Tobacco sold off amid concern about new threat

MD. 'LEAF' GOES ON THE BLOCK

March 17, 1993|By Ted Shelsby | Ted Shelsby,Staff Writer

UPPER MARLBORO -- The annual Southern Maryland tobacco auction opened here yesterday amid concern that the industry is coming under a new threat overseas.

"The big threat to Maryland is the growing popularity of American brands overseas, like Marlboro," said Earl F. "Buddy" Hance, chairman of the State Tobacco Authority, minutes before the selling started at Marlboro Tobacco Market Inc. warehouse. The authority is a private group charged with promoting Maryland tobacco.

He explained that European brands have traditionally used a high percentage of Maryland leaf (between 30 percent and 50 percent) in their tobacco blends to produce a "stronger tasting cigarette [but] have been falling out of favor" in recent years.

If this trend continued, it would not bode well for Maryland's 350-year-old tobacco industry.

In past years, foreign tobacco companies, including those in Germany, Switzerland, Italy and Luxembourg, have purchased between 75 percent and 90 percent of Maryland's tobacco crop and traditionally have paid top price.

Mr. Hance fears that the popularity of American brands, which use only between 1 percent and 2 percent of Maryland Type-32 leaf, primarily to make cigarettes burn more evenly, will reduce the demand and, thus, the price of state tobacco.

There was some concern, at least for a period of time, that this was exactly what was happening yesterday.

When the auction began, foreign buyers were paying between $1.85 and $1.90 a pound, initiating chants of "OK," and "yea man," from the dozens of growers who followed behind buyers making their way down the long rows of baskets, piled 4 feet high with reddish-brown leaf.

But their smiles turned to frowns an hour later when prices fell and winning bids were closer to $1.40 to $1.60 a pound.

"It looks like one of the big foreign buyers doesn't want to pay very much, and it seems like he's pulling everyone down with him," said Mr. Hance. "What you would hope is that the others would pull him up with them, but he's pulling them down."

"It doesn't pay to grow it at these prices," grumbled John J. Rice, a 72-year-old sharecropper from Huntingtown who says he has been growing tobacco as long as he can remember.

Mr. Rice wasn't sure he would be planting his usual 2 acres in Calvert County this year. "It's too much work for a little bit of money. That's what I don't like about it."

Growers complained about price, but there were no signs of them rejecting the bids by tearing or folding the sales ticket placed on the top of each basket.

"I guess they think prices are not going to get any better," reasoned Mr. Hance.

The average opening day price at the Marlboro Tobacco Market sale was "about $1.75," said Robert E. Lee, an official with the warehouse. This compared with an average opening day price of $1.77 last year, when the season average was $1.62, down from $1.87 in 1991.

But to the joy of Mr. Rice and others who braved the chilly temperatures in the unheated warehouses, prices took a turn for the better when the selling shifted to another warehouse in Wayson's Corner after lunch.

"I don't know why, but the market changed a little bit in the afternoon," said Claude G. McKee, head of the University of Maryland's tobacco experimental farm near here, and the man commonly referred to as "Mr. Tobacco" because of his knowledge of the industry.

Following a brief delay to the start of the sale at Wayson's Corner, the bidding price for top grade leaf suddenly jumped to $1.95 a pound, the highest price ever paid by a buyer, according to Mr. McKee.

Mr. McKee said he was not certain why the price for top quality leaf rose, but he said the speculation was that new orders came to a broker representing an overseas buyer.

To increase the demand for Maryland leaf and boost the price farmers receive for their harvest, Mr. Hance said, the state authority was looking to new markets, including Japan, Israel, France, South Korea and Taiwan.

He said farmers have about 10.2 million pounds ready for this year's auction, which continues through April 8.

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