with prices after a rough 2010 when much of the crop was discounted and judged to be poor. Rankin said impact was so devastating for some smaller farmers they didn't have the money to start another crop. There was good tobacco coming to market, but it was devalued Rankin said because of the large amount of leaf that dried out instead of curing properly in the barns. This year, he said there is less volume coming through, but much of it has been graded higher because of excellent moisture levels that help slow the curing process. It is one of the best curing seasons Rankin has ever seen. Rankin said the plan is to continue using the two warehouses as needed, and sales likely will run at least until mid-February. Although the landscape is shifting in what was once a relatively stable world, he thinks operations like the one in Danville can survive. "If we can keep integrity in the business and strip (the tobacco) clean, I think there is a good future, especially for the next four to six years," he said. Enditem