Rules and regulations in effect in the local tobacco market determine 

 flexibility of the sale system. In most cases the system is fairly 

 rigid, and the individual warehouse must abide by directives allocating 

 time and rate of sales. This constitutes a sales quota, and quantity 

 handled by the cooperative facility must be directed toward the maximum 

 allowance of the allotment. Volume marketed determines the efficiency 

 with which warehouse facilities and equipment are utilized and the 

 amount of cost assigned per unit of sale tobacco. 



Patrons pay a flat rate based on weight when their tobacco is auctioned. 

 In addition, they also pay a commission representing a proportion of the 

 sale value of the crop. 



Thus, the general quality of offerings during the season has a sub- 

 stantial influence on the average charge obtained per hundredweight 

 auctioned through the organization. 



Most associations have concentrated on obtaining quantity. The importance 

 of delivering quality tobacco for sale has not been stressed to the same 

 extent. By attempting to obtain a better balance between quantity and 

 quality, some organizations may find a means of enhancing their financial 

 position. Such a program might include changes in operating practices 

 designed to reward the grower marketing higher quality tobacco. 



In addition to directly benefiting the association by increasing com- 

 missions earned per sale lot, upgrading the quality of offerings on 

 the auction floor also affords side benefits. Among these are encourage- 

 ment of buyer interest and strengthening of the cooperative's reputation 

 among patrons by means of increased sale prices received. Both foster 

 continued and growing patronage. 



A secondary problem which has confronted many of the cooperatives is 

 that of obtaining sufficient finances, both for capital acquisition 

 and for operating purposes. At the outset each organization should 

 develop a financial plan which provides for (1) organizational expenses, 

 (2) investment in permanent facilities, (3) operating expenses, and 

 (4) reserve requirements. 



IV 



