Highlights 



This report examines organizational and operational features of co- 

 operatives operating looseleaf tobacco auction warehouses. Infor- 

 mation from 15 cooperatives located in Kentucky, North Carolina, 

 Tennessee, and Virginia is included. 



Twelve of the associations are local cooperatives, operating one or 

 more warehouses in a single local market. The three remaining associ- 

 ations, classified as central cooperatives, operate warehouses in two 

 or more local markets and have a headquarters to coordinate and control 

 administrative and operating functions. Together, their total member- 

 ship included over 50,000 tobacco growers. 



During the period, 1952-53 to 1961-62, patrons furnished a seasonal 

 average of some 83 million pounds of tobacco for sale through these 

 cooperative facilities. This volume represented over 20 percent of 

 that handled by the local markets in which cooperatives operate ware- 

 houses and had a sale value exceeding $44 million. 



The associations were organized to market tobacco through grower- 

 controlled auction warehouses. This remains their primary purpose 

 and results in 99 percent of the dollar volume of business handled 

 annually. 



Some cooperatives also market small amounts of other locally-produced 

 commodities and a few engage in service activities such as operating 

 redrying and storage facilities. Only one association purchases 

 supplies for its membership. 



Each local tobacco market has regulations providing standard sale 

 charges that must be deducted by all auction warehouses operating in 

 the market. Savings earned during the marketing season by the co- 

 operative warehouse can, after necessary deductions, be returned to 

 patrons on the basis of proportion of business furnished. This, in 

 effect, reduces the established sale charge which growers must pay 

 when selling their tobacco. Savings which would be earned and returned 

 to patrons was the major factor responsible for organizing most associ- 

 ations . 



Cooperatives were also organized to acquire facilities in order to 

 help maintain or improve the position of the tobacco grower in influ- 

 encing local market policy and procedure. In some markets, co- 

 operatives were instrumental in stabilizing sale charges when a 

 movement was underway to increase the amount of commission charged. 

 In other cases, cooperatives adopted practices to develop improved 

 marketing conditions for the resale of tobacco. 



Since establishment, the major problem with which cooperatives must 

 contend is that of obtaining an adequate quantity and quality of tobacco, 

 They attempt to acquire patronage necessary to furnish quantities of 

 tobacco which utilize to capacity the sale allocations made to associ- 

 ation-operated warehouses. Promotional activity and personal contact 

 attract the business of potential patrons. 



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