What is in this article?:
• From the operator's point of view, the advantage of the auction is that it puts multiple buyers together with multiple sellers.
TWO BUYERS plan their strategy as they await the beginning of the auction.
Auction sales seem to have regained a place in tobacco marketing after nearly disappearing just a few years ago.
Rick Smith, a leaf dealer in Wilson, N.C., said at the U.S. Tobacco Forum in Raleigh, N.C., that auctions will take only a small percentage of the flue-cured and burley sold this year.
But nevertheless they have proven their merit," said Smith, who is president of Independent Leaf Tobacco Company.
“The long-term success of the auction houses will depend, like everything else in agriculture, on the operator’s ability to make a profit. 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," said Smith.
“There are different ways to do this, but the auction appears to have met the needs of the current market very well.”
Smith has some concerns about how the auction system will function this season.