Southern tobacco-auction rebound continues

A decade ago, Southern tobacco auctions appeared set to go the way of mule-and-plow farming.

For more than a century, the sign-song chant of auctioneers had wafted through tobacco warehouses from Virginia to the Carolinas and beyond, as buyers and farmers did business in towns big and small across the region, the sweet aroma of cured tobacco ever-present as crop and cash changed hands.

That began to change in the 1990s as tobacco companies increasingly entered into contracts directly with growers to grow the crop.

By the early- to mid-2000s, tobacco auctions were no more. It seemed the late-summer ritual that was as much a part of the area as NASCAR and fish camps was gone for good.

Now, however, the tobacco auction appears to be making a comeback.

Auctions have been held this year everywhere from Danville, Va., to Wilson, N.C., to Lake City, S.C.

The auction provides a broader marketplace for growers to bring their tobacco bales without worrying about big tobacco company regulations, auctioneer Jim Lynch told the Florence (SC) Morning News.

“The main thing is they don’t care about what the moisture is, how much it weighs and those are some of the hoops big tobacco is making them jump through,” said Lynch, of Carolinas Tobacco Auction in Lake City. “Just like we have 32 bales right here that the moisture was I think one tenth of a percentage high and they expected him to haul it all the way back home and go through it and then bring it back.

“They don’t have to jump through the hoops (here). You don’t know how busy these farmers are right now,” he added.

Unlike receiving stations that force farmers to comply with weight and moisture standards, the auction managers don’t turn any tobacco away.

Photo of old-time tobacco auction, Ashe County, NC.

So-called “loose-leaf” tobacco auctions, which allow buyers to inspect tobacco at length, began in 1858 in Danville, Va., and became the primary method of selling bright leaf tobacco, according to the website NCpedia.org.

“This method was necessitated, in part, by a chronic distrust between tobacco buyers and those who produced, planted, or sold tobacco,” the site added.

Rick Smith, a leaf dealer in Wilson, N.C., said that while auctions will only handle a small percentage of the flue-cured and burley tobacco sold this year, they’ve proven their merit, according to Southeast Farm Press.

“The long-term success of the auction houses will depend, like everything else in agriculture, on the operator’s ability to make a profit,” said Smith, president of Independent Leaf Tobacco Company. “But my feeling is that auctions are here to stay, for at least as far ahead as we can see.”

Smith said he has bought leaf at flue-cured auctions for the last several seasons. As far as he is concerned, the return of the auction has been a development that has been not only desirable, but inevitable.

In flue-cured areas, no matter the crop size or quality, about five to seven per cent is going to enter the trade outside of contract stations, he said.

“We needed a means of absorption into the market for: tobacco produced without a contract, tobacco produced under a contract but beyond the contracted amount, and tobacco produced under contract but failing to meet the quality requirements of the contract,” Smith said.

“There are different ways to do this, but the auction appears to have met the needs of the current market very well,” he added.

Auctions provide an alternative to the contracting system, according to Dennis White, owner of Old Belt Tobacco Sales in Rural Hall, N.C.

“We have had some better-quality tobacco that sold higher than the contract price,” he told Southeast Farm Press.

Auctions are also providing an opportunity for better-than-contract pay for some niche styles of tobacco, the publication added.

“We have received some Chinese-style tobacco, and buyers have fought for it,” White said. “Good bright leaf has gotten a price advantage here.”

For burley growers, there is another fringe benefit of auctioning: They can deliver their tobacco in small bales, rather than standard bale, which weighs 700 to 800 pounds.

“The fact that we take small bales is a good selling point,” said Jerry Rankin, owner of Farmers Tobacco Warehouse, Danville, Ky.

“Big balers are expensive, and we have many growers who grow only three to six acres and can’t afford the expense,” he said.

(Top: Tobacco auction in Lake City, S.C. Photo credit: Florence Morning News.)