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



dustry. That such stabilization can best be brought about by the 

 establishment of strong cooperative marketing associations has been 

 demonstrated by the experiences described. 



It is the purpose of this section to set forth the essential features 

 of a cooperative marketing organization for tobacco which, it is 

 believed, can be operated for the benefit of the growers and the busi- 

 ness interests whose prosperity is dependent in a large part upon the 

 purchasing power of these growers, and which can be operated in a 

 manner that will be equitable to the manufacturing companies and 

 the tobacco industry in general. 



Such an organization must be based on an agreement or contract 

 between the association and the manufacturers. The details of the 

 contract need not be specified here, but it might include the following 

 general provisions or similar provisions : 



(1) The growers' cooperative tobacco association and the tobacco manufac- 

 turers, through duly authorized committees representing all parties concerned, 

 would enter into negotiations with regard to prices to be paid for the various 

 types of tobacco handled by the association and to price differentials applicable 

 to the various grades. It probably would be advisable that the United States 

 Department of Agriculture (with the assistance and cooperation of the growers' 

 cooperative marketing association, manufacturers, and dealers, and of State 

 and Federal agencies) assemble and compile statistics and other information 

 regarding tobacco production, culture, cost of production, shifts or trends in 

 production or types, prices, grades, consumption and marketing, and regarding 

 such other phases of tobacco production and marketing as may be helpful in as- 

 sisting the association and the tobacco manufacturers in arriving at reasonable 

 and justified prices for each grade. Such prices would apply to all tobacco of the 

 types and grades specified which are produced by members of the association 

 during the current crop year; and sold by the association within 12 months of 

 the acceptance of such prices by all parties ; or until such prices are changed or 

 set aside by agreement at a subsequent conference. 



(2) Prices and differentials so agreed upon would be for tobacco in green 

 order, sorted in specified lots or grades, f. o. b. at the various receiving plants 

 of the association, or at some specified central point. 



(3) In the event that the association and the manufacturers are unable to 

 agree upon prices or price differentials, they would submit their dispute to a 

 board of arbitrators whose decision should be final and binding upon both 

 parties. 



(4) Disputes regarding the grade, quality, or condition of any lot of tobacco 

 sold under the terms of the contract might be submitted for settlement to 

 licensed Federal tobacco graders, inspectors, or supervisors. 



(5) For all warehousing, redrying. prizing, handling, and transportation of 

 tobacco performed by the association an agreed amount per pound would be 

 added to the price paid by the manufacturing companies. Such differentials 

 would take into consideration the costs of performing such additional services, 

 including shrinkage and loss during redrying or other operations, and all other 

 normal and unavoidable losses and costs. 



(6) The association would agree to sell and deliver to the manufacturing 

 companies, under the terms and at the prices agreed upon by conference or 

 specified in the contract, all tobacco of the types and grades desired by these 

 companies which has been delivered to it by its members ; provided that if 

 all such tobacco is not sold or disposed of within one year, or prior to the 

 conclusion of a conference called to negotiate regarding the price of tobacco 

 grown during the succeeding crop year, then the price schedule for the new 

 crop would also apply to all old-crop tobacco in the possession of the 

 association. 



The manufacturing companies, in turn, would agree to purchase from the 

 association, at prices and terms agreed upon, all tobacco of the types and grades 

 required by them for manufacture offered for sale by the association, and to 

 make such purchases exclusively from the association as long as tobacco offered 

 for sale by the association is of the variety, type, and grade that meets their 

 needs. 



