38 



Patron Charges and Benefits 



A standard procedure was used in each local market to compute charges 

 to warehouse patrons for the sale of their tobacco. All auction ware- 

 houses charged an auction fee plus a commission on gross sale receipts. 

 The auction fee was usually based on the weight of the tobacco furnished 

 by the patron for sale. The commission on gross sale receipts was a 

 percentage of the amount offered by the buyer for the patrons' tobacco. 

 In addition, warehouses in some markets set a minimum charge. In other 

 markets a weighing and handling fee was charged. All charges were de- 

 ducted before patrons received payment for their tobacco. 



The annual savings earned by a typical tobacco auction warehouse coop- 

 erative was allocated by the board of directors in the following order 

 and manner: (1) Establishment of reserves or surpluses necessary for 

 the maintenance or expansion of the business; (2) payment of dividends 

 on outstanding preferred stock shares; (3) payment of a reasonable 

 return on common stock shares, when declared by the board, but not to 

 exceed a specified level; (4) allocations to patrons in proportion to 

 amounts of tobacco or other commodities marketed or supplies purchased 

 for patrons. 



Patronage allocations were normally distributed and paid as cash, as 

 shares of common or preferred stock, or as credits on common or pre- 

 ferred stock shares, such as ad interim certificates representing 

 fractional shares. For non-member patrons eligible for association 

 membership, patronage allocations were usually applied first to the 

 payment of the purchase price of at least one share of common stock. 

 At the discretion of the board of directors, provision was often made 

 for applying patronage allocations or returns on capital stock to pay 

 any indebtedness of the patron to the association. 



Other Activities 



Tobacco marketing constituted the major activity of all associations. 

 Sale of tobacco comprised over 99 percent of the annual dollar volume 

 of business done by tobacco auction warehouse associations during the 

 5=year period, 1958 to 1962. Some associations also marketed small 

 amounts of other locally produced products during certain years. These 

 products included sweetpotatoes, pecans, wool, and hay. 



A few cooperatives offered other services. These activities included 

 operating redrying facilities and storage warehouses and selling hail 

 insurance. 



One association purchased supplies for its members. This association 

 handled a dark type of tobacco which has been in less demand during 

 recent years. As its grower -members shifted to the production of other 

 types of tobacco or to the production of other agricultural commodities, 

 the association has attempted to enlarge its purchasing activities to 

 offset its declining role in the sale of tobacco. 



