Tobacco Sales Disappoint Farmers
12/20/99
LOUISVILLE, Ky. (AP) -- A disappointing pre-Christmas burley tobacco sales season ended with farmers clinging to hope that tobacco companies will become more aggressive buyers when the auctions resume in January.
An unprecedented one-third of all sales went into the surplus pools after the companies rejected large chunks of each day's offerings.
Danny McKinney, chief executive officer of the Burley Tobacco Growers Cooperation Association in Lexington, said auctions last week were a bit stronger than the earlier going this year. He said the pools took about 28 percent of the tobacco, although the pre-Christmas average will be about 33 percent.
``Hopefully, things will be stronger after we come back after the first of the year,'' McKinney said. The auctions resume Jan. 10.
Tobacco is sold under a federal price support system that places the leaf in a reserve pool unless a company bids at least a penny a pound above a government-set support price. Thus, farmers get something near full price, even if the companies pass it up.
But the pool intake is much larger than it is in a normal year, when it runs more like 3 percent. ``I don't think we've ever taken in this much before Christmas,'' McKinney said.
Only 6.1 percent of the 1998 burley crop went to the pool for the entire selling season.
``It's been the toughest three weeks in my life working in the warehouse. I've never seen farmers so dejected,'' said Rod Kuegel, president of the Burley Tobacco Growers Cooperative.
The co-op pools are designed to keep 50 million to 100 million pounds of tobacco without too much effect on quota, the amount of tobacco farmers can sell each year.
But they had taken in 180 million to 185 million pounds before this auction season began, and McKinney estimated the intake will amount to about 100 million pounds for the pre-Christmas portion of the season.
McKinney said it probably will reach 200 million pounds by the time the new auctions close Feb. 24. The Lexington co-op has pledged not to sell any of the pool stocks at a discount, and that means they could be holding 380 million pounds when the U.S. secretary of agriculture sets next year's quota in early February.