Look up the word “tobacco” in an industry dictionary these days and the definition would likely involve the word change.
The change continues at the auction level. The latest will change the way a buyer buys tobacco.
As markets opened in late July in North Carolina, the familiar melodic chant of the auctioneer at some sales fell silent, replaced by handheld computers. Philip Morris and R.J. Reynolds, familiar corporate faces at the auctions in years past, were also absent. Both companies are buying all their tobacco through contracts with farmers this year.
With the exception of someone starting and announcing the winning bid and the milling around the bales of tobacco, the sound in the warehouse is silent.
Still, a salesman kept up a quiet auctioneer chant as he walked down the first row of tobacco, while looking at the numbers flashing on the handheld computer.
The Flue-Cured Tobacco Cooperative Stabilization is using the new technology at its 14 marketing centers. The co-op is also making the computers available free of charge to independent tobacco auctions. The new sales tactic was brought about by the $200 million settlement tobacco growers won in May against cigarette manufacturers, says Lionel Edwards, the co-op's general manager. The lawsuit claimed that the tobacco industry had violated antitrust laws by bid-rigging, allocating purchases at tobacco auctions and conspiring to undermine the tobacco quota and price-support program.
Under the new system, a co-op employee walks down the rows of tobacco with cigarette buyers and punches in a price on his handheld computer. The price decreases until a buyer pushes a button that indicates he's satisfied with the price. The sales leader then announces the price and the name of the company that bought the bale of tobacco.
It takes about 10 seconds to sell a bale of tobacco. “It's slightly slower than the voice auction,” Edwards says, “but we should be able to sell about 360 bales per hour. The usual rate of a good auctioneer is about 400 bales per hour.”
Stabilization demonstrated the new system to buyers a week before the opening of markets in North Carolina. Edwards said it received a good reception.
“They (the buyers) realize we have to do something to eliminate the tie bid,” Edwards says. “After talking with the auctioning business organization, we found that this was the way to go.”
Nine sets of buyers at each auction will have a complete set of handheld computers.
“It eliminates the situation where two or more buyers have the same money or pay the same price on a specific grade of tobacco,” Edwards says. “The person that pushes the button first” is the one who wins the bid. “It's very similar to the TV game show ‘Jeopardy.’”
The new system also eliminates the need for an auctioneer.
At the demonstration of the new technology a retired auctioneer said he never thought he'd see the day when the tobacco auctioneer would be replaced by an electronic device.
Changes have been coming hard and fast on the tobacco industry and tobacco farmers. They're still watching and waiting for buyout legislation in Congress that some say would ease an accumulation of woes on tobacco farmers and rural communities in the Southeast.