92 CIRCULAR 10 0, U. S. DEPARTMENT OF AGRICULTURE 



money; and (4) by aiding the farmer to produce a better quality of 

 tobacco or a type better suited to meet the market demand, or by 

 aiding him to produce tobacco at a lower cost. 



It is the purpose now to analyze the price and sales policies of 

 the Tobacco Growers' Cooperative Association in order to ascertain 

 to what extent it succeeded in performing any or all of the above 

 services. 



There is no record or information available that the organizers of 

 the Tobacco Growers' Cooperative Association ever formulated any 

 detailed sales policy. They had in mind certain broad general prin- 

 ciples, but probably never prepared any definite method of procedure. 

 All were agreed that one of the association's main objects was to 

 avoid the annual dumping of tobacco in the market during a short 

 marketing season. If the association controlled a large portion of 

 the annual production, its officials believed that they would then be 

 in a strong position to bargain with the large tobacco companies. It 

 was hoped that ultimately all middlemen and leaf dealers would be 

 displaced and that the association would thus be able to deal directly 

 with both domestic and foreign companies. In other words, the 

 association's objective was eventually to effect a radical change in 

 which the auction-floor system of marketing was to be displaced. 



It was felt that the success of the association was absolutely 

 dependent upon the association's obtaining control over an appre- 

 ciable portion of the annual tobacco crop. But another factor of 

 prime importance had to be taken into account — the opposition that 

 such a policy would provoke. It was inevitable that neither the rep- 

 resentatives of the tobacco manufacturers nor the independent leaf 

 dealers would submit without protest to this movement, which, if 

 successful, would eventually deprive them of their business. 



It would appear that the sales committee of the association, in plac- 

 ing minimum sales prices upon the different grades of green tobacco, 

 was largely guided by the schedules of prices prepared by the bankers' 

 valuation committee. It was understood, from the former general 

 manager of the bright-leaf department, that the reserve prices placed 

 upon green tobacco were based upon the bankers' valuation prices, 

 plus a proportionate amount of the estimated cost of operation per 

 pound. TThenever conditions justified such action, green tobacco 

 was sold for prices in excess of this reserve price, but never below. 

 All tobacco that could not be sold at the green reserve price within 

 a few days after delivery was immediately consigned to a redrying 

 plant. Attention is again called to the fact that tobacco in the green 

 state is subject to rapid deterioration unless it is frequently turned to 

 prevent overheating. Only a few days, therefore, were available for 

 selling tobacco in the green state after is was delivered. 



The officials in charge of the various association warehouses were 

 required to advise the leaf department daily of the quantity of each 

 grade of tobacco delivered by members. This department was thus 

 at all times in possession of accurate information as to the volume of 

 each grade of tobacco available at the different receiving points with- 

 in each pooling area. The selling force of the leaf department kept 

 in constant touch with the buying departments of the different to- 

 bacco companies and leaf dealers, and sales were negotiated whenever 

 a satisfactory price could be arranged. 



