US: Wilson Tobacco Market Marks 125th Year This Week

Source from:  Wilsontimes.com 08/14/2014

It was September 1890 when the Wilson Tobacco Market opened for its first season of selling the golden leaf.

Advertisements in The Wilson Mirror, the newspaper at the time, urged growers to haul their tobacco to Wilson to sell because they could save money on warehouse fees and this market would be closer to home.

"Come with your tobacco, see it handled and sold, get your money and go home happy," reads an advertisement by Ed M. Pace, who was identified in the advertisement as manager of Wilson Tobacco Warehouse.

Tobacco warehouses first popped up in the mid-1800s when tobacco auctions moved inside. Prior to the construction of tobacco warehouses, tobacco was hauled into town and sold in the streets.

But by 1890, tobacco growers and warehousemen from North Carolina's border counties and Virginia decided to join forces and create what would eventually become known as the world's greatest flue-cured tobacco market here in Wilson.

On Tuesday, tobacco growers along with tobacco industry and community representatives will gather at United Tobacco Company to celebrate the opening of the Wilson Tobacco Market for its 125th year.

"The ‘World's Greatest' Tobacco Market has a long and rich history of selling tobacco and continues to be a hub of tobacco production and leaf sales," said Norman Harrell, Wilson County agriculture extension agent.

The event starts at 7:30 a.m. with breakfast followed by remarks by Steve Troxler, North Carolina's agriculture commissioner. Other local officials will also talk about the market's history and bright future.

United Tobacco Company is located at 1707 Black Creek Road SE. But participants should use the entrance at 1510 Old Stantonsburg Road.

More than 100 people had signed up as of Wednesday, Harrell told members of the Wilson AgriBusiness Committee during their monthly meeting held Wednesday.

The opening celebration is sponsored by the Wilson Chamber of Commerce and the Wilson AgriBusiness Committee. Breakfast sponsors are AgCarolina Farm Credit, Blackman Insurance Agency, Crop Production Services, Fair Products, Inc., Southern Container Corporation, Wilson County Farm Bureau and Wilson County Farm Supply.

commemorative plate

The Wilson County Young Farmers Association will have commemorative World's Greatest Tobacco Market license plates for sale at the celebration for $10 each.

Money raised by selling the plates will go to help fund the association's scholarship endowment for Wilson County 4-H. Scholarships are awarded annually to help 4-Hers from here go to college.

Adam Gardner, current president of the Wilson County Young Farmers Association, said the group decided to do the license plate because they want to make everybody aware it's the market's 125th anniversary. Plus, Gardner explained a similar license plate was created when the market celebrated its 100th anniversary.

Gardner said they want to "let everybody else know tobacco is still around and still big in Wilson."

The association ordered 300 license plates. But Gardner said if the plates sell rapidly they can order more.

"There will be plenty to go around, I think," he said.

The association has about 50 members, which include farmers and members of the business community.

still going strong

Gardner has been growing tobacco since 2005. There's three brothers and two cousins making up the Gardner's family farming operation. Gardner said they have about 425 acres of tobacco this year between all five of them. He's excited about being a part of the future of the Wilson Tobacco Market.

"It feels very good," Gardner said. "I'm glad I can carry on the tradition. The market has been around for 125 years. I'm glad I can be part of maybe keeping it going."

An estimated 120 million pounds of flue-cured tobacco was sold on the Wilson Tobacco Market in 2013. That tobacco had an estimated value of over $258 million. Harrell said earlier this year that "due to the challenges presented during the year, namely the excessive rainfall, it is estimated that the amount of tobacco sold on the Wilson Tobacco Market was about 15 percent less than expected" during 2013.

At least 12 different companies have been actively buying tobacco directly from growers via contract on the Wilson market for the past few years. As Harrell describes it, "there are no other tobacco markets in the United States that compare to the volume of leaf moved through the Wilson market."

Last season, the Wilson market had two warehouses selling tobacco at auction because of the interest in giving growers an option other than contracting to sell their leaf.

The tobacco market has changed as the tobacco industry has evolved over the years.

Wilson has had as many as a dozen tobacco auction warehouses operating at different times. During the market's heyday, local, state and national politicians flocked to Wilson for the opening ceremony for the market. Speeches were made with politicians promising support for farmers and the federal tobacco program.

But in the late 1990s farmers experienced several years of fairly dramatic quota cuts that affected how much tobacco they could grow under the federal tobacco program. As the amount of tobacco grown dwindled so did the number of warehouses on the market. In addition to the quota cuts and the eventual tobacco buyout and move to a deregulated program, farmers in the late 1990s and early 2000s were moving toward contracting directly with tobacco companies instead of selling it at auction. This meant tobacco warehouses were no longer needed because farmers delivered their crop to receiving stations. By 2004, when the Wilson Tobacco Market opened for its 115th season, one auction warehouse remained open.

During the past 10 years, growers have continued to contract directly with tobacco companies. But live tobacco auctions have experienced a resurgence in popularity because growers want a way to sell excess tobacco they might have and a way to sell tobacco that might not be of the highest quality.

this season's crop

In North Carolina, 180,000 acres of flue-cured tobacco was harvested in 2013. This year, growers have planted 181,000 acres of flue-cured tobacco, according to the July farm report issued by the North Carolina Department of Agriculture.

Gardner and his family started harvesting their tobacco crop around the July 4 weekend. He admits heavy rains have put a damper on things. But Gardner said the tobacco coming out of their barns right now is looking good.

On Wednesday, Herbert Weatherford, regional director for North and Central America for Alliance One International, told the Wilson AgriBusiness group that companies need less tobacco because cigarette sales are down around the globe. Plus, companies are having to work through their inventories and are trying to use up tobacco they've bought during previous seasons.

Overall, Weatherford thinks the projections for cigarette production around the world will remain pretty flat out to 2016. He even expects that during the next couple of years China's offshore tobacco purchases will be down with the exception of its purchases of tobacco grown here in the United States and in Zimbabwe.

China produces so many cigarettes each year that it not only uses tobacco grown there but also imports tobacco. The imported tobacco is used to upgrade the quality of the cigarettes produced in China.

But Weatherford said the good news is once companies work through their inventory the demand for tobacco goes back up.

In his updated "U.S. Flue-Cured Tobacco Outlook" for 2014 issued in May, Blake Brown with North Carolina State University indicates that Chinese cigarette makers are buying tobacco from the United States because they are trying to "meet the demand for cigarettes from a more affluent consumer."

"While the intermediate to long term market outlook is uncertain, current demand for U.S. flue-cured tobacco remains strong," Brown wrote.

Flue-cured tobacco prices in 2013 averaged around $2.15 per pound, according to Weatherford. He expects tobacco will be priced more based on its merits this year and should sell for about $2 per pound.

In the United States, the price range between top and low quality tobacco is not as dramatic as it in Brazil, Weatherford noted.

Here in the United States, the flue-cured markets opened in Georgia earlier this month. Weatherford said rain has made the crop in the Old Belt come out. But he added that the tobacco here in the Wilson area "looks fantastic at the moment." Wilson is part of what's known as the Eastern Belt.

People attending Wednesday's agribusiness session questioned Weatherford about the expected market for excess tobacco that farmers might have beyond what they have contracts to sell and questioned him about the impact electronic cigarettes are having on the industry.

Weatherford said he thinks there will be a market for excess tobacco but it depends on how much tobacco is over produced this year. He reminded the group that the auction market is an outlet for farmers to sell their excess tobacco.

As for electronic cigarettes, Weatherford explained that it's impact is debated daily. Some people see them as a trend while others see electronic cigarettes as a product that will stick around because smokers use them in instances where they can't smoke a regular cigarette.

But Weatherford pointed out that you see them and regular cigarettes in every convenience store.

"The emerging e-cigarette market has the potential to dramatically change the U.S. and EU cigarette markets," Brown wrote. "While total U.S. sales of e-cigarettes is still small (about $2 billion in 2013) relatives to sales of traditional cigarettes (about $108 billion in 2013), growth in e-cigarettes is explosive with all major manufacturers of traditional cigarettes now selling e-cigarettes."

The federal Food and Drug Administration is in the process of developing regulations for e-cigarettes, according to Brown, because the FDA views them as a tobacco product. Enditem