27 



Type of Market Sales 



Total sale volume handled in a local market consists of first sale and 

 resale tobacco. First sale tobacco, as the name implies, is purchased 

 the first time it is offered for sale on the auction warehouse floor. 

 It is processed (redried and packed into hogsheads) , stored for aging, 

 and ultimately moves into manufacturing channels. Resale tobacco, on 

 the other hand, is that on which bids have been rejected by farmers 

 during a first sale or that which has been purchased by warehousemen 

 or speculators to resell. It is reoffered at a later sale. 



Volume Handled by Local Markets 



For the 1961-62 marketing season, total sales for the local markets in 

 which cooperative warehouses operate ranged from less than 2.5 million 

 founds to over 75 million pounds of tobacco, with the majority of 

 markets handling less than 10 million pounds. First sale tobacco com- 

 prised over 90 percent of total sales on all markets and over 95 per- 

 cent on most. 



Floor sweepings and pick-up tobacco are included in the total sales 

 volume (first sales plus second sales) handled on a market, since 

 almost all of it is displaced from baskets after they have been weighed, 

 either through movement on and off the auction floor or during buyer 

 inspection as the auction sale proceeds. 



The cost of this type of tobacco is borne by buyers twice -- once when 

 they pay for baskets on which it was originally placed and again when 

 they buy the pick-up tobacco itself. Revenue derived from the sale of 

 this type of tobacco accrues to the warehouse organization. Any margin 

 obtained may be reduced considerably, however, if buyers have to be 

 reimbursed for a substantial number of baskets whose loss in weight 

 exceeds the tolerance that has been agreed upon between the warehouse 

 and the purchasing firms. 



Resales on burley markets ranged from 1 to 10 percent of total sales 

 during the 1961-62 marketing season. 'On 80 percent of these markets, 

 however, 5 percent or less of the sales volume was resale tobacco. 



Resales on flue-cured markets are generally greater than on those 

 handling other types of tobacco. This is due to the relatively fast 

 pace of the auction sale which increases the number of bid rejections 

 by growers and leads to greater purchase activity by speculators and 

 warehouse operators. Warehouse operators usually set up a warehouse 

 leaf account to control the purchase and sale of this type of tobacco. 

 Two of the three flue-cured markets with cooperative warehouses han- 

 dled a volume composed of some 7 percent resales during the 1961-62 

 marketing season. The other flue-cured market handled slightly more 

 than 5 percent resales . 



