12 CIKCULAR 10 0, 17. S. DEPARTMENT OF AGRICULTURE 



to stay off the market makes the auction-floor system of marketing 

 tobacco essentially a buyer's market. This point is extremely impor- 

 tant when regarded in relation to the success of cooperative market- 

 ing of tobacco. The average tobacco grower has little or no knowl- 

 edge as to market conditions or as to what would be a reasonable 

 price for his crop of tobacco, because little market information in 

 regard to tobacco is available. 



Looked at from all angles, the auction-floor system of marketing 

 tobacco is far from satisfactory and is almost entirely in the favor 

 of the large companies. The lack of a uniform system of grading 

 tobacco operates to the disadvantage of both buyer and seller, but 

 particularly to the disadvantage of the small grower, whose market- 

 ing position is weak. 6 



During the 1920 and 1921 marketing seasons the prices offered by 

 the tobacco companies on the auction floors were, in the opinion of 

 the farmers, unreasonably low. The buyers of the large tobacco 

 companies were held responsible for the low prices. In certain sec- 

 tions of the tri-State area, the producers refused to sell at the prices 

 offered and even threatened violence to the buyers and the destruc- 

 tion of warehouses. Indignation meetings were held, and there was 

 a general demand for relief from existing conditions. Reports of 

 the successful cooperative marketing of other farm products in other 

 parts of the country were circulated, and this method of marketing 

 tobacco was advocated as a remedy for the low prices then prevail- 

 ing. Since the growers attributed the low prices to the auction-floor 

 method of selling and to the control of the market by five or six large 

 manufacturing companies, they considered it necessary to change 

 the method of marketing and to control the marketing of tobacco by 

 the organization of producer-owned cooperative associations. 



DEVELOPMENTS DURING ORGANIZATION PERIOD AND MEMBER- 

 SHIP CAMPAIGN 



FORMATION OF ORGANIZATION COMMITTEE 



The first important step toward organizing in the tri-State area 

 was the appointment of a committee of leaders from the States of 

 Virginia, North Carolina, and South Carolina for the purpose of 

 studying the market situation and suggesting remedies for the exist- 

 ing unsatisfactory conditions. This committee met at Raleigh, N. C, 

 in November, 1920, and decided to form a temporary organization to 

 attempt to curtail the production the following year. The committee 

 believed that this measure would bring only temporary relief, and 



6 Market inspection and grading of tobacco previous to sale has been conducted experi- 

 mentally for two years, 1927 and 1928, at the Lynchburg, Va., market by the Virginia 

 State Department of Agriculture and the United States Bureau of Agricultural Economics 

 cooperatively. As the result of requests, this service will be extended to at least two 

 other markets in Virginia in 1929, and its extension into other States is being considered. 

 Under the market inspection and grading procedure, tobacco delivered to an auction-floor 

 warehouse for sale is examined by a grader licensed by the United States Department of 

 Agriculture to grade tobacco on the basis of United States standardized grades. The sales 

 ticket is marked to show the grade, and this grade is announced by the warehouseman or 

 auctioneer when the tobacco is offered for sale. The average prices by grades are posted 

 at the close of each week. During the first two years of the experiment a farmer's tobacco 

 was graded only at his request. The inspection and grading has met with such interest 

 and approval of the Lynchburg tobacco growers and dealers that the local tobacco board 

 of trade on May 6, 1929, went on record as favoring the policy of grading all tobacco 

 received at its market except when farmers specifically request otherwise. 



