Tobacco farmers to vote on federal graders at all leaf sales

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Posted 7:56AM on Monday, March 11, 2002

FRANKFORT, Ky. - Tobacco planting is weeks away, but the question of who evaluates the market-ready leaf -- a government grader or someone from a tobacco company -- will be decided in the coming days by farmers. Tobacco growers nationwide will cast ballots in a referendum on whether federal graders should examine the quality of each bundle of tobacco sold -- whether in the traditional way, through a chanting auctioneer, or by contract sale directly to a cigarette company. Some farm leaders say the decision is crucial to continuing the federal tobacco program, since price supports require federal grading. They are aggressively urging a "yes" vote. Cigarette companies, including R.J. Reynolds and industry leader Philip Morris USA, play down the referendum's significance. They point out that contract tobacco doesn't depend on price supports. The vote reflects a dramatic change in how farmers sell tobacco. Across the burley belt, scores of traditional auction warehouses stand empty. Most tobacco these days is grown under contract for sale directly to cigarette companies: 80 percent of flue-cured tobacco, two-thirds of burley in the most recent season. Federal graders examine leaf sold at auction, but cigarette companies can have their own graders at contract receiving stations. Since the federal inspection program is funded by a penny-per-pound fee, the rise of contract growing has left it struggling for solvency. "We've got to pass this referendum, or in my opinion we can kiss the tobacco program goodbye," Sam Moore, president of the Kentucky Farm Bureau, said in a recent speech to local Farm Bureau leaders. The federal program, with its quotas and guaranteed prices, has enabled farm families to make a living with tobacco on relatively small plots of land. Henry West, president of the Burley Tobacco Growers Cooperative in Lexington, said most farmers he talks to support guaranteeing the presence of federal graders at all sales. His group and the Farm Bureau have campaigned heavily for a yes vote, and he predicts growers will overwhelmingly endorse having federal graders for all tobacco sold. There are separate referenda for each tobacco type, meaning burley growers might approve federal graders for all their tobacco while flue-cured growers reject their referendum. Growers of burley and flue-cured tobacco vote this week. Producers of other types of tobacco, such as dark-air cured and dark fire-cured, vote next week. Results are expected about a week after the votes. Kim Farlow, a spokeswoman for Philip Morris USA, said federal grading at cigarette companies' receiving stations won't make a difference in prices paid to farmers. "People believe they would receive price supports on contract sales, and that is simply not true. They are private transactions," she said. Even without supports, contracted leaf has fetched higher prices than tobacco sold at auction. But West said the price support is still an important protection even for farmers selling leaf directly to tobacco companies. "The companies are making contracting very attractive right now," he said. "Without a tobacco program and support prices it would not be as attractive. They would be at the mercy of the tobacco companies without the program and the support price."