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The traditional tobacco sale is dwindling away
By TIM THORNBERRY
Kentucky Correspondent

DANVILLE, Ky. — The traditional time of tobacco sales is anything but the traditional tobacco environment as producers enter their second season of post-buyout sales. Farmers are anxiously waiting to see the price verdict.

Labor issues and damaging weather at harvest could be the deciding factors in this year’s crop. Growers who had enough help to get in their crop had to fight Mother Nature and a deluge of rain. Those who were able to work around the weather had a difficult time in finding enough help.

Many growers work now on a contract basis with a particular tobacco company, but options still remain for those who still seek the traditional auction warehouse. There are at least five auction venues in Kentucky along with three in Tennessee and one in Asheville, N.C.

Once considered obsolete, warehouses have managed to stay open as an alternative to contract sales - especially since burley demand is so high.

Scott Althauser, vice president for leaf with the Burley Tobacco Growers Cooperative Assoc., said good tobacco will find buyers and warehouse sales offer the producer options.

“All good tobacco has a home,’ he said. “Even with the supply of burley being up, we’re still not growing what the market needs. These sales offer farmers’ choices, and we have growers that want auctions.”

Today’s auction sales sound a bit different than the old days with the auctioneer now replaced by electronic bidding devices, but the premise is still the same with buyers making their way to the sales to offer the best price.

Estimating the best price is difficult early in the sales season, but so far, the average has been $1.60.

Jerry Rankin operates the Farmers Tobacco Warehouse in Danville. He said the small producer can find their market at warehouse sales.

“What we have seen is that most small growers have dropped out because of the buyout, but I can tell whether the tobacco has been stripped by the family or by contract labor. The small producer can give the extra care in growing and small companies that want certain leaves, can come out on the floor and buy what they want without buying the whole stalk. This is advantageous to the small producer who can strip by stalk position,” said Rankin.

With that in mind, many small producers that have remained are finding an increase in revenue.

University of Kentucky County Extension Agent Tommy Yankey sees this time in tobacco production as a time small growers can do well.

“Tobacco production certainly is in transition for most farm families. Many families that wish to continue to raise tobacco are finding that tobacco is still profitable if they have family members who can help with the transplanting, harvesting and stripping of the crop,” he said. “The family farm that can do all of the labor themselves is finding that they are more profitable now than in recent years as they no longer must pay the high lease prices as in the past.”

Yankey said once production goes to a certain amount, more labor is needed than most families can provide unless they turn to mechanization.

“Once we start getting much past 15 acres in size, additional labor needs to be obtained by most farm families. There is a large interest among all producers in mechanization but I don’t see anything on the horizon for this short term. There are some machines on the market to help with the labor shortage but they have too much leaf breakage to be acceptable for most farmers or are cost prohibitive. But there is widespread interest in mechanization if it becomes affordable,” said Yankey.

As farmers prepare to sell and think of next year, small producers can take another look at a business they may have thought had left them behind.

“Smaller growers typically produce a better quality crop I believe because they control every aspect of production and still take pride in putting a quality crop on the warehouse floor. We start to lose some of the management and quality control aspects of producing that ‘perfect crop’ as our size increases,” said Yankey. “So there is and will still be an opportunity for the smaller grower I believe. The companies appear to be pushing growers to get bigger but at the same time they realize they need the small grower as well.”

12/20/2006