Tobacco auction prices anger sellers Prices plunge to 5-year low then recover.

March 25, 1992|By Ted Shelsby | Ted Shelsby,Staff Writer

UPPER MARLBORO -- The opening session of the annual Southern Maryland tobacco auction yesterday turned into a power struggle between buyers and sellers, like a pair of cigar-chomping street fighters going at one another.

Although the opening round afforded each side the chance to flex its muscles, it left many farmers confused as prices dipped to levels not seen in five years, then bounced back to levels comparable to what farmers received last year.

The buyers landed the first blow when they offered prices that one industry official estimated were 20 percent lower than those a year ago.

The farmers gathered at Planter's Warehouse were outraged. "This is not a recession. This is a depression," said Richard Moore, a 70 year-old grower from Mellwood, in Prince George's County, as he read the price tag on a basket of leaf that had brought $1.40 a pound.

The next two baskets brought only $1 a pound, prompting him to add, "These prices are terrible."

The early selling at the start of the monthlong auction had Claude G. McKee, head of the University of Maryland's tobacco experimental farm and a man frequently referred to as "Mr. Tobacco," scratching his head.

"It doesn't look good," he said of the prices. "It doesn't look good at all. I've only seen one basket at $1.90" -- the highest price per pound for top quality leaf at last year's auction.

Earl F. "Buddy" Hance, chairman of the State Tobacco Authority, a private group charged with promoting Maryland tobacco, also was confused.

He pulled a hand of tobacco from one basket that sold for $1.85 a pound and laid it on top of another basket that brought $1.45 and said to surrounding farmers: "Now I'll tell you the difference." Mr. Hance said nothing, his way of indicating the two were of comparable quality.

He estimated the opening-day average price would be about $1.40 a pound if sales that were rejected were figured into the equation. During last year's auction, when there were many fewer bid rejections, the average price was $1.87 a pound.

"It's hard to draw any conclusions at this early stage," Mr. McKee said. "Baskets that might have brought $1.80 or $1.85 last year are bringing $1.50 or $1.55."

Mr. Hance and Mr. McKee said the absence of buyers representing Italy's cigarette industry this year might have been a factor in the erratic market. They noted that the Italians bought nearly one-third of last year's 9 million-pound crop.

Foreign buyers, including the Germans and the Swiss, traditionally pay the highest prices.

Last year, about half of Maryland's harvest went to the export market.

Disappointed farmers soon began fighting back the only way they could. They protested the buyers' prices by folding the ticket held by a wooden spoke on the top of each basket or tearing off a corner of the tag.

Tickets were folded on about 25 percent of the baskets sold in the first row of baskets. "Prices are a lot lower than last year," said Joseph Adam, 73, who had hoped for a dime-a-pound increase in prices this year.

Growers folded the tickets on 38 of the first 50 baskets sold in the second row.

The strategy seemed to be paying off as the opening day sale shifted to the Marlboro Tobacco Market Inc. warehouse nearby. "Prices are leveling out," Mr. Hance said. "The average price seems to be up a quarter over what they were" at the Planter's Warehouse sale, he said.

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