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State Tobacco Auction Brings Higher Prices for Smaller Crop
Capital News Service Tuesday, April 6, 2004 WASHINGTON - The just-ended state tobacco auction attracted more buyers and brought farmers a higher price per pound than last year, despite a steep drop in the amount of leaf sold. During seven auction days between March 23 and April 1, buyers bought about 1.3 million pounds of tobacco at an average of about $1.77 per pound, beating the $1.52 per pound paid last year for 2.3 million pounds, the state Department of Agriculture said. The auction also saw more buyers -- four compared to two last year -- despite a steady decline in the number of Maryland tobacco farmers and a crop that was challenged by last year's heavy rains and battered by Hurricane Isabel. One extension agent said it was still a quality crop. "In the last eight years, I'd say we had three outstanding crops," said David Conrad, a tobacco extension agent in Prince George's County. "This year's crop was one of those." Conrad said this "will be one of the smaller crops that we've had. But the smallness of the crop (sold) was due not to waning interest in the growers but to the growing season." He said the harvest was smaller than expected because last year's rains caused fertilizers to leach out of the soil, making it harder for plants to mature. And about 10 to 15 percent of the crop was still in the ground when Hurricane Isabel hit, leaving those plants that survived green and bruised. But even that damaged leaf brought 75 to 80 cents per pound. "Boy, if you've got greenish hurricane-damaged tobacco and you can let it go for that, you better let it go," said Conrad, noting that drought-ravaged tobacco sold last year for as little as 40 cents a pound. Among the "several hundred" people at the Farmers and Hughesville tobacco warehouses in Charles County -- the only two auction sites left in the state -- were two new buyers who came to Maryland for the first time at the request of Swiss companies. Chris Cooksey, a buyer from Tennessee-based Hail and Cotton Tobaccos, said a Swiss cigarette company specifically requested Maryland tobacco -- known for its thin, slow-burning leaf -- when its usual Brazilian source could not fill its order. Cooksey said Hail and Cotton bought 155,000 pounds of Maryland tobacco, paying up to $2 a pound for the best-quality leaf. He said that price is typical for good leaf, but high for what he called the "average-quality" tobacco in Maryland this year. Conrad disagreed, saying that the crop overall was better than average quality. "It's like going to the supermarket and buying USDA choice and prime, or ground sirloin," he said. "Most of the crop was choice prime, but very little ground sirloin." Cooksey reasoned that the price was higher due to simple supply and demand: There was too little tobacco on sale to meet the relatively high demand, he said. Just five years ago, 8.3 million pounds sold at a number of auction warehouses throughout the state. But that changed when Maryland began its buyout program in 2001, which promised a decade-long subsidy to farmers who stopped growing tobacco. Only about 33 percent of eligible farmers grew tobacco for this year's auction. And officials project that just 14 percent of eligible farmers will grow for next year, representing just 6 percent of the former crop. But Conrad said that many farmers were encouraged by good sales at this year's auction and planned to grow the same amount or more next year. "I think farmers actually left with a smile on their faces," he said.
Copyright © 2004 University of Maryland Philip Merrill College of Journalism
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