'Terrible Day' For Tobacco

March 09, 1994|By Ian Johnson | Ian Johnson,Sun Staff Writer

WAYSON CORNER — WAYSONS CORNER -- Martin Zehner picked up the card that carried the tobacco company's offer for his harvest. He took a hard look, then carefully folded the card in half and stuck it back in the 235-pound stack of tobacco.

"It's too little," Mr. Zehner said. "You can't break even with what they're offering."

So it went yesterday on the first day of the annual Maryland tobacco auction. The threat of higher cigarette taxes and bad weather combined to drive down tobacco prices dramatically, making yesterday one of the worst opening days in recent memory.

"It's not good at all. The price is really low," said Claude G. McKee, head of the University of Maryland's tobacco experimental farm. "You're looking at a terrible day."

Stuck on top of rows of tobacco like flags of defiance, the folded cards signified the farmers' mass rejection of the tobacco companies' prices. More importantly, however, they were another signal that Maryland's tobacco industry seems stuck in long-term decline.

The dominant industry in the state's southern counties only 30 years ago, tobacco is in danger of becoming a relic of the state's past. Discouraged from growing tobacco because of low prices and tempted by hefty prices for their land, farmers have been forced out of tobacco in droves. Fewer than 1,000 families grow tobacco and the land they cultivate has shrunk to 9,000 acres this year from 27,000 acres in 1983.

Maryland tobacco growers have been just able to make ends meet. But last year's dry weather made the reddish-brown leaves that were offered yesterday a tad too greenish-yellow for many buyers.

Walking down narrow aisles between three-foot stacks of carefully bundled tobacco leaves, foreign and domestic bidders made offers for each stack. The auction staff followed behind, scribbling the bid price on small note cards that they stuck in each pile with a stake.

But only a few minutes after the first bids were written down at the auction warehouse in Waysons Corner in southern Anne Arundel County, growers began tearing or folding the note cards in half.

Half an hour into the auction, which was supposed to see 157,000 pounds of tobacco sold, the auction staff was faced with an unprecedented situation: Farmers were so upset with the prices that they had not only folded the cards with the bids but also the blank cards -- in essence telling the tobacco companies not to bother bidding if their offers were so low.

After that burst of defiance, the companies and the auction staff huddled and started to make bids again. By midmorning, they had given up. Only a few hundred pounds of the tobacco was sold and the warehouse emptied slowly, with some farmers lingering by their bales, asking each other how they had come to these straits.

Lawrence Hall, a grower from St. Leonard in Calvert County, blamed the dry weather. He was able to take home $1.40 a pound last year -- after paying the auction staff, warehouse fees and transportation costs. At current prices, he will be lucky to clear $1 a pound, he said.

"My great-grandfather planted tobacco in 1818 and my family has been growing tobacco since then. But now, it's hard to see continuing," Mr. Hall said.

Yesterday's auction took place at three sites. The first, in Waysons Corner, was a shock for the farmers and little was sold, but the sales in Upper Marlboro and Waldorf were hardly better. More sales were made at the latter two sites because many farmers resigned themselves to the low prices.

The farmers who folded their cards face a hard choice: Go through the bidding as the auction continues later this week and take what probably still will be a low bid, or store the leaves for a year and hope that next year will be better.

Tobacco leaves age well, but few people think the prices will rise significantly next year. Proposed taxes in Maryland and federal taxes to pay for health care reform could add $1 a pack to the price of cigarettes, pushing the tobacco companies to squeeze the farmers further and to look abroad for cheaper tobacco.

Anger at the new taxes has led the farmers to organize a march and rally today in Washington.

Maryland tobacco has been relatively isolated from domestic campaigns against tobacco, because it exports about a third of its crop, said Mr. McKee of the University of Maryland.

But now, foreign buyers are increasingly turning to similar but cheaper tobacco from Mozambique and other Third World countries.

Last year the top price paid for high-quality tobacco was $1.95 a pound, but yesterday the highest price was $1.80. Dozens of bales of medium-quality tobacco were being sold for $1.40 a pound.

Preliminary figures show the average price yesterday was less than $1.60 a pound, vs. $1.75 a pound last year and opening day prices of $1.77 in 1992.

Bud Truluck, who works for the auction staff, said the farmers' decision to reject the bids in such a unified fashion was unprecedented in the 30 years that he has auctioned tobacco.

"The farmers are being pushed over the edge," he said. "They're between a rock and a hard place."

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