First Tobacco Auction Sales After Buyout Begin

Source from:  By BOBBIE CURD bcurd@amnews.com 11/22/2005

The first sale of the post-buyout era began at 9:30 a.m. today at Farmer's Tobacco Warehouse in Danville, one of 15 auction warehouses in the burley belt holding auction sales this year. Purchase prices came in at the beginning of the sale ranging from $1.50 to $1.68 per pound. Eight or nine companies were on hand to buy tobacco, including Alliance One and Universal. Most, if not all, were purchasing for foreign markets. [img border=0 hspace="4" vspace="4" align="left" src=http://www.tobaccochina.com/english/picture/00014923.jpg] "People want to know why I am trying to do this," said Jerry Rankin, warehouse owner. "I'd like farmers to continue to have a choice, not a monopoly - which it's daggone close to one now." Since Congress passed new legislation in 2004 that eliminated all price-support regulations, the markets now have no minimum price guarantees. That led to an atmosphere of uncertainty and nervousness from growers just before the sale. Tobacco is primarily sold through direct contracts between buyers and producers now, and no one seemed to know for sure what today's sale would mandate. "The big deal is to be able to sell it for a higher price than what they're contracting for - if we can't, we may as well go out of business," Erma Key Clancy said. Clancy has been in the tobacco warehouse business since 1941, now in Lexington, and said this will mark the first time tobacco has been sold on a warehouse floor without graders or support from the government. When Keith Allison with the Burley Tobacco Growers Cooperative Association was questioned about a price prediction, his answer was, "We'll find out in a few minutes." Buyers gathered around for a pre-auction huddle with Donna Graves, executive director of the Burley Marketing Association. Graves says the 15 warehouses hosting auctions this year are extremely important. "Export buyers prefer the auctions because they can buy select stalks," Graves said, and some local farmers are loyal to the warehouse auction process. As buyers walked through the aisles, they carried "controllers," or black computer boxes that now take the place of auctioneers. Retired farmer R.K. Gordon was optimistic farmers would give a good price for their crop this year. "I raised it for over 60 years but had to sell my farm and get out of it," he said. "It'll bring in a pretty good price this year because they want us to grow more next year so they can come in and take it cheaply. That's just my opinion," Gordon said. "This really is history in the making and will determine the future for a lot of farmers and warehouses," Clancy said. Enditem