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Tobacco Auction System May Be Going, Going, Gone

Americana: Decades-old operation faces a squeeze: Use is declining, and cigarette firms now contract directly with growers.

October 28, 2000|From Associated Press

WILSON, N.C. — The procession snakes its way around the burlap-wrapped piles of tobacco like some giant, many-headed caterpillar.

Auctioneer Walter Wilkerson, echoing a chant perfected during the Civil War, leads the way, calling off the lots in a language that he and the cigarette company buyers appear to understand. Every so often, Donald "Stumpy" Winborne, who owns this warehouse, grabs Wilkerson by the arm and stops the juggernaut, cajoling the buyers to add precious pennies to the prices they're offering growers.

As each bale and bag of golden-brown leaf is sold, a ticket marker scribbles hieroglyphics onto a color-coded company ticket, drops it on the pile and moves to the next one.

By the end of the day, the warehouse has sold 302,362 pounds of leaf, most of it low-quality, lower-stalk tobacco, for prices ranging from $1.60 to $1.75 a pound. It's a pretty good sale, but Winborne is far from glowing.

In the past two years, four other houses have closed in Wilson, the world's largest market for flue-cured tobacco. After nearly 20 years in the business, Winborne is waiting for his turn.

"This may be the last year I do this," he says, reaching across his desk for a color print of this year's opening-day sales in August. "I think that the auction system as we know it is maybe over."

Since 1997, the number of warehouses in the so-called Bright Belt--the flue-cured tobacco-producing states of Florida, Georgia, North and South Carolina and Virginia--has dropped from 198 to 147. Of those 51 closures, 35 were in North Carolina, 17 in the past year.

During the same period, only eight warehouses have closed in the Burley Belt, which covers Indiana, Kentucky, Missouri, North Carolina, Ohio, Tennessee, Virginia and West Virginia. But the shakeout among the remaining 151 houses is coming, says Denny Wilson, executive director of the Lexington, Ky.-based Burley Auction Warehouse Association.

"You call me in the spring, and that 151 will probably be in half or more," he says. "I'm dead serious."

People in the industry blame the sudden turn on two things: Drastic cuts in the amount of tobacco the federal government allows farmers to grow, and the decision by the largest cigarette makers to bypass traditional auctions, instead contracting directly with growers for their leaf.

Richmond, Va.-based Philip Morris Co., the nation's largest cigarette producer, has entered contracts for more than 100 million pounds of burley this year and for 2 million pounds of flue-cured leaf. R.J. Reynolds Tobacco Co. of Winston-Salem, the No. 2 producer, now has flue-cured contracts with 250 farmers, though company officials would not say how many pounds were involved.

Big Tobacco, under siege by multibillion-dollar lawsuits, says it needs to make the switch to make American leaf more competitive with tobacco grown overseas. But devotees of the auction system can't help wondering that something good is being irrevocably lost.

Of all the facets of the tobacco industry, the auction has the most pageantry and flavor. It's a tradition that stretches back to 1619, when colonial Virginia promulgated the first tobacco inspection act.

For more than 150 years, a receipt from an honest tobacco warehouseman was considered a dependable form of currency. Tobacco companies sponsored radio in its infancy. The auctioneer's call of "Sold American!" became part of the national lexicon.

Page Roberts of Clarksville, Va., remembers when the dream of farm boys all over the South, himself included, was to become a tobacco auctioneer. His father was an auctioneer, and Roberts learned the trade during Sunday drives in the countryside.

"He'd say, 'Sing out from 180 to 185.' And I'd go, 'One-eighty-four American! One-eighty-five American!' " Roberts, 69, croons in a lilting Southern accent. "He said, 'Your chant will come. You just learn to be plain so that the buyers can understand what you're saying."'

Roberts, who retired last year after 45 years calling sales, remembers when a tobacco auctioneer was a minor celebrity. Roberts was sought after for county fairs and television appearances, especially after he won the 1982 world championship sponsored by R.J. Reynolds.

"See, as a really good auctioneer you attempted to create an excitement about the sale," says Roberts. "And when you did that, you got the buyers involved in it, tobacco sold good."

Opening day at the tobacco markets has always had a carnival atmosphere, the kind of joy that comes with the seasonal return of friends who travel the circuits.

"I don't know if I can put it in words. But if you've ever been out to opening day, and you see the families coming in with their kids," Wilson says. "In the good years, you can see it in the farmer's eyes, and the whole family's eyes, when the prices are good."

But all that is changing. This year, many farmers at Winborne's warehouse didn't even wait to watch their tobacco sold. There is an overwhelming sense of foreboding.

Wilson says he's spoken with several warehousemen who aren't yet sure whether they'll open come November. That has sent ripples on down the line.

Government workers, too, recognize the auctions' decline.

Each season, the U.S. Department of Agriculture dispatches four-person teams of graders to size up the tobacco and help establish the base price. In 1998, the agency sent out 51 sets of graders. Last year, that dropped to 41. This year, it was 31.

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