THE MARKETING AND SALE OF TOBACCO LEAF
METHODS OF DISPOSAL BY THE GROWER. THE WAREHOUSE SYSTEM. DIRECT
PURCHASE. PRINCIPAL MARKETS IN THE UNITED STATES. PRICES.
THE MARKETING AND SALE OF TOBACCO LEAF
When the tobacco leaf is fully cured it is at once prepared for the
market. The first step is the planters' classification of the leaf. In the
case of pipe smoking and chewing tobacco the planter collects all the
imperfect, injured leaves, or those inferior from any cause, and ties them
in bundles. These are the planters _lugs_. All other grades are _leaf_.
Slightly injured leaves are classed as _low-leaf_ or _seconds_. The others
are classed _medium_, _good_, _fine_ and _selected_ leaf, according to
grade, color, quality, etc.
In the case of cigar leaf tobacco a similar classification is made, more
care being taken owing to the very great difference in price between the
better and poorer qualities. This difference may be as much as 20c in the
lb., the finer and more suitable leaf being eagerly sought for.
Pipe smoking and chewing tobacco leaf is usually packed in hogsheads or
cases each weighing from 1,000 to 1,400 lbs. The operation of packing the
leaf is called "prizing." Cigar leaf is usually put up in "hands." A
"hand" consists of from 25 to 75 leaves tied together. Four hands tied
together make a "carrot" and 80 carrots go to the bale, but the size of
the bale varies considerably. The tobacco is then ready for the buyer.
There are two systems of disposing of the planters' product: (1) direct
purchase by the manufacturer or by a middleman from the grower; and (2)
what is known as the warehouse system. In the southern states the
warehouse system prevails. Every important tobacco section in the south
has its public warehouse which is under the control and supervision of
state law. Many of these warehouses are long established, that at
Richmond, Va., dating as far back as 1730, and those at Louisville and
Clarksville about 1839.
On appointed days the planter brings his leaf to the warehouse. Here it is
entered as "loose leaf" or "inspected leaf." In the case of loose leaf,
the tobacco is open to the inspection of prospective buyers, who examine
it and afterwards bid on it. In the case of "inspected leaf" the warehouse
officials first examine the consignments, grade them and mark them
according to their judgment, taking samples. The samples are open to
buyers' inspection and form the basis of sale. Tobacco auctions are
regularly held when the buyers assemble and bid on the "loose leaf" and
"inspected" lots. Prices of the various grades are fixed and sales take
place at the day's price.
The principal tobacco markets are:
For Kentucky and Tennessee--At Louisville, Clarksville and Cincinnati.
For Maryland and Ohio--At Baltimore.
For North Carolina--At Durham and Winston.
For Virginia--At Richmond.
The warehouse system has the great advantage that the proceedings are open
and the prices are recorded and published. Hence growers can know how the
market fluctuates and judge the best time for sale. This is not the case
when the sale is private between the buyer and seller as is customary in
the eastern and northern states. Here the price actually received by the
grower is often different from that given out as paid.
The price of tobacco leaf has had many vicissitudes during the past 25
years, the price often having reached so low a point as to discourage
producers. Thus at Winston, N. C., the price has gradually fallen from
12.3c per lb. in 1889 to 6.3c in 1896. In the same period Burley leaf at
Louisville and Cincinnati fell from 10c to 7-1/2c. Prices similarly
dropped in other centers. The price of cigar leaf has latterly increased.
In 1900 prices ran from 6 to 15 cents; in 1905 from 8 to 17 cents. Many
conditions at home and abroad affect the price, such as bad harvests or
inferior grades of produce.
The tobacco trust has been very unjustly blamed by many for the falling
price of tobacco. As a matter of fact and record, however, the
concentration of buying power by eliminating the middleman and the small
dealers has not only placed the grower in a better position by giving him
a better price, as recent records show, but it has benefited the consumer
also who can obtain the superior grades at a lower price. It is the
middleman's profit that has been cut. Moreover, the concentrated buying
power of the large interests here has been an effective force in keeping
up tobacco leaf prices against the foreign buyers. It must be remembered
that about half of our crop is exported. The buyers of this portion, who
are principally the agents of foreign governments (in the cases where
tobacco is a government monopoly as in France, Italy, etc.) assemble at
the auctions and bid in the usual way. As this competition is very limited
there is always an opportunity for such buyers to agree among themselves
as to the limit of prices. This has been one of the important factors
which has kept the prices of tobacco leaf down. The concentration of
American buying power has, however, been a formidable check on it, the
prices received by the growers being now fair and reasonable, and such as
are the result of a healthy market, where the factors of supply and demand
have their full share of effect.
The government statistics show that for 1914 the prices of leaf varied
from 5.5c to 20c for common to good varieties.
(_For references see end of Chapter VIII_)