What is in this article?:
- Tobacco auctions regaining popularity
- Destined for auction
• Auctions have regained a place in marketing of the tobacco crop.
FARMERS Mark Smitherman (second from right) and Hassel Brown (right) were all smiles after the October 29 auction at Rural Hall, N.C. Auction manager Dennis White (far left) was happy about the high prices too. Smitherman and Brown are from Yadkin County, N.C.
Destined for auction
But a small portion was tobacco that was destined for the auction from the time it was planted. That usually occurred when a farmer got a contract, but it wasn’t enough to cover the tobacco he wanted to plant.
White told of one man who farms close to Rural Hall who had gotten a contract for his whole crop this year. But to fulfill it, he was going to have to carry his leaf 65 miles to Danville, Va.
He decided to try Old Belt Warehouse instead. He sold some there, liked the price and treatment he got, he ended up selling 100 percent at the auction.
“His average price was well above the contract price,” White said.
Burley growers have access to auctions sales this season as well. At least three warehouses were expected to conduct auctions ― they are in Mount Sterling, Lexington and Danville, all in Kentucky. Some others may be organized in smaller markets.
Farmers Tobacco Warehouse of Danville held its first auction of the year on Nov. 5, and it was a tremendous success.
“We sold 195,000 pounds for $1.98 a pound at our opening sale,” said owner Jerry Rankin. “It was as good a floor of tobacco as you could possibly want to see. The color was excellent, and the quality and texture were very good.”
Buyers competed for the lots they wanted, and farmers showed their satisfaction by not turning tags. Burley sales for this crop will last well into 2013, and both Rankin and White plan to auction again in 2013-14.
Conventional auctions still have a small but loyal following among burley growers, like Kentuckian Scott Travis. He never felt really comfortable about the contracting system, so this year, for the first time since contracting began, he is selling 100 percent of his production at auction.
“My trust of the people running the Danville auction is the big reason I sell there,” said Travis, who farms in Cox's Creek, Ky., near Louisville.
“To me, it seems like a good alternative to contracting."
Most farmers need a contract to get financing to produce their crop, he said. “But smaller farmers like me can get by without one, so I would say the auction system has a place serving the smaller farmer.”
Auctions offer an additional advantage to smaller burley growers, said Travis.
“We can sell there in either large or small bales,” he said.
“For us, it’s cheaper to produce small bales. I have a large baler, but the stripping with it is somewhat hindered because of the space available.”
The room he has it in was built for a small baler.
“It hasn’t retrofitted to the large baler very well. If I had to go back to large bales, I would have to make changes to the stripping room or build another one.”