'165123 PROPOSED MODIFICATION OF TOBACCO .Q,\

GOVERNMENT 

MARKETING PRACTICES

StorageKSU LIBRARIES 

HEARING

BEFORE THE

SUBCOMMITTEE ON TOBACCO

OF THE

COMMITTEE ON AGRICULTURE

HOUSE OF REPRESENTATIVES

EIGHTY-SEVENTH CONGRESS

4144p FIRST SESSION

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75192 WASHINGTON : 1961

"5*,
COMMITTEE ON AGRICULTURE

HAROLD D. COOLEY, North Carolina, Chairman

W. R. POAGE, Texas, Vice Chairman

GEORGE GRANT, Alabama

E. C. GATHINGS, Arkansas

JOHN L. McMILLAN, South Carolina

THOMAS G. ABERNETHY, Mississippi

CARL ALBERT, Oklahoma

WATKINS M. ABBITT, Virginia

CLARK W. THOMPSON, Texas

PAUL C. JONES, Missouri

HARLAN HAGEN, California

LESTER R. JOHNSON, Wisconsin

ROSS BASS, Tennessee

W. PAT JENNINGS, Virginia

D. R. (BILLY) MATTHEWS, Florida

MERWIN COAD, Iowa

I. FLOYD BREEDING, Kansas

FRANK A. STUBBLEFIELD, Kentucky

HAROLD B. McSWEEN, Louisiana

DANIEL K. INOUYE, Hawaii

RALPH R. HARDING, Idaho

CHARLES B. HOEVEN, Iowa

PAUL B. DAGUE, Pennsylvania

PAGE BELCHER, Oklahoma

CLIFFORD G. McINTIRE, Maine

CHARLES M. TEAGUE, California

ALBERT H. QUIE, Minnesota

DON L. SHORT, North Dakota

CATHERINE MAY, Washington

DELBERT L. LATTA, Ohio

RALPH HARVEY, Indiana

PAUL FINDLEY, Illinois

ROBERT DOLE, Kansas

RALPH F. BEERMANN, Nebraska

BEN REIFEL, South Dakota

RESIDENT COMMISSIONER

A. FERN6S-ISERN, Puerto Rico

MTS. CHRISTINE S. GALLAGHER, Clerk

HYDE H. MURRAY, Assistant Clerk

JOHN J. HEIMBURGER, Counsel

FRANCIS M. LEMAY, Staff Consultant

SUBCOMMITTEE ON TOBACCO

WATKINS M. ABBITT, Virginia, Chairman

JOHN L. McMILLAN, South Carolina

ROSS BASS, Tennessee

W. PAT JENNINGS, Virginia

D. R. (BILLY) MATTHEWS, Florida

FRANK A. STUBBLEFIELD, Kentucky

PAUL B. DAGUE, Pennsylvania

DON L. SHORT, North Dakota

DELBERT L. LATTA, Ohio

PAUL FINDLEY, Illinois

•
CONTENTS

Statement of:

Allen, T. W., chairman, North Carolina State Grange Tobacco Page Committee 22 Ford, W. Jesse, Lakeview, S.0 34 Godfrey, Horace D. Administrator, Commodity Stabilization Service; accompanied by Charles W. Bucy, Office of General Counsel; Stephen E. Wrather, Agricultural Marketing Branch; and Sylvester R. Smith, AMS, U.S. Department of Agriculture 2

Hicks, Carl T. president, Flue-Cured Stabilization Corp 20 Mangum, B. d., president, North Carolina Farm Bureau Federation 19 Royster, F. S., managing director, Bright Belt Warehouse Association,

Inc 14 Terry, W. Nat, president, Danville, Va., Tobacco Association 23 Communications submitted to the subcommittee:

Allen, Louis C., Jr., Allen dr Allen, letter of May 19, 1961 12 Bailey, Herbert G., Jr., Bank of Greensboro, letter of May 22, 1961 _ 11 Cooper, Hon. John Sherman, a U.S. Senator from the State of Ken- tucky, letter of August 16, 1961 10 Floyd, E. Y., director, Plant Food Institute of North Carolina and Virginia, etter of August 14, 1961 38 Hall, Claude, 

Inc.,

Roxboro, N.C., telegram of August 15, 1961 39 Mebane Tobacco Market and Mebane Merchants Association, telegram 11 Menzel, James H.

'

Mebane Merchants Association, and Joe W. Dillard, Mebane Tobacco Market, letter of August 3, 1961 11 Shaw, James C. assistant vice president, Durham Bank Sr Trust Co., telegram of Aligust 7, 1961 14 Spence, Hon. Brent, and Representatives Frank Chelf, Carl D. Perkins, John C. Watts, William H. Natcher, Frank W. Burke, Frank A. Stubblefield, and Eugene Siler, Members of Congress, letter of August 4, 1961 9

Walton, V. D., secretary-treasurer, Greensboro Tobacco Board of Trade, letter of May 19, 1961 12 U.S. Department of Agriculture press releases announcing hearings for more tobacco services:

May 16, 1961 37 July 3, 1961 38
_ -
PROPOSED MODIFICATION OF TOBACCO

MARKETING PRACTICES

WEDNESDAY, AUGUST 16, 1961

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON TOBACCO OF THE

COMMITTEE ON AGRICULTURE,

Washington, D .0 .

The subcommittee met, pursuant to notice, at 10:15 a.m., in room

1310, New House Office Building, Hon. Watkins M. Abbitt (chairman

of the subcommittee) presiding.

Present, Representatives Abbitt, Cooley, McMillan, Bass, Jennings,

Matthews, Stubblefield, Dague, Short, and Findley.

Also present: Representatives Fountain, Henderson, Kornegay,

Bonner, Lennon, and Whitener.

Christine S. Gallagher, clerk and John Heimburger, counsel.

Mr. ABBITT. The Subcommittee on Tobacco will please come to

order.

We have called this meeting for the purpose of discussing the proposed changes in relation to the assignment of graders. I have, and

I am sure that the other members of the committee, as well as other

Members of the Congress, from the tobacco-producing areas, have

heard from a number of their constituents concerning certain suggested changes.

As I understand it, the Department has set up rules and regulations

regarding the assignment of graders.

I further understand that certain groups have requested changes in

the regulations, and that the Department is now considering whether

or not to make those changes.

Of course, this subcommittee, and other Members of the Congress,

representing the tobacco-producing areas, are interested in these regulations and in the proposed changes.

In an endeavor to bring the matter to a head and to understand

what is proposed, and with the thought in mind, probably that we

want to convey to the officials in the Department our feelings about

the matter, we have set this meeting, which will be more or less informal. We have asked the officials of the Department to meet with

us today. We welcome them and always welcome anybody else who

is interested in the matter under discussion by the subcommittee.

I know that the chairman of the full committee has been very much

interested in the subject. We would like to have a statement from

him before we hear from those in the audience.

Mr. COOLEY. Thank you. I do not desire to make a statement. I

would like to suggest to the chairman that he call on Mr. Royster,

who is well known to the members of the committee, to give us a state1
2 TOBACCO MARKETING PRACTICES

ment in regard to the proposed change. Mr. Royster has in the past

given us very valuable information. He could tell us what the effect

will be if the proposed change is made. Mr. Royster is the head of

what we call the industrywide tobacco committee. We could have

Mr. Royster first or Mr. Godfrey.

Mr. ABBITT. Thank you for your suggestion. I had in mind that

Mr. Godfrey might give us the background of this subject. I would

prefer that Mr. Godfrey just briefly give us the background, and

then we can hear from Mr. Royster.

We are always pleased to have you here, as you know. We will be

glad to hear from you at this time.

STATEMENT OF HORACE D. GODFREY, ADMINISTRATOR, COMMODITY STABILIZATION SERVICE, ACCOMPANIED BY CHARLES

W. BUCY, OFFICE OF GENERAL COUNSEL, STEPHEN E. WRATHER,

AGRICULTURAL MARKETING BRANCH; AND SYLVESTER R.

SMITH, AMS, U.S. DEPARTMENT OF AGRICULTURE

Mr. GODFREY. Mr. Chairman and members of the committee, I

would like to present Mr. Smith of the Agricultural Marketing Service, also Mr. Buoy, of the Office of the General Counsel, Mr. Wrather

from the Agricultural Marketing Service; Mr. Williams, Director

of the Tobacco Division, ASCS ; Mr. Fitzgerald, Deputy Administrator for Price and Production, ASCS ; and three other members

from the Tobacco Division.

Mr. ABBirr. We are glad to have all of you here.

Mr. COOLEY. You have enough people with you to run a rump sale.

[Laughter.]

Mr. GODFREY. We thought that we might have to.

Mr. ABBirr. If you would just briefly outline the setup, and the

purpose of adopting some of the proposed rule changes and regulations it might help, and tell us what has been requested of the Department. That information might be helpful.

Mr. GODFREY. Mr. Wrather is more familiar with the assignment

of tobacco graders than I am, because the assignment of graders comes

under the Agricultural Marketing Service.

Back in 1958 the Department established, by regulation, rules for

obtaining pregrading service on tobacco markets. Normally, the

number of buyers follows the number of graders that are allotted to

a particular market. That is under the Tobacco Inspection Act.

In this particular case the hearing was asked for by the WinstonSalem and Danville tobacco markets, requesting the allotment of

additional sets of tobacco graders. The hearings were scheduled

under the Department's regulations. At the outset of the hearings

the appellants appealed for a change in the regulation. The appeal

was made directly to the Secretary of Agriculture. The hearing

examiner suspended the hearings.

The Assistant Secretary for Foreign Agricultural Service, Mr. Duncan, heard the appellants for the Secretary, and convinced them to

resume the hearings before the decision was reached on their appeal

to change the rules.
TOBACCO MARKETING PRACTICES

The hearings were resumed on July 12 and 13 and were completed,

I believe, on July 14. In the meantime, the Department proceeded

with the normal procedure when a request for a change in rules is

made.

We issued a press release under date of July 20, stating that someone had proposed a change in the Department's regulations and that

we invited views from all interested parties. The final date for receiving those views was August 11.

The hearings were conducted in Danville and Winston-Salem and

reconvened on July 12 and 13, respectively. The transcript is now

being prepared. The Board assigned by the Secretary to review the

Comments made in the hearings has not yet reviewed this, because

all of the data has not yet been assembled.

The petition for change in the regulation will be decided by the

Secretary, based upon the comments submitted as the result of this

press release and publication in the Federal Register.

That is about where it stands at the present time, Mr. Chairman.

The Department has made no decision so far.

Mr. ABBrrr. No decision has been made by the Department?

Mr. GODFREY. That is true. The Board appointed by the Secretary

consists of Mr. Smith, AMS Mr. Cooper from the Budget Office for

the Department, and myself. That is the way I got into this, I

suppose.

Mr. ABBITT. There are three of you?

Mr. GODFREY. Yes. We will consider the results of the hearings now

under the regulation, not the petition to change the regulation—it is

a decision on the change.

Mr. COOLEY. Who are the appellants?

Mr. GODFREY. The appellants are the Warehouse Association, Winston-Salem, N.C., and the Tobacco Association, Inc., Danville, Va. I

believe they are listed as such.

Mr. COOLEY. They filed a petition for a change in the regulation?

Mr. GODFREY. They filed, first, for a hearing for an additional set

of graders, and when the hearing began they immediately filed a petition to change the regulations.

Mr. COOLEY. Under what authority did they file the petition?

Mr. GODFREY. Under the regulations.

Mr. COOLEY. What right did they have to file a petition?

Mr. GODFREY. Mr. Bucy will answer that for you.

Mr. BUOY. It would not have to be in any formal form, but under

the Administrative Procedures Act any affected citizen, of course, can

petition an administrative agency for an amendment of its rules, and

then the agency, if it is considering the matter, publishes a notice of

the proposed change in the regulation so that all interested members of

the public have an opportunity to submit data, views, and arguments

with respect to whether or not they feel the proposal is justified.

Mr. COOLEY. What was the change in substance that was requested?

Mr. BUOY. First of all, that we delete from the regulation a provision that—

The applicant market or sale will function as a bona fide auction sale and has

firm commitments from an adequate set of buyers that they will participate in

this sale if inspection and price-support services are provided.
4 TOBACCO MARKETING PRACTICES

And secondly, the definition of what constituted an adequate set of

buyers.

Presently, the regulations provide—

adequate set of buyers shall mean five or more buyers representing five or more

companies or buying organizations who could reasonably be expected to purchase at least two-thirds of the total U.S. production of the kind of tobacco for

which the additional services are requested.

Mr. COOLEY. The appellants are moving to strike out that requirement, is that it?

Mr. Buoy. That is right.

Mr. COOLEY. Or to modify it?

Mr. BUOY. Well, they propose to strike out that definition of an

adequate set of buyers, and to modify the provision about the requirement for proof of an adequate set of buyers participating in the sale.

Mr. COOLEY. Do you propose now to have a public hearing on that

proposition?

Mr. BUCY. The procedure there under that, Mr. Cooley, is that you

may obtain views, either written views, which has been done presently,

or you may provide for oral views. It is not a formal proceeding

where you have testimony under oath and cross-examination, and that

sort of thing.

Mr. COOLEY. We now have an opportunity to give you some oral

views on the proposition before you, do we not? I have not talked to

other Members of Congress, but I venture to say that every Member sitting on this rostrum—every Member of Congress representing an area

in which tobacco is grown—would not want to change the rule. What

do these petitioners allege will be the advantage to the tobacco market,

the growers, if this change is made?

Mr. BUM Well, they do not allege a particular advantage, except

the fact that they claim in their application that by their having another sale on their market it will better serve these producers who

would ordinarily market through that market.

Mr. COOLEY. It would start a lot of little markets 

Mr. BUOY. I am not a tobacco man.

Mr. COOLEY. There would be many markets with one set of buyers,

and the first thing you know, if you do this, the little markets that are

now serving the farmers of those areas will be gone.

Have any growers complained about the inadequacy of marketing

facilities?

Mr. BUM I presume that if any growers had complaints 

Mr. GODFREY. The growers would have an opportunity in the hearing, and had an opportunity in the hearing that was held on July 12

through 14 to express their views. I have not seen the results of the

hearing.

Mr. COOLEY. Where was the hearing held?

Mr. GODFREY. In Winston-Salem and Danville.

Mr. COOLEY. On July 12 through 14?

Mr. GODFREY. Yes.

Mr. COOLEY. When was the press release issued?

Mr. BUOY. You mean on the change of the rules.

Mr. COOLEY. Yes.

Mr. Buoy. A notice for the change of the regulation, for the proposed change, was published on July 20.
TOBACCO MARKETING PRACTICES 5

Mr. COOLEY. And the hearing was held on July 12 to 14.

Mr. BUM They had a hearing. It was adjourned and later reconvened.

Mr. COOLEY. When did they reconvene?

Mr. BITCY. I do not have that date readily available. July 12, 13,

and 14.

These are two different proceedings, Mr. Cooley. One of them is

what is known as an adjudicatory proceeding to decide whether these

people can establish the need for extra inspectors on an extra sale. The

other is a rulemaking proceeding. The July 20 notice was for an

informal rulemaking proceeding to determine whether there was a

demand in the industry or a factual basis for changing the rule.

Mr. CooLEY. Well now, you made a very pertinent statement, that

is, what has been alleged in the petition—what was in the petition—

who is it by?

Mr. Buoy. For the change of rule?

Mr. COOLEY. That is right.

Mr. RUM These people allege that 

Mr. LENNON. What people?

Mr. BUM These two warehouse groups that Mr. Godfrey referred

to, who are applicants for an additional set of buyers, for an additional sale on their markets. They are petitioning, or they said that

it should be changed, because they felt it was impossible for them to

obtain written commitments from an adequate set of buyers, or to

get buyer representation to the hearing who would indicate that they

would be at and would participate in the additional sale; and, therefore, the rules ought to be changed.

My understanding is that prior to this rule, when it was changed,

then the Department had to go out and investigate the prospects a

an adequate set of buyers, because you could not have an auction unless you had an adequate set of buyers.

Mr. BASS. For example, if one of the sales barns in Tennessee petitioned to change the rules, you would have to go through all of this

procedure every time you were petitioned, or every time anyone

wanted to change the rules, would you not?

Mr. BUM No, we do not go through this on every petition for a

change of rules.

Mr. BASS. Why all of the furor because a couple of warehouses petition you? What percentage of the total number of markets in the

United States does it consist of?

Mr. RUM I imagine a very small percentage.

Mr. BASS. It would be about one hundredth of one hundredth of 1

percent, would it not?

Mr. Buoy. That is right.

Mr. BASS. It seems to me that for this small segment of the market,

of the industry to petition for a change in the rule, that would affect

an industry that is as big as this is a little out of line for the Department to get so excited about.

Mr. Buoy. I would say, Mr. Bass, that the Department is not

excited about it. They merely wanted to get the views of the industry

to be sure as to what the industry view was under the present rule.

Mr. COOLEY. Let me interrupt there. Do you not think that these

men sitting here as Members of the Congress, represent the people of

75192-461-2
6 TOBACCO MARKETING PRACTICES

this industry? I doubt that if a man sitting here would approve of

this petition.

Mr. BUCY. I am sure that the Department always is glad to have the

views of this committee which is, certainly, thoroughly informed in

the area of agriculture.

Mr. COOLEY. I do not speak for all of them, but I know that in my

own district, if this change were made, we would have rump sales

popping up all over my district, enough to run a Member of Congress

crazy. If you break the rules down which were established several

years ago you would have them popping up in every crossroads,

corner and every filling station. They would open up and then get

in touch with you and ask you to send them inspectors. We must

have rules and regulations. I am not against any one petitioning, but

the thing that troubles me about it is that we as Members of the

Congress did not know anything about this until a short time ago.

The minute it came to our attention about a week ago I asked Mr.

Abbitt, chairman of the subcommittee, to call a meeting to give the

Members of Congress and the tobacco industry an opportunity to let

you know how we feel about changing these rules.

Of course, you are acting in your official capacity—we understand

that—but, at least, as Mr. Bass pointed out, this thing has been dignified to the point that there has been conducted some sort of hearing.

We want you to know that we also want to be heard.

Mr. BUCY. As I understand it, there will be no hearing. When

these rules were originally put in, Mr. Cooley, you will recall that the

Department people met with various segments of the industry and, in

fact, all segments of the industry, I believe, worked up these rules

with the very view of having an orderly handling of applications for

additional inspectors, and to prevent just an open mob scene of adding

inspectors at unwarranted cost.

When the notice of rulemaking was published, after that preliminary work, the submissions received were practically nothing, because of the fact that the entire industry had been consulted prior

to the issuance of the rules.

The purpose of the issuing of this notice was so that there would

be an opportunity for the industry to get on record concretely as to

what their position was with respect to the present rule and if their

position and the facts warranted it that the present rule was a proper

one, then there would not be any bother about additional questioning

of these provisions, we would have had the thing established of record

once and for all what the industry felt it needed and what it wanted

in this area.

Mr. ABBITT. How has the rule worked so far?

Mr. GODFREY. There have been five applicants prior to these two.

Of those five all were rejected.

Mr. ABBITT. The petition requesting a hearing was on the basis that

they could not get assurance of buyers.

Mr. GODFREY. That is the basis of their appeal for a change in the

rule—they stated that it was impossible for them to get assurance of

an adequate set of buyers to participate in the sale.

Mr. ABBITT. How many sales do they now have in Winston-Salem?

Mr. GODFREY. Four.
TOBACCO MARKETING PRACTICES 7

Mr. ABBITT. Do they have any trouble in getting adequate buyers

for those?

Mr. GODFREY. No.

Mr. ABBiTr. But they thought that they could not get assurance

from the companies that they would have adequate buyers?

Mr. GODFREY. That is right.

Mr. ABBrrr. What was the experience of the Department, that they

did not have adequate buyers before the adoption of the regulations?

Mr. GODFREY. Mr. Cooley has pointed to the experience that we

went through before we had this regulation. We had rump sales, as

I recall on the Kinston market and the Wendell market and one or

two others.

Mr. COOLEY. And the Smithfield market.

Mr. GODFREY. Yes. And a rump sale is a sale conducted without

adequate buying representation, and in such instances the growers

themselves suffer more than anyone else.

Maybe I could clarify a point or two here, if you would like.

The Department, as Mr. Bucy has pointed out, established this regulation in 1958. When this appeal was made there was an indication,

that the appellants would carry it all the way through to court proceedings. There was no record in the Department that had been

built up from the trade and grower representatives. Therefore, it

was our feeling that if this particular case was going into court we

would need a record built up, and we asked for opinions and publicized it as widely as we could, issuing a press release and by publishing it in the Federal Register and by personally contacting Mr.

Royster, and discussing it with him, and with the legal counsel for

the Warehouse Association. This was prior to the time the press release was issued. We wanted the opinions from any and everyone

who was interested as to whether or not the rule should be changed.

Mr. BASS. Can you not visualize almost complete chaos if you do

not have some type of regulation?

Mr. GODFREY. Mr. Bass, I would prefer that we not answer a direct

question of that kind since the results of the hearing have not been

reviewed by the Board, and I am now a member of the Board. It

might give evidence for the appeal.

Mr. ABBIrr. Are there any statements of those present?

Mr. WHITENER. I join in the position taken by the chairman of the

House Committee on Agriculture, Mr. Cooley, that no action be taken

to bring about a disruption of the present satisfactory market

program.

Mr. ABBrrr. Mr. Bonner.

Mr. BONNER. I have a subcommittee of the Merchant Marine and

Fisheries Committee before which we have a very important matter, and I feel that I should be there. However, I am greatly interested

in this subject. I appreciate the opportunity to be here with your

committee this morning on your invitation. I hope that the rule will

not be changed to bring about chaos in the tobacco market which has

recently been straightened out.

Greenville, N.C., is located in my congressional district. It is one,

of the largest marketing communities in the United States. My congressional district is also one of the largest producers of tobacco.
8 TOBACCO MARKETING PRACTICES

I know that there are some small markets that would like to get

additional sets of buyers, but I think that in justice to all there should

be a limitation. The marketing season is being rushed so fast that by

extending it further it brings difficulty into the market and it is unfair to the small markets.

Certainly, we do not want to concentrate the sales in a few markets

and starve out the small ones. And if you change this rule that is what

it will do. I think you understand that as well as anyone else here

understands it. You would bring that about in this tobacco-growing

section of availability of markets small and large. And I go on

record, Mr. Chairman, in joining Mr. Cooley in his statement and the

others here who represent the tobacco growers, that this rule not be

changed.

Mr. ABBrrr. We appreciate your comments, and your cooperation

with this committee, Mr. Bonner.

Are there any other questions of these gentlemen until we hear

from the tobacco industry?

Mr. FOUNTAIN. I concur wholeheartedly in what has been said in

opposition to a change in the regulations. I am opposed to a change.

I have not received one request, either from the growing or market

groups urging such a change.

In my congressional district, like Mr. Bonner's, is one of the

largest tobacco producing and marketing areas in the United States.

Mr. KORNEGAY. I appreciate the opportunity of being here today.

Mr. ABBrrr. We appreciate your being here and your cooperation.

It is a pleasure to have you here.

Mr. KORNEGAY. I do have in my district in North Carolina four

small tobacco markets. They have been contacting me for some

time—they have been protesting the proposed change of standards

and the proposed additional set of buyers on the other markets.

Three of the four markets in my district have one set of buyers, and

the other one has three. They are doing a good job there. They are

working hard at it. They have the support of the community, the

growers the business people and others in the area, who are very

much interested in this proposition.

I would like to join with my colleagues, Mr. Cooley and the members of the committee and others interested in protesting any change

in the regulations or adding to the buyers, and to say that I, sir, feel 

that it is in the interest of the growers, certainly in my section, to see

that these small markets are kept in a healthy condition and to

increase the buyers, or to change the regulations, would create conditions which I understand would be of great disadvantage to the

people in my district, to the tobacco growers, producers, and the

markets. I would like to join with my colleagues in their remarks

that this proposal not be approved.

Mr. ABBrrr. Thank you very much.

Mr. LENNON. I concur with Mr. Bonner, Mr. Godfrey, and Chairman Cooley in what has been said. I am far removed from the

Winston-Salem-Danville areas. There are nine markets in my congressional district, three of them substantially large.

I cannot escape the conclusion in my own mind that the change

in rules, such as suggested by the petitioners, would, ultimately, result

in our form of competitive bidding being killed at these sales, and I
TOBACCO MARKETING PRACTICES, 9

think that would cause irreparable damage to the grower. That is

my principle concern, the growers.

I want to go on record as being unalterably opposed to any change

in the rules such as has been suggested by this. The growers and

warehousemen are against it in my district.

Thank you very much.

Mr. Aeerrr. Thank you.

Are there any other comments by members of the committee or of

the Congress?

Mr. STUBBLEFIELD. I would like to add this letter dated August 4,

1961 to the record and I ask permission to do so.

Mr. Aeerrr. Without objection, it will be inserted in the record

at this point.

(The letter referred to follows:)

HOUSE OF REPRESENTATIVES,

Washington, D.C., August 4, 1961.

HEARING CLERK,

U.S. Department of Agriculture

Washington, D.C.

DEAR Sin: We, the undersigned Members of the House of Representatives

from Kentucky, wish to record our strong opposition to the proposed changes

in the regulations governing the extension of tobacco inspection and price support services to new markets and to additional sales on existing markets.

The portions of these regulations which the Department has been petitioned

to eliminate as set forth in the Federal Register of July 25, 1961, constitute

the substance of the regulations.

We oppose the proposed changes for the following reasons:

1. We do not see how tobacco growers can benefit by further increasing

the already excessive personnel involved in the buying process;

2. Expansion of buying and inspection service personnel to service additional sales would inevitably increase marketing costs;

3. We do not believe the Congress, in enacting inspection and price support statutes, authorized or intended to authorize the Department of Agriculture to determine where buyer and seller would meet—that is, where

auction markets would be located or how many "sets of buyers" auction

markets would have.

That there are presently more than enough sets of buyers and corresponding sets of inspectors is demonstrated by the fact that sales of burley tobacco

have been limited to 31/2 hours per day in recent years, although it is generally

recognized that this personnel could properly service sales of at least 5 hours

duration. Further increasing existing buying personnel would not increase

buying power or enhance prospects for increased income to producers.

Marketing costs as related to buying and inspection personnel are already

excessive as existing personnel are engaged in the buying process only 60 percent

of the time they could perform these services at optimum efficiency. Increasing

the buying personnel to service new sales would add marketing costs with no

offsetting benefits to tobacco growers.

Since neither producers nor buyers of tobacco could expect to obtain any

economic benefits from increasing the total number of sets of buyers, the question of relocation of existing sets of buyers, and inspection personnel could

properly be raised. To this question we would answer that the difficulties the

Department of Agriculture and Members of Congress (as well as all others interested in an orderly and competitive marketing process for tobacco) encountered prior to July 1958, is too long to recount in this document. This history

clearly demonstrates, however, that the statutory authority empowering the

Department to determine the locations at which buyer and seller meet does not

exist.

We believe the regulations as presently written are a proper and reasonable

method of providing for the parties involved; namely, the producer-sellers and

the buyers making the decisions as to the opening of new markets or the adding of sets of buyers on existing markets. (It is noted that growers are free

to sell and buyers are free to buy tobacco by private treaty without the inspection and price support services.)
10 TOBACCO MARKETING PRACTICES

To summarize, we vigorously oppose the proposed changes. We do not believe they will help tobacco producers. We are certain they will increase marketing costs without offsetting benefits. And they would have the effect of placing on the Department the responsibility for allocation of buying personnel for

which statutory authority does not now exist. Lacking this authority, the Department would be unable to carry out this allocation responsibility in a manner consistent with our concept of government through orderly and publicly

acceptable processes.

Sincerely,

BRENT SPENCE,

Member of Congress.

FRANK CHELF,

Member of Congress.

CARL D. PERKINS,

Member Of Congress.

JOHN C. WATTS,

Member of Congress.

WILLIAM H. NATCHER,

Member of Congress.

FRANK W. BURKE,

Member of Congress.

FRANK A. STUBBLEFIELD,

Member of Congress.

EUGENE SILER,

Member of Congress.

Mr. ABBITT. At this point, I would like to read into the record a

letter from Senator Cooper of Kentucky which follows:

I understand your subcommittee is holding hearings on the proposal to repeal

the regulations issued by the Department of Agriculture on July 2, 1958, governing the assignment of graders to new markets and to additional sales on old

markets.

I am strongly opposed to any change that would have the effect of abandoning

these criteria. I have already protested to the Department against the proposed

change, because I believe it would be a great mistake.

I wish I could attend the hearing. However, both the Senate and the Committee on Agriculture are also meeting at 10 o'clock. I would appreciate very

much having the privilege of filing a statement on this question with your subcommittee.

Sincerely yours,

JOHN SFIERMAN COOPER.

And without objection, the letter will be made a part of the record,

as well as permission granted to Senator Cooper to insert a statement

into the record.

(The letter referred to follows:)

U.S. SENATE,

COMMITTEE ON AGRICULTURE AND FORESTRY,

August 16, 1961.

Hon. WATKINS ABBITT,

Chairman, Tobacco Subcommittee, Committee on Agriculture, House of Representatives, Washington, D.C.

DEAR CONGRESSMAN: I understand your subcommittee is holding hearings

on the proposal to repeal the regulations issued by the Department of Agriculture on July 2, 1958, governing the assignment of graders to new markets and

to additional sales on old markets.

I am strongly opposed to any change that would have the effect of abandoning

these criteria. I have already protested to the Department against the proposed

change, because I believe it would be a great mistake.

I wish I could attend the hearing. However, both the Senate and the Comniittee on Agriculture are also meeting at 10 o'clock. I would appreciate very

much having the privilege of filing a statement on this question with your

subcommittee.

Sincerely yours,

JOHN SHERMAN COOPER.
TOBACCO MARKETING PRACTICES it

Mr. ABBrrr. We will now hear from our colleague, Mr. McMillan,

who represents one of the large tobacco producing districts in the

country. We will be glad to hear from you at this time, Mr. McMillan.

Mr. McMILLAN. Thank you, Mr. Abbitt. I do not know of any

market that would not like to have an extra grader or extra set of

buyers, if they could. However, I am opposed to this proposal.

Mr. ABBirr. Thank you. Does anyone else have a statement?

Mr. KORNEGAY. I would like to ask permission to insert into the

record telegrams and letters I have received. I have not received any

communications from in7 district favoring the proposed change.

There has been only opposition.

Mr. ABBITT. You may have that permission to insert those in the

record.

(The letters and telegrams referred to follow:)

[Western Union telegram]

Hon. HORACE KORNEGAY,

Member of Congress, Washington, D.C.:

Request Secretary Freeman decline Winston-Salem and Danville tobacco

markets request authorization of five buyers and graders. Authorization would

create adverse economic effect to 19 other Piedmont, N.C., and Virginia smaller

markets. Letter follows.

MEBANE TOBACCO MARKET AND MEBANE MERCHANTS ASSOCIATION.

FARMERS WAREHOUSE,

Mebane, N.C., August 8, 1961.

Hon. HORACE KORNEGAY,

Member of Congress, Washington, D.C.

DEAR MR. KORNEGAY: In reviewing the Danville and Winston-Salem tobacco

market's request for an additional set of Government graders and granting each

of these two markets to have additional buyers, it would be greatly appreciated

if you would take into consideration the adverse economic effect that this

authorization would have on the 19 smaller markets in the Piedmont sections of

North Carolina and Virginia.

This will be the first year in quite some time that both tobacco warehouses in

Mebane have been under local management and ownership. The owners of

the warehouses along with the Mebane merchants are putting forth full effort

this year with hopes of making this market one of the leading tobacco markets

In the Piedmont.

We are certain that you realize the adverse effect that this decision could

have upon the smaller markets and for this reason we request that you attempt

to influence Secretary Freeman to decline the request of the Winston-Salem and

Danville tobacco markets.

Sincerely yours,

JAMES H. MENZEL,

Mebane Merchants Association.

JOE W. DILLARD,

Mebane Tobacco Market.

BANK OF GREENSBORO,

Greensboro, N C., May 22, 1961.

Hon. HORACE R. KORNEGAY,

House Office Building, Washington, D.C.

DEAR HORACE: You are already familiar with the application that has been

made by the tobacco markets at Winston-Salem and Danville for the allotment

of additional tobacco graders in order that they may secure additional sets of

buyers for those two markets.

If this application is granted, it will have a most serious effect on our Greensboro tobacco market which in turn will result in substantial loss of business to

our retail, wholesale, and service industries in Greensboro and Guilford County.
12 TOBACCO MARKETING PRACTICES

I have already written to the hearing clerk of the U.S. Department of Agriculture protesting these applications and my only purpose in writing you is to ask

that you will use your influence in any way possible to see that these applications

are denied.

Over the past 12 years the Greensboro tobacco market has provided a real

service to the tobacco farmers located in and around Guilford County. In turn,

the money provided by this market has found its way into the channels of commerce in our county. We are most fearful that this latest move will only serve

to improve the markets at Danville and Winston-Salem at the expense of our

own market and other smaller markets in this area. I hope you will use every

means at your disposal to help defeat this application.

My very warmest personal regards.

Sincerely yours,

HERBERT G. BAILEY, Jr.

GREENSBORO, N.C., May 19, 1961.

Hon. HORACE R. KORNEGAY,

House of Representatives, Washington, D.C.

DEAR MR. KORNEGAY: We are advised that application has been made to the

U.S. Department of Agriculture for the allotment of additional tobacco graders

on the Winston-Salem, N.C., tobacco market and the Danville, Va., tobacco market so as to permit each of those markets to obtain an additional set of tobacco

buyers. At the present time each of those markets has four sets of buyers.

In your congressional district there are at the present time tobacco markets in

Guilford County, Alamance County, and Durham County. There is one set of

buyers on the market in Guilford County, one set of buyers on each of the two

markets in Alamance County and three buyers on the market in Durham County.

The purpose of the Department of Agriculture in furnishing graders for these

various markets where tobacco is grown is to make it convenient and economical

for the growers of tobacco to market their product.

The amount of tobacco grown in each county is limited by the tobacco support

program. If the number of buyers and graders in Winston-Salem and in Danville are doubled, the amount of tobacco grown in our congressional district

would not be increased by 1 pound. It would merely mean that the Department

of Agriculture would be cooperating with the efforts of the two big fish to eat

the little fish. If the markets in Guilford, Alamance, and Durham are diminished

in usefulness, or if they are destroyed, the farmers in these three counties will

be compelled to waste an unreasonable amount of time in marketing their tobacco either in Winston-Salem or in Danville, and they will be required to pay

costs of transporting the same to those markets.

During the year 1960, Forsyth County produced 6,060,212 pounds of tobacco.

The Winston-Salem market sold 61,153,098 pounds of tobacco. Guilford County

produced 13,517,382 pounds of tobacco, and the Guilford market sold 6,755,112.

Alamance County produced 7,075,585 pounds of tobacco and its two markets sold

11,684,782. Durham County produced 4,924,561 pounds and its market sold

approximately 45,000,000 pounds. These smaller scattered markets are rendering a useful service to the tobacco growers throughout the district and they

should be protected from the continuous encroachment of the Winston-Salem and

Danville markets. The Greensboro Tobacco Board of Trade vigorously protests

the granting of additional graders to the Winston-Salem market or to the Danville market, and respectfully request your assistance in protecting them from

further encroachment upon their marketing territory by the two dominant

markets.

Respectfully yours,

GREENSBORO TOBACCO BOARD OF TRADE,

By V. D. WALTON, Secretary-Treasurer.

ALLEN & ALLEN,

Burlington, N.C., May 19, 1961.

HOD. HORACE R. KORNEGAY,

U.S. Congress, Old House Office Building,

Washington, D.C.

DEAR HORACE: We represent Mr. Norwood C. Newman of Burlington who

operates two of the four tobacco warehouses which form the Burlington tobacco

market. He has requested that we write you on behalf of the Burlington
TOBACCO MARKETING PRACTICES 13

tobacco market to make you aware of the damage to everyone of the tobacco

markets in your district which will follow if a hearing scheduled by the U.S

Department of Agriculture Marketing Service on Wednesday, May 24, results in

a change in the marketing setup in this area.

In the old belt there are 20 tobacco markets in North Carolina and Virginia.

Three of these markets are in your district—Burlington, Mebane, and Greensboro. The Durham market, which is not in the old belt, nevertheless would be

adversely affected by the action which has been requested.

Of the 20 markets in the old belt, 17 are 1-sale markets, 1 ( South Boston, Va.)

is a 2-sale market and Winston-Salem and Danville, Va., are 4-sale markets.

The Winston-Salem and Danville tobacco markets have requested that the

U.S. Department of Agriculture Marketing Service allow them to have another

set of graders. This will result in an additional set of buyers being allocated

to each of these two markets, and Winston-Salem and Danville will become 5-

sale markets. Because their capacity to handle tobacco sales will be increased

by about 25 percent, Danville, Va., and Winston-Salem will attract tobacco

farmers who would normally sell their tobacco in Greensboro, Burlington, and

in the other tobacco markets in this area. The increased capacity of these two

markets that already have four sales each, will result in decreased business for

all of the remaining markets in the old belt and necessitate layoffs and holidays

during which the markets will not be opened because of insufficient volume.

It also will mean that Alamance County farmers who would normally sell their

tobacco in Alamance County will travel to Danville, and Guilford County farmers

will travel to Winston-Salem, rather than to Greensboro. The weakening of the

remaining markets, plus the fact that the farmer will be induced to travel a

longer distance to procure sales time, will not be in the public interest and in

particular will not be in the interest of any of the markets in your district.

If additional graders are needed it would appear that they should be furnished

in markets that are one sale. Burlington would be delighted to have additional

graders and certainly would not want to see graders go to a 4-sale market,

when one-sale markets are left as is. Likewise your hometown of Greensboro

no doubt would be happy to have additional graders. It is not the feeling of the

Burlington tobacco market that additional graders are required anywhere, and

the Burlington tobacco market is opposed to an increase in the graders allotted

to the old belt until the need is greater than it now appears. At such time as

such need does develop, these graders should not be supplied to the markets that

have more than their fair share already.

The Burlington tobacco market along with the tobacco market in Greensboro,

will have representatives present in Danville on May 24 to actively and vocally

oppose the application of Winston-Salem and Danville. However, our client

requested that we write you and Senator Jordan and request that you make

inquiries through the Department of Agriculture to determine just what the

effect of the contemplated action will be on the other 18 old belt markets. We

hope that you can see fit to express your concern to the end that the applications

of Winston-Salem and Danville for additional graders be denied.

The Burlington tobacco market hopes that you can and will discuss this

matter with Congressman Cooley. He, no doubt, can visualize the effect that

such an action would have on tobacco markets in his district if it were made a

precedent for similar action in the eastern part of the State.

If the matter is not completely resolved at the Danville hearing and if any

doubt remains in the minds of the Department of Agriculture officials as to the

advisability of granting this relief, our client, will come to Washington if

necessary to let you and those officials know how detrimental this move would

be to orderly tobacco marketing in Piedmont North Carolina.

With kindest personal regards, I am

Sincerely yours,

Louis C. AT.T.EN, Jr.

75192-61-3
14 TOBACCO MARKETING PRACTICES

[Western Union telegram]

MEBANE, N.C., August 7, 1961.

Congressman HORACE R. KORNEGAY,

House Office Building,

Washington, D.C.:

Urge disapproval extension of tobacco grading and inspection service sought

by Winston-Salem and Danville, Va., for reason great destructive impact on

smaller old belt markets.

JAMES C. SHAW,

Assistant Vice President, Durham Bank & Trust Co.

(In addition, 31 telegrams addressed to the Secretary of Agriculture, all opposing any changes in the marketing regulations, were

submitted and may be found in the files of the committee.)

Mr. GODFREY. Could I add one thing that the Tobacco Inspection

Act which was passed in 1935, and made tobacco inspection on designated auction markets mandatory, did not describe the method

of assignment of graders or how they would be assigned. So it

left the Department with one of three choices, to come back and ask

the legislative body for direction on how to assign graders, or to

assign them to the limit of the appropriations made for the employment of graders, or the third method was to prescribe regulations to

govern the assignment of graders. And after a trial-and-error method

for about 12 years we settled on the regulation that we now have.

Mr. MCMILLAN. Several years ago a number of warehousemen in

my district tried to secure additional graders, but I have not had a

request of this nature recently.

Mr. ABBrrr. We appreciate your coming here, Mr. Godfrey. Wo

will want to make some kind of recommendation on this.

Mr. GODFREY. Thank you.

Mr. MATTHEWS. Will you yield for just a moment?

MT. ABBITT. Yes.

Mr. MATTHEWS. I would like to get on the record and to emphasize

again that coming from the State of Florida I have had no requests

for this change; in fact, my people are very much opposed to it. We

want the status quo to remain.

Mr. ABBITT. Thank you.

Mr. JENNINGS. I might say that my situation is similar to that of

others: I have no request for any change. As a matter of fact, my

people seem to have not heard about it—they have not communicated

with me about it, I know, and I believe that they are pretty well satisfied. I would have heard from them if they were not.

Mr. ABBITT. Thank you very much.

We will next hear from Mr. Fred Royster. I am sure that everyone

here is well acquainted with Mr. Royster. We are pleased to have you

here. We shall be glad to hear from you now.

STATEMENT OF F. S. ROYSTER, MANAGING DIRECTOR, BRIGHT

BELT WAREHOUSE ASSOCIATION, INC.

Mr. ROYSTER. Mr. Chairman and members of the committee, I am

grateful for this opportunity to appear before you this morning on

what is, in my opinion, one of the most important matters that could

be considered by the Department and by this committee.

The policy of the Bright Belt Warehouse Association has always

been that all flue-cured tobacco should be sold at auction with adequate

"qM
TOBACCO MARKETING PRACTICES 15

buyers representation to assure the grower of the best possible price

and to assure the tobacco is not tendered to the stabilization corporation under the price-support program because of insufficient buying

power on the sales which were offered.

For a number of years the U.S. Department of Agriculture had no

strong definite policy controlling the assignment of inspectors to additional sales. As a result of this situation, inspectors were assigned to a

number of new markets and for additional sales on established markets

including the markets at Danville, Va., and Winston-Salem, N.C.

And, in a number of instances, this caused sales to operate without

adequate buying power to protect either the growers or the loan program. The record is clear that the operation of these sales resulted in

a substantial lower price to the growers and the placing of a much

larger amount of tobacco under loan than would have otherwise been

the case.

As a result of the above-mentioned very unsatisfactory situation, in

1958 the Bright Belt Warehouse Association, Inc. was invited by the

U.S. Department of Agriculture, together with farm organizations

and other interested people, to consider this matter and to make recommendations for the adoption of a regulation which would establish a

reasonable definite policy as to the assignment of additional inspectors.

The present regulation was issued July 2, 1958. The result of this

regulation has been to correct the unsatisfactory and chaotic conditions

which existed prior to its adoption and the best interest of the growers

and loan program have been served thereby.

To modify or amend the present regulation as requested by the Tobacco Association Inc., Danville, Va., and the Warehouse Association,

Winston-Salem, N.C., would completely destroy its effectiveness and

would result in a worse situation than that which existed prior to its

adoption, to the great detriment and loss to tobacco growers, the loan

program, and the auction method of marketing tobacco.

We respectfully urge that the proposed amendments to the regulation be denied and should any amendments to the regulation be considered, that an open hearing be called for the submission of evidence

by all interested parties.

Mr. Chairman and members of the committee, I have read from a

statement that I filed as managing director of the association subsequent to the notice appearing in the Register.

I, also, ask indulgence of the committee to read into the record a

statement filed by the general counsel of the association relating to this

subject.

This protestant, hereafter called the association, is Bright Belt Warehouse Association, Inc., a North Carolina corporation with its principal office in Raleigh.

The association is a trade organization composed of practically all of the

Bright Belt warehousemen in Virginia, North Carolina, Georgia, and Florida,

and the warehousemen in the largest market in South Carolina. The members

of this association sell approximately 90 percent of the bright tobacco crop each

year. In 1960 there was sold over the floors of the members of this association an amount of tobacco of approximately 1,160 million pounds out of 1,248

million pounds of bright tobacco production in the United States.

The association was formed in 1945 and has been an active organization since

that date. Its objective is the furnishing of the best possible marketing facilities to the growers of bright tobacco. That objective is best shown, and some

of the details of the warehouse operations are best shown, by the current set

of marketing regulations and recommendations adopted by the association at
16 TOBACCO MARKETING PRACTICES

its annual convention in July 1961. A copy of these regulations is attached

to this memorandum. Most of these regulations have been repeated each year.

The 1961 set, attached hereto, represents a growth over a period of 15 years.

It is the product of wide experience, accumulated wisdom, and the deep-seated

conviction by the warehousemen that the best auction market is the one which

serves the grower best.

THE ISSUE AS PROTESTANT UNDERSTANDS IT

The issue in this matter appears to be narrow. The power of the Secretary

to make a regulation limiting the extension of inspection and price support services is not questioned. The statement in the beginning of section 29.2 is

not challenged. The reasonableness of a limitation that there will be an ex- tension only when there is a "bona fide auction sale and an adequate set of buyers" is obviously conceded. The opening portion of the policy statement, section 29.2 is not challenged. All that the applicants seek is to throw away the guideposts set by the regulations, namely, at least five buyers and repre- sentation of at least two-thirds of the bright leaf buying power. The issue is this: Should these guideposts be thrown away?

It must be admitted that it would be unreasonable to extend inspection and price support to a market with only two buyers who can be expected to buy only 2 percent of the bright leaf tobacco crop. On the other hand, it must be admitted that it would be beyond the bounds of reason to require that there must be 50 buyers who can be expected to buy 98 percent of the crop. The issue presented here is twofold (1) whether between those two extremes there shall be any guideposts at all, and (2) if so, is the present requirement of at least five buyers and representation of two-thirds of the bright leaf buying power a

reasonable requirement under circumstances as they exist today?

The protestant insists that for the welfare of the growers of tobacco and for the economic health of the States in which tobacco is grown and of the United States, the answer to each of these questions must be yes.

The Bright Belt Warehouse Association, Inc., earnestly argues that either to leave the matter of extension of inspection and support to the uncontrolled and the unguided discretion of a single executive or of a single group of execu- tives in each case as it arises, or to relax the requirement now in force and which have worked so successfully in the past, would be to create chaos and insure poor marketing. There would be threatened a deterioration or destruc- tion of the auction warehouse system which would be bad for warehousemen,

and bad for the growers, and bad for the public. There would even be threat- ened (if the auction warehouse system is destroyed or seriously impaired) the loss of the whole tobacco support program. The threat of the proposed changes is just that serious.

THE VERY KEENEST COMPETITION BETWEEN BUYERS MUST BE PRESERVED

The pending threat is to the degree of competition on the auction tobacco warehouse floors. In order to understand clearly the seriousness of the threat

now posed to the tobacco economy, it is necessary to look closely at the precise nature of the tobacco auction system as it exists today and to realize that keenness of buyer competition is the very heart of the system.

We speak specifically of bright tobacco, although what we shall say is gen- erally applicable, we think, to other types of tobacco.

Bright tobacco is the oldest agricultural product marketed in the United States. It is the most important agricultural product in North Carolina and a

very important product in other States. Tobacco market prices constitutes a

vital factor in the economy of many States. They are very important to the

economy of the United States.

From time immemorial bright tobacco has been marketed at public auction. That has been found universally to be the best method of achieving the highest dollar for a pile of tobacco.

The tobacco grower believes in the auction system. Private-grower selling of tobacco on the farm or anywhere except on the auction floor is practically non- existent and has been so for decades. The farmer is accustomed to, in fact he insists upon, selling his tobacco at auction.

The Department of Agriculture believes in the auction system. As a pre- requisite for a grower receiving a price-support payment on his tobacco, he must offer it for sale on a public auction floor. Only if the tobacco fails to bring

one "bid" above support can the grower demand and receive a support payment.
TOBACCO MARKETING PRACTICES 17

The belief and the trust of the farmers and of the Department of Agriculture

have been justified over the years. In the year 1960, for example, 95.8 percent

of the 1,248 million pounds of bright tobacco produced that year was sold at

auction and at prices substantially above the support prices. Only 4.2 percent

of the 1960 crop moved to Stabilization, having failed to receive a bid above

support. In terms of dollars, the 1,197 million pounds of tobacco sold at auction

in 1960 brought $4.97 per hundred above support. So, in 1960, the selling of

tobacco at auction got for the farmers approximately $60 million more than

support prices. That is illustrative of other years. In other years, the effectiveness of the auction system has put hundreds of millions of dollars into the

pockets of the growers. Also it has saved the Federal Government from the

necessity of putting billions of dollars into support.

The selling of tobacco at public auction has been recognized by a long line of

unanimous State and Federal court decisions as well as by the Tobacco Inspection Act as "affected with a public interest." The great public interest is so universally recognized that a reference to decided cases is unnecessary here.

The effectiveness of a tobacco auction sale and the degree to which public

interest is served depends entirely upon the degree of buyer competition at the

sale. To stimulate competition to give life to the sale, there are certain conditions which are well recognized, that are peculiar to tobacco auctions. The

selling is rapid but, by regulation, not in excess of 400 piles per hour. The

weight of a pile is restricted, in the Bright Belt, to 300 pounds. Most unusual

is the fact that the warehousemen conducting the sale is not limited to the

starting bid on a pile but may thereafter, on his own account, make additional

firm bids for the purpose of stimulating the sale and getting the highest price

for the grower. It is to the great credit of the auction system and of the auction

warehousemen that it is widely recognized, as is prescribed in the regulations of

this association, that the warehousemen's bidding is not for the purpose of

making a profit for himself but solely for the purpose of stimulating the bidding

and increasing the final price.

The point we make above is the vital point in the matter here before the

Department of Agriculture, namely, that the very basic essential to good tobacco

prices is strong competition in the bidding on the auction warehouse floors.

There can be no strong competition in auction warehouse bidding unless a

very substantial portion of the potential buying power is represented at the sale.

THE PRESENT SITUATION IS GOOD AND THE EXPERIENCE UNDER THE REGULATIONS A6

WRITTEN IS SATISFACTORY

The buyers of tobacco acquiesce in and participate in the existing auction

system.

It has been established over a period of many years that approximately 90

percent of the bright tobacco crop produced each year is purchased by or for not

more than 12 companies. These companies provide buyers for practically all of

the sales operating in auction warehouses in the Bright Belt. The presence of

buyers for those companies is essential to full competition. The absence of any

one large company from a market is felt in the lessening of the competition on

that market and the lowering of prices bid for tobacco. All of the large buyers

buy regularly and throughout all of every season in every properly established

market in the Bright Belt.

For a number of years the growers of tobacco, the warehousemen, and, finally

in 1958, the Department of Agriculture recognized that the presence of at least

five buyers and that representation of not less than two-thirds of the potential

buying strength is needed for a satisfactory auction market. The present Department regulation is reasonable and is supported by experience.

Bright tobacco is sold in five distinct marketing belts, namely, in the order of

their opening, Georgia-Florida belt, South Carolina border belt, eastern belt,

middle belt, and old belt. Statistics are kept and are widely published showing

market averages, belt averages, and total averages. For the several belts there

is a surprising similarity as to the level of averages for markets with adequate

buying power.

Uniformly the markets with less than adequate buying power, less than twothirds of the potential buying power, fall substantially below the average of

other markets.

The most recent illustration of this experience is in the Georgia-Florida belt

which opened on July 27, 1961. A market in that belt opened with less than twothirds of the potential buying power. From that market 10.61 percent of the
18 TOBACCO MARKETING PRACTICES

offerings went to stabilization. From the belt only 1.40 percent went to stabilization. The average price on that market with the weak buying power was 57.30

cents per pound. The average for the belt was 60.50 percent.

In 1960 over the entire season the Georgia-Florida belt average was 65.87 cents

per pound. The 1960 season average on that Georgia-Florida market with less

than two-thirds potential buying power was 46.10 percent per pound.

In 1960 in the South Carolina-border belt, the market average was 62.09 cents.

For that year the average of a market in that belt with less than two-thirds of the

buying power, was 57.52 cents.

In 1960 there was no market in the eastern belt with less than an adequate set

of buyers. The market averages there were on approximately the same level.

In 1960 there was no market in the middle belt with less than an adequate set

of buyers. There also the market averages were on practically the same level.

In 1960 the season averages for the old belt markets was 59.02 cents. For 1960

the average of one old belt market with less than two-thirds of the riotential buying power was 54 cents.

It is conceded by the applicants, because not challenged, that "inspection and

price-support services currently provided in auction marketing areas are adequate and the lack of these services is not a limiting factor to accelerated marketings, or the extension of price support to producers. Consequently, the extension

of inspection and price-support services, without limitation, would not contribute

to the effectuation of the purposes of either of these services" (sec. 29.2, Policy

Statement ) .

Under the Acreage Control Act there has not been any large increase in the

production of bright tobacco and, therefore, there has not been any greater demand for larger marketing facilities than the facilities which have been found

adequate as set forth in the policy statement quoted above.

CONCLUSION

It must be conceded by everyone that weak buyer representation, a substantial

diminution of competition in the bidding, will mean a staggering loss to growers

and staggering additional burdens on the tobacco price-support program. Even

the applicants must concede that conclusion.

Yet they would have the standards, which have been proven to be highly satisfactory and which have not unreasonably restricted the opportunity of the

growers to offer bright tobacco for sale at auction, thrown away, eliminated from

the regulations. They would leave each case to be decided by the force of pressures which can be brought to bear. The pressures could become irresistible.

The affect of those pressures would certainly be devastating.

The demolition of the standards (the deletions proposed by the applicants)

may well, in a short period of time bring about the discontinuance of the acreage limitation and the price-support program. It may well cause the destruction of the auction warehouse system. It may cause the growers of tobacco to

lose hundreds of millions of dollars and may cause the economy of the tobacco

States to be very severely injured.

It is submitted that except for the two tobacco markets which are applicants

here, a vast majority, practically all, of the growers' farm organizations, warehousemen, buyers, bankers, merchants, and businessmen in the Bright Belt

who know about and who understand this dire threat to our economy, are vigorously opposed to the proposals. Those who do not know about the proposals will,

if they are adopted, learn about them to their distress and anger.

On behalf of the Bright Belt Warehouse Association it is most earnestly re- quested that the proposals of the applicants to delete portions of the regulations

be denied and that the regulations be not changed.

Further, we earnestly request and pray that if any other amendments to the

existing regulations are proposed, there be held an open hearing for presentation of evidence and arguments both in favor of and against the proposed

amendments.

Mr. Chairman, I appreciate the indulgence of being permitted to

read that statement, but I thought that it should be in the record.

I should like to add this, the Department has already received numerous protests, both from Flue-cured and burley areas. Mr. Clay,

who is president of the Burley Auction Warehouse Association was
TOBACCO MARKETING PRACTICES 19

not able to be here this morning, but requested me to say that he was

in hearty accord with the statement I have tendered. He already has

in the record of the Department a similar statement on behalf of his

association.'

Mr. ABBITT. Thank you very much. Are these two applicants

members of your association?

Mr. ROYSTER. That is right.

Mr. ABB= If the buyers should be available, would you have any

difficulty from your standpoint?

Mr. ROYSTER. Mr. Chairman when you have a situation that is as

highly competitive as the auctioning of tobacco, if you change this

regulation or assign additional sets of graders, then you immediately

would be flooded with requests from a vast majority of the market for

sets. And if it is impossible for them to get grading without an

adequate set of buyers, then you have lost sales, and it would be a

more chaotic condition.

I must say to you fairly and honestly under this regulation the

situation has become standardized, there are no rump sales now operating anywhere, and I must say to you that under the regulation it

would be difficult for any additional sets of buyers to be obtained.

In connection with that there are, certainly, now adequate buyers.

In burley, I believe, they have a sales day of 31/2 hours. That is

because of the situation that exists. And in Flue-cured we have sold

as low as 31/2 hours in the past 3 years. We sell a maximum of 51/2

hours.

We did have an attempt last season to alleviate the situation, principally, at these two markets, extending the sale day to 6 hours for a

period of time, but the restrictions are necessary. The facilities, certainly, are now adequate and ample to market the crop.

Mr. AeBrrr. Thank you. Are there any questions of Mr. Royster ?

Mr. COOLEY. I have no questions, but I would like to call to your

attention the fact that we have two men here from two farm organizations in the State of North Carolina, and I believe that we would like

to hear from them and they would like to be heard.

Mr. ABBrrr. Yes. We will now hear from Mr. B. C. Mangum of

the North Carolina Farm Bureau Federation. We are glad to hear

from you now.

STATEMENT OF B. C. MANGUM, PRESIDENT, NORTH CAROLINA

FARM BUREAU FEDERATION

Mr. MANGum. Mr. Chairman and members of the committee, I

represent an organization in North Carolina with 64,000 members.

Most of them are tobacco growers.

We have over the years been unanimously opposed to any regulation that would permit the operation of additional sales on any market

without an adequate set of buyers. Therefore, we are opposed to any

change in the regulation.

I might say that we have a 20-man tobacco committee representing

each tobacco-producing area in the State that keeps pretty closely in

touch with the tobacco problem. On this committee there is a member from the Winston-Salem area. And he has stated that there has

not been any request by any producer in the entire area requesting any

change in the regulation.
20 TOBACCO MARKETING PRACTICES

For the record I would, also, like to point this up: I understood the

statement was made that there was a hearing in Winston-Salem giving

the people who were interested in this problem an opportunity to appear and to express their views. We, in the Farm Bureau in North

Carolina, did not know anything about the hearing until after it was

all over. Therefore, we did not have an opportunity to appear and

to express our views.

Thank you very much.

Mr. ABBrrr. Thank you very much, Mr. Mangum. We are always

entirely pleased to have you here and to have you give us your views.

Mr. FOUNTAIN. We have here a substantial tobacco grower and

farm leader from my congressional district, the president of the North

Carolina Flue-Cured Stabilization Corp. I am sure the committee

would like to hear from Mr. Carl Hicks.

Mr. ABBITT. We are always glad to welcome Mr. Hicks. We will be

glad to hear from you now.

STATEMENT OF CARL T. HICKS, PRESIDENT, FLUE-CURED

STABILIZATION CORP.

Mr. HICKS. Mr. Chairman and members of the committee, thank

you very much.

I can only reiterate the statement Mr. Mangum has made. The regulations now in effect originated with the Tobacco Committee of the

North Carolina Farm Bureau as the result of the operation of the socalled rump sales with inadequate buyers. It was with a great deal

of satisfaction and joy on our part that the Department finally adopted

these regulations after several years. It has protected the best interests of the growers who sell tobacco on these markets.

We, also, feel strongly that it would affect adversely the program

if inadequate buying power was present where farmers offer their

tobacco for sale.

Thank you.

Mr. ABBrrr. Thank you.

Mr. SHORT. What assurance is there that adequate buying power

will appear at an established sale when the sale is scheduled? Let

me ask this. Does it ever happen that adequate buyers do not show up?

Mr. HICKS. Has it ever happened?

Mr. SHORT. Yes.

Mr. HICKS. Yes. We have one market in North Carolina that does

not have adequate buyer representation—I believe at least one market.

Mr. SHORT. Would it be within the power of the Department of

Agriculture to restrict the holding of the sale where it was an established sale and the dates had been announced—would it be within the

province of the Department of Agriculture to call off the sale if adequate buyers did not show up?

Mr. HICKS. Well, sir, it would be in the best interests of the growers.

Mr. SHORT. I am wondering what would happen under the present

regulations in the event the buyers did not show up.

Mr. COOLEY. The answer is that no one has the right to call off the

sale, but the Government can refuse to put the inspectors at the sale.

They can withhold the inspectors, and when they do, the price goes

down. Is that not the situation? You could refuse to send the inspectors to a place that does not have adequate buyers.
TOBACCO MARKETING PRACTICES 21

Mr. BUCY. The act itself provides that if the Secretary determines

that it is impracticable to furnish inspectors, because the benefits from

inspection would not be commensurate with the cost of it, they can

suspend mandatory inspection on an existing sale.

Mr. COOLEY. And when you do that, no one is there to inspect the

tobacco.

Mr. SHORT. Thank you. Would it be within the province of the

authority of the Department of Agriculture to make the determination on the spot the day the sale started if it appeared there were not

adequate buyers there, to withdraw the inspection service that day,

to bring about this curtailment of this sale where adequate buyers

were not present?

Mr. HICKS. It might be within their province. I think they would

have an economic impact pressure which would be so great on the

part of the business interests, it would be to prevent the withdrawal,

in the particular area affected. I think there is some freedom exercised by the buying interests today due to conflicting views regarding

opening sale dates and sometimes in some of the big markets withholding of buyers for a few days because of disagreement as to the

opening dates in existence today. So far as I know there is nobody

with authority who has exercised this authority that would automatically require buyer representation to meet these regulations.

Mr. SHORT. In other words, does it happen once in a white then

that because of some particular circumstance that adequate buying

power does not appear at a sale? Does this have the end effect of

tobacco all being sold just a little bit above the existing price support

level, that the major portion of the tobacco sold at that sale would go

at a lower price than it would have had there been more buyers present

at the market?

Mr. HICKS. I think that has been true in some instances.

Mr. STUBBLEFIELD. I think that you would want to ask the warehousemen as to that. They would know more about that.

Mr. SHORT. What I am trying to get at is whether or not there is

some recourse that they can turn to in the event this situation develops

where there are not buyers actually adequate at the sale which has been

scheduled to keep the sale from being a sort of a distressed sale.

Mr. ABBITT. Mr. Wrather, is here, perhaps he can answer that.

Mr. WRATHER. Where you have an established sale the situation

you describe just does not happen. When the buying companies

accept or follow a sale they continue to keep representation on that

sale year after year. The situation develops only in the case where

we are trying to initiate a new sale or a new market, and in that

event the buyers have not committed themselves to participate in the

sale. So in that event you may have what has been referred to here

as a rump sale.

I might add, pursuing the question you raised, we have tried about

everything we could think of prior to the issuance of this regulation

of July 2,1958.

You have suggested that perhaps we could arrange for a trial basis,

or a standby basis, to see if we could verify whether or not the,

proposed sale would be a bona fide sale before we make graders available. We have tried all of that. We have gone with our inspection

personnel to these sales and have buttonholed buyers and questioned
22 TOBACCO MARKETING PRACTICES

tuyers in an effort to ascertain whether or not the sale would function as a bona fide auction sale before we would grade any tobacco.

We have on other occasions agreed to make the service available for

a period of time, say, 3 or 4 days, and see if the trade would follow

the sales. We have tried in numerous and sundry ways trying to

assure ourselves that the sale would function as a bona fide auction

before we would commit ourselves with respect to the service.

You have to remember that some of these people get in trouble,

too, along with us, because once we get into a market and provide the

services and then we go to talking about withdrawing the services,

then again we get a lot of people in trouble and they do not like that.

Once we have gone into a market with a view of withdrawing if the

trade is not there, we can be enjoined and kept from pulling out.

Mr. ABBITT. Thank you very much.

Mr. HICKS. Thank you.

Mr. ABBIrr. We will now hear from Mr. T. W. Allen, chairman of

the North Carolina State Grange Tobacco Committee. We will be

glad to hear you, it is a pleasure to have you here.

STATEMENT OF T. W. ALLEN, CHAIRMAN, NORTH CAROLINA STATE

GRANGE TOBACCO COMMITTEE

Mr. ALLEN. Mr. Chairman and members of the committee, I am

glad to be here.

I have a very short statement which I will read.

The North Carolina State Grange has no objection to anybody,

any market anywhere getting additional sets of buyers. We have no

objection to that. We are not here objecting to that. I will, also, say

that the North Carolina State Grange has the member of the tobacco

committee in Forsyth County. Likewise, we knew nothing about the

meeting in Winston-Salem. This is the first we have ever heard of it

today.

Several years ago there began to spring up the rump sales on several

markets with just a few companies represented. Some would last a

few days, some one or two seasons and we have a few of them running

today. It became evident that some plan had to be initiated—that

thP -Farmer had to be protected.

The regulations that we now have were worked out and agreed

to by all interested parties. The North Carolina State Grange

Tobacco Committee wholeheartedly supported these regulations. We

think they have worked well and the farmers have been guaranteed

buying power when they sell their crops, and we are opposed to any

change in the regulation where the farmers, and only the farmers,

would be penalized. Without these regulations some groups could

open new markets, add additional sets of buyers to their advantage,

and the farmer that sells tobacco on these markets or under these

additional sets of buyers, with some of the companies not represented,

would be greatly penalized.

Therefore, we honestly request you not to change these regulations.

Thank you.

Mr. ABBrrr. Thank you very much.

I might inquire if there is anybody here for the Change in the

regulations who desires to be heard at this time?

Mr. Terry, we will be glad to hear from you at this time.
TOBACCO MARKETING PRACTICES 23

STATEMENT OF W. NAT TERRY, PRESIDENT, DANVILLE, VA.,

TOBACCO ASSOCIATION

Mr. TERRY. Thank you, Mr. Chairman and gentlemen of the committee. I did not know that there was going to be any hearing on

this issue today.

Under the regulations we filed April 30 under the rule of July

4, 1958, with the Department—we held these hearings by this rule

made by the Department.

We do not object to the rule

'

that

is, 

with one exception, and at

is, the fact that the applicant has the burden of proving by documentary evidence or by testimony of a buying organization that they

will be on the market, and it is impossible to get a bona fide commitment from a tobacco company. Of course, we have proven that in

our hearing. The Department has all of that record in their hearing.

In other words, there should be a regulation providing additional

grading service, but we do not think it ought to be taken out of your

hands or the Department's hands and turned over to the companies,

just by not giving an applicant notice by letter or being present there

that they would control this regulation. That is what we object to.

There have been new sales, additional sales, established. There is

one sale that operated without full coverage this year up until last

week, in Lake City, S.C., and two large domestics operated for 11

years. And two of the large domestics which went on last week were

for one day and one the next day. They did not go on simultaneously.

In Danville we operate on the beginning of the market and on

the end of the market without full coverage of buyers. Last year on

opening day we operated 2 days before the tobacco company was

there. We have operated when Export and Imperial were not there.

We have operated when Export and Imperial and Universal were

not there.

We will have our meeting Saturday to determine an opening date

for this year in Danville.

It would be impossible for me to get a commitment from any of

the companies that they would be there. When we set the date we

assume they will be there, and most of the time most of them are

there. There have been times when we set the date that they all

would be there.

Danville, according to some of the evidence that has been brought

out here is selling 16,600,000 pounds of tobacco to a set of buyers

because the other markets in the old belt in Virginia do not have the

facilities to sell tobacco. You can take Chase City, they sell 3,800,000

pounds of tobacco to a set of buyers. Take Petersburg, they sell

6,800,000 pounds of tobacco. They could do the same as we are,

sell 16 million.

If Danville was not selling tobacco for a high price then we would

not have a big market, the farmers would not patronize it.

I have a few exhibits here with me which were offered in evidence

at the hearing. I would be glad to offer them into the record so

that you can look at them at your leisure and convenience.

Mr. ABBirr. Without objection, they may be made a part of the

record.
24 TOBACCO MARKETING PRACTICES

Mr. TERRY. I would like to point out that Danville is the No. 1

ranking market for a set of buyers. Danville is No. 2 in rank in

tonnage sold. Winston sells more tobacco than Danville. They have

five sets of buyers 'at Winston. We have just four at Danville.

I would, also, like to point out to you gentlemen that since 1939,

in Georgia, there have been six markets established and six sets of

buyers or graders. In South Carolina there have been three markets

and four sets of buyers established. In the eastern Carolinas there

have been three markets and six sets of buyers added. In the middle

belt there has been one market and two sets of buyers added. In the

old belt there has been one market and one set of buyers added. And

in Virginia there has been none.

(The documents referred to follow:)

WHY THE DANVILLE, VA., TOBACCO MARKET SHOULD HAVE AN ADDITIONAL SET

OF BUYERS

1. Market performance

(a) The records of this market throughout the years very clearly indicate the

need for expansion.

( b ) Operating with four sets of buyers, this market has ranked second in the

number of pounds sold, for more than 12 years. This second place ranking

includes both producers' and gross sales. The No. 1 market in the Flue-cured

area is a five-sale market.

(c) Our records show that this market, per set of buyers, has consistently

out sold every market in the Flue-cured area for over a decade. Each year

this market sells to capacity turning away tobacco growers who want to sell on

this market. Growers sell in Danville from a 100-mile radius and from 50 or

more counties.

(d) Ten-year average per set of buyers on old belt markets.

Producers' sales (1951-60)

Market Pounds

per set

Rank Market Pounds

per set

Rank

Danville, Va 16, 637,074 1 Petersburg, Va 6, 857, 261 11 Winston-Sglem, N.0 13, 712, 860 2 Greensboro, N.0 6, 748, 595 12

South Boston, Va 13, 128,474 3 Clarksville, Va 5, 967, 039 13

South Hill, Va 10, 204, 590 4 Stoneville, N.0 5,659, 717 14

Mount Airy, N.0 9,914, 590 5 Brookneal, Va 5,030, 650 15

Reidsville, N.0 9,825, 129 6 Martinsville, Va 4,940, 276 16

Kenbridge, Va 9, 152,376 7 Chase City, Va 3, 829, 832 17

Burlington, N.0 8, 607, 156 8 Mebane, N.0 3, 244, 046 18 Madison, N.0 7, 670, 974 9 Lawrenceville, Va 2,935, 959 19

Roxboro, N.0 7, 231, 021 10 Rocky Mount, Va 2, 010, 332 20

( e) Refer to facts and figures of markets.

2. The squeeze between the closing of the South Carolina-border markets and

the opening of the burley markets.

(a) In 1960 the Danville market operated for a total of 60 days and operated

with the regular line of buyers for only 30 days. The same company personnel

cover both the South Carolina-border and the old belt markets. When the Danville market opens, the South Carolina-border markets are still in operation.

These buyers remain on the South Carolina-border after the local opening and

leave for the burley markets before the Danville market closes, thus creating a

squeeze between the closing of the South Carolina-border markets and the opening of the burley markets.

(1) Both the grading service and the companies have tried to curtail the

movement of tobacco from one belt to another and this (the additional sale)

would be a step in the right direction.

(2) The amount of tobacco moving to other belts prior to the opening of the

old belt continues to increase. In recent years, until the old belt's regular sets

-of buyers arrived, the flow of tobacco to other belts has also increased. By the
TOBACCO MARKETING PRACTICES 25,

time the regular set of buyers arrive we are selling to capacity and we automatically push tobacco to other belts.

(b) The tobacco growers in the tobacco producing areas surrounding Danville

are fully aware of this situation. They desire and are entitled to sell their tobacco under the best possible buying conditions.

(c) These conditions are not true in any other belt. The other belts get their

full line of buyers at the opening of their selling season and they remain there

until the crop has been sold.

(d) In past years buyers were sent from the eastern North Carolina belt to

the burley. In recent years a large percentage of old belt buyers are sent to

the burley.

3. Discrimination

(a) How many new markets and sets of buyers have been added since Danville got its fourth set of buyers?

(1) Since 1939 the following markets and sets of buyers have been added in

the Flue-cured area:

Markets Sets of

buyers

Georgia and Florida 6 6

South Carolina—border, North Carolina_ 3 4

Eastern North Carolina 3 6

Middle belt, North Carolina.. 1 2

Old belt (North Carolina, 1; Virginia, 0) 1 1

Total_ 14 19

(2) The Danville market has continued to operate with the same buying capacity the market was operating with in the year 1922.

(3) Danville's capacity has decreased in the period from 1940 to 1960. Prior

to 1940 the market was operating with four sets of buyers on a 7-hour day with

no restrictions as to number of baskets sold per hour. In 1960 Danville operated wtih four sets of buyers on a 5/12-hour day for 20 days and 40 days on a

6-hour day at a rate of 400 baskets per hour. In 1940 producers' sales for the

old belt, type 11A, were 152 million pounds. Producers' sales in 1960 were 237

million pounds.

4. Why do growers want to sell here?

(a) The buyers and growers insist that it is the best-operated market.

( b ) They have better supervision.

(c) Companies are well equipped to handle tobacco sold here. The redrying

plants are equipped with modern machinery, capable of processing millions of

pounds of tobacco daily.

(d) This market sells from the areas producing poor crops and the good to

excellent crops. In spite of this, the market's average is consistently as high

or higher than all of the old belt markets.

(e) Storage facilities are more than adequate.

5. Restrictions

(a) The tobacco industry, nor any other industry, should not be restricted by

legislation or regulation, as to growth. The law states that tobacco must be

graded before it is sold. We are asking to be allowed to expand to handle the

requirements of the tobacco growers.

6. Lack of selling facilities for tobacco growers

(a) For the 1960 auction selling season, the Danville market operated a total

of 29 days with full sales, 12 of which were on a 51A-hour basis and 17 on a 6-hour

basis. During the 12 days that we sold on a 51/2-hour basis, we were able to

sell 8,800 baskets per day, and during the 17 days, on a 6-hour basis we were able

to sell 9,600 baskets per day. Every day during this period, growers brought

their tobacco to Danville to sell and had to be turned away because of lack of

selling facilities. Consequently, these growers had to transport their tobacco

many additional miles to other markets, at extra expense, and in many instances

were compelled to sell their tobacco at a lower price than they would have received on the Danville market.
26 TOBACCO MARKETING PRACTICES

7. Approximate capacity of buying companies located in Danville

Pounds

(a) Daily redrying and packing capacity 4,055,000

( b) Storage capacity 259,300,000

The Danville tobacco market tonnage breakdown by months

Company Pounds Month Percentage

American 1,522,494

3,279,974

2,318,968

September 

October 

November 

15.35

9.88

9.54

264,448 December 12. 00

II. J. Reynolds 1,916,512 September 19. 32

3,491,130 October 10. 52

1,913,896 November 7.87

181,664 December 8.25

Liggett & Myers 461,150 September 4.65

547,592 October 1.65

288,922 November 1.19

34,567 December 1.57

P. Lorillard 539,692 September 5.44

631,728 October 1.90

694,236 November 

December (Virginia bought for

2.86

Lorillard).

Dibrell _ 692,952 September 6.99

3,687,712 October 11. 11

1,751,918 November 7.21

251,730 December 9.79

Virginia 2,234,916 September 22. 53

7,786,916 October 23. 46

7,113,434 November 29. 26

675,622 December 30. 67

Imperial 434,608 Sentember 4.38

4,363,812 October 13. 14

1,551,202 November 6.38

63,822 December_ 2.90

Export 658.078 September 6.64

5,348,128 October 16. 11

5,433,312 November 22. 35

302,420 December 13.73

Flue-cured stabilization receipts:

Flue-cured pounds

3, 861,034 64,473,506 Sept. 19 to Nov. 23 5.99

202,

358,

290

170

2,332,982

2,826,250

Nov. 28 to Nov. 30 

Dec. 1 to Dec. 14 

8.67

12. 67

Market breakdown for 2 weeks, 7 weeks, and 4 weeks

Company 2 weeks Percent 7 weeks Percent 4 weeks Percent

American 1,522,494 15.35 4, 873,414 9. 42 989,976 12. 37

R. J. Reynolds 1,916,512 19. 32 4, 895, 276 9. 47 691,414 8. 64

Liggett & Myers 461,150 4.65 774, 936 1. 50 96,145 1.20

P. Lorillard 539,692 5. 44 1, 193, 930 2. 31 132.034 1. 65

Dibrell 692,952 6.99 4,997, 008 9. 66 658,352 8. 23

Virginia 2,234,916 22.53 13, 112, 846 25. 36 2,463,126 30. 79

Imperial 434,608 4.38 5, 731. 542 11.08 247,294 3.09

Export 658,078 6.64 9, 742, 068 18. 84 1,341,792 16. 77

NOTE —Total company purchases during the 7-week squeeze (Oct. 3 to Nov. 18 : Company purchases:

51,715,704; set of buyers, 4; per set of buyers, 12,928,926. Each set of buyers averaged 380,000 pounds of

tobacco per day for the 7-week squeeze. Market opened Sept. 19 and closed Dec. 14, 1960.
TOBACCO MARKETING PRACTICES 27

FACTS AND FIGURES OF MARKETS

1951-60 CROPS

Markets by rank

Market State and belt Set of

buyers

1960 total

sales

1960

rank

1959

rank

Pounds

Wilson North Carolina, east 5 81, 462, 526 1 1

Danville Virginia, Old 4 69, 641. 632 2 2

Rocky Mount North Carolina, east 4 66, 947, 020 3 4

Greenville _do 5 61, 617, 216 4 3

Winston-Salem North Carolina, old 4 61, 103, 652 5 5

Kinston North Carolina, east 4 58. 110, 372 6 6

Fairmont North Carolina, border 4 50. 302. 392 7 7

Mullins South Carolina 4 47, 451, 312 8 8

Durham North Carolina, middle 3 42, 897, 090 9 9

Whiteville North Carolina, border 3 37, 093, 728 10 11

Lumberton _do 3 36, 966, 689 11 10

Fuquay Varina North Carolina, middle 2 33, 703, 276 12 16

Smithfield North Carolina, east 2 29, 761, 366 13 15

Lake City South Carolina 3 28, 877, 872 14 12

Oxford North Carolina, middle 2 28, 277, 142 15 13

South Boston Virginia, Old 2 25, 575, 652 16 14

Farmville North Carolina, east 2 25, 395, 442 17 18

Henderson North Carolina, middle 2 23. 736, 846 18 17

Timmonsville South Carolina 2 18, 121, 134 19 20

Douglas Georgia 2 15, 307. 434 20 24

Wallace North Carolina, east 1 14, 903, 892 21 21

Goldsboro do 1 14, 666, 957 22 23

Clinton do 1 14, 447. 366 23 22

Statesboro Georgia 2 14, 146, 014 24 19

Vidalia do 2 12,218, 268 25 30

Gross figures showing increases in Pounds and percentages

Total Pounds for Old Belt 1960 262,199.841

Total Pounds for Old Belt 1959 950,431,554

Total increase 11,768,287

Percent increase 4.70

Total Pounds for Danville 1960 69,641,632

Total Pounds for Danville 1959 64,832,654

Total increase 4.808.978

Percent increase 7.26'

Old Belt's increase in pounds 11,768,287

Danville's increase in pounds 4.808,978

Balance of increase sold by the other 19 markets which comprise the Old Belt 6,959,309

Danville sold 40.01 percent of the Old Belt's poundage increase in 1960.

1960-Danville sold 26.56 percent of the Old Belt (North Carolina and Virginia)

sales. Danville sold 47.85 percent of the Virginia Old Belt market's sales.

1959-Danville sold 25.89 percent of the Old Belt (North Carolina and Virginia)

sales. Danville sold 47.14 percent of the Virginia Old Belt market's sales.

Percent Percent

1960 26.56 47.85

1959 25.89 47.14

Total increase 67 . 71

Percent

The 1959 deliveries of Danville's total sales to the Flue Cured Stabilization

Corp. 

The 1960 deliveries of Danville's total sales to the Flue Cured Stabilization

Corp. 

11.

6.

70

34

Total decrease 5.36
28 TOBACCO MARKETING PRACTICES

Comparison of No. 1 and No. 2 ranking markets in the old belt

1960 1959 Increase

Danville $41, 279, 112 $35, 362, 557 $5, 611,049

Winston-Salem 35, 668,063 32, 740, 174 2, 622, 383

Difference 5, 611, 049 2, 622, 383 1 2, 988, 666

Danville pounds_ _ 69, 641, 632 64, 832, 654 8,537, 980

Winston-Salem do 61, 103, 652 61, 852, 402 2, 980, 252

Difference do 8, 537, 980 2, 980, 252 1 5, 557, 728

1 Gained in 1960 over 1959.

Number of pounds sold per set of buyers, gross, 1960

Market Total pounds

sold

Set of

buyers

Per set of

buyers

Rank

Danville, Va 69, 641, 632 4 17, 410, 408 1

Fuquay Varina, N.0 33, 703, 276 2 16, 851, 638 2

Rocky Mount, N.0 66, 947, 020 4 16, 736, 755 3

Wilson, N.0 81, 462, 526 5 16, 292, 505 4

Winston-Salem, N.0 61, 103, 652 4 15, 275,913 5

Wallace, N. C 14, 903, 892 1 14, 903, 892 6

Smithfield, N. C 29, 761, 366 2 14, 880, 683 7

Goldsboro, N.0 14, 666, 957 1 14, 666, 957 8

Kinston, N.0 58, 110, 372 4 14, 527, 593 9

Clinton, N.0 14, 447, 366 1 14, 447, 366 10

Durham, N.0 42, 897,090 3 14, 299,030 11

Oxford, N.0 28, 277,142 2 14,138, 571 12

South Boston, Va 25, 575, 652 2 12, 787, 826 13

Farmville, N.0 25, 395, 442 2 12.697, 721 14

Fairmont, N.0 50, 302, 392 4 12, 575, 598 15

Whiteville, N.0 37, 083, 728 3 12, 361, 242 16

Greenville, N.0 61, 617, 216 5 12, 323, 443 17

Lumberton, N.0 36, 966, 639 3 12, 322, 229 18

Tarboro, N.0 12, 206, 976 1 12.206, 976 19

Henderson, N.0 23, 736, 846 2 11, 869, 423 20

Mullins, S.0 47, 451, 312 4 11, 862, 828 21

Lake City, S.0 28, 877, 872 3 9, 625, 957 22

Timmonsville, S.0 18, 121, 134 2 9,060, 567 23

Douglas, Ga 15, 307, 434 2 7, 653, 717 24

Statesboro, Ga 14, 146, 014 2 7, 073, 007 25
Gross sales

Danville, Va 

Wilson, N.0 

Rocky Mount, N.0 

Winston-Salem, N.0 

Fuquay Varina, N.0 

Durham, N.0 

Kinston, N.0 

Greenville, N.0 

Mullins, S.0 

Whiteville, N.0 

Fairmont, N.0 

Lumberton, N.0 

Market 1951 1952 1953

72,972,606 78,645,946 67,619,882

• 93,341,170 89,106,134 91,511,756

75,471,590 70,832,470 64,544,578

67,448,764 66,819,976 58,608,654

34, 782,742 32,481,826 34,582,114

47,153,628 45,438,248 31,519,884

79,126,469 76,290,610 69,294,078'

74,074,708 62,514,184 65,296,634

56,674,394 54,825,014 53,902,582

39,729,829 37,587,160 41,197,898

59,492,318 51,052,328 52,323,025

44,254,867 39,452,700 42,861,465

1954 1955 1956 1957

74, 258,882 75,689,381 79,654,556 63,662,912

96, 840,268 92,502,080 90,640,358 72,656,022

75, 870,140 69,208,622 73,807,807 51,424,414

63,403,740 68,591,180 68,520,279 49,921,822

35, 180,642 29,418,660 31,525,676 22,571,982

40, 713,054 43,107,072 50,720,778 33,666,544

78, 823, 720 80,559,718 74,890,780 53,326,894

68, 688,776 77,524,553 70,511,424 44,505,259

49, 479,970 55,311,738 51,433, 797 40,370,934

38, 909,438 39,692,826 40,927,334 30,623,773

50, 591, 921 50,901,422 48,652,170 38,805,022

38, 677,520 39,966,168 35,872,606 25,335,760

Market 1958 1959 1960 Total, 10 years

Number

set

buyers

Pounds per set Rank

Danville, Va 66,622, 614 68,832,654 69, 641, 632 713, 602,065 (4) 178, 400, 516 1

Wilson, N.0 79,726, 386 69,198,716 81,462, 526 656, 985, 416 (5) 171, 397,083 2

Rocky Mount, N.0 58,534,304 56,126,996 66,947, 020 662, 767, 941 (4) 165, 691, 985 3

Winston-Salem, N.0 59,722, 230 61,852,402 61,103, 652 625, 992, 699 (4) 156, 498, 174 4

Fuquay Varina, N.0 27,075, 718 21,792,766 33,703, 276 303, 115, 402 (2) 151, 557, 701 5

Durham, N.0 36,357, 968 35,554,666 42,897, 090 407, 228, 932 (3) 135, 742, 977 6

Kinston, N.0 54,508, 104 47,289,536 58,110, 372 672, 200, 281 (5) 134, 440, 056 7

Greenville, N.0 54,564, 710 47,330,580 61,617, 216 626, 628,044 (5) 125, 325, 608 8

Mullins, S.0 41,956, 660 43,544,192 47,451, 312 494, 950, 593 (4) 123, 737, 648 9

Whiteville, N.0 32,847, 221 31,577,202 37,083, 728 370, 176, 409 (3) 123, 392, 136 10

Fairmont, N.0 42, 845, 194 44,474,348 50,302, 392 489, 440, 140 (4) 122, 360, 035 11

Lumberton, N.0 28,710, 335 31,835,290 36,966, 689 363, 933, 400 (3) 121, 311, 133 12

O33VE10.1 DNIJENIIVW SHouovua 

t\D
30 TOBACCO MARKETING PRACTICES

Number of pounds sold per set of buyers and producers, 1960

Market Producers'

sales

Set of

buyers

Per set of

buyers

Rank

Danville, Va 64, 503, 542 4 16, 125, 885 1

Rocky Mount, N.0 62, 259,096 4 15, 564, 774 2

Fuquay Varina, N.0 30, 160, 416 2 15, 080, 208 3

Wilson, N. C 75, 080, 710 5 15, 016, 142 4

Wallace, N.0 13, 824, 170 1 13,824,170 5

Clinton, N.0 13,592,846 1 13,592,846 6

Smithfield, N.0 26,827,868 2 13,413,934 7

Goldsboro, N.0 13,317,869 1 13,317, 869 8

Kinston, N.0 52, 851, 460 4 13, 212, 870 9

Winston-Salem, N.0 52, 533. 996 4 13, 133,499 10 Durham, N.0 38, 661, 212 3 12, 897, 070 11 Oxford, N.0 25, 704, 444 2 12, 852, 222 12 Farmville, N.0 23, 403, 750 2 11, 701, 875 13 South Boston, Va 23, 228, 492 2 11, 614, 246 14 Greenville, N.0 57, 623, 296 5 11,524, 659 15 Tarboro, N.0 11, 454, 770 1 11, 454, 770 16 Fairmont, N.0 45, 550, 880 4 11, 387, 720 17 Whiteville, N.0 33, 880, 340 3 11, 293, 446 18 Lumberton, N.0 33, 716, 737 3 11, 233, 912 19 Henderson, N.0 21, 720, 152 2 10, 860, 076 20 Mullins, S.0 42, 155, 312 4 10, 538, 828 21 Lake City, S.0 25, 895, 906 3 8, 631,968 22 Timmonsville, S.0 15, 326,556 2 7, 663, 278 23 Douglas, Ga 13, 846, 154 2 6, 923, 077 24 Statesboro, Ga 13, 004, 918 2 6, 502, 459 25
Old belt flue-cured 11 (a)—USDA figures—Gross pounds and averages, 1950-40

1950 1951 1952 1953 1954 1955

Pounds Average Pounds Average Pounds Average Pounds Average Pounds Average Pounds Average

Virginia:

Brookneal 7, 921, 058 54.47 6,450, 580 51.08 7, 446,900 50.63 5, 856, 394 1 49.22 5, 013, 320 52. 82 5, 714, 976 53.61 Chase City 7, 119, 284 53.90 7, 636, 808 53.31 5,902,784 48.01 3, 595, 880 88. 53 2, 931, 986 2 46.20 3, 760,354 2 48. 93 Clarksville 6, 782, 590 55.61 7, 680, 988 53. 18 9,315,470 48.29 5,381, 620 35.26 5, 642, 618 46. 59 6, 799, 038 49.34 Danville 71, 914, 524 3 4 3 54.71 72, 972, 606 3 4 3 52. 40 78, 645,946 3 4 3 51. 10 67, 619, 882 3 4 3 42. 91 74, 258, 882 3 4 3 53. 56 75, 689, 381 1 3 4 3 55. 90 Kenbridge 9, 442, 420 55.49 12, 598, 570 1 55.80 10, 366,066 50.91 7,819, 628 43.46 8,845, 756 49.10 8, 350, 498 52. 07 Lawrenceville 4, 792, 500 55.88 4, 539, 122 53.87 4, 453,991 49. 60 2, 661,606 38.46 3, 312, 312 49. 08 3, 937, 966 51. 60 Martinsville 3, 337, 310 2 50.14 4,913, 564 44.91 6,174,342 46. 66 3, 016, 370 42.04 4,823, 682 54.32 5, 392,166 53. 83

Petersburg 4, 507,116 55.69 8, 840, 280 54.99 9,584,642 1 51.19 6, 890, 960 42.84 6,914, 540 52.28 7,000, 154 53.15

Rocky Mount 3, 760, 570 52. 59 2, 473, 964 45.15 3, 289.688 49.24 1, 493, 814 41.09 2,685, 778 53.36 2.169, 964 53. 92

South Boston 28, 997, 012 55. 10 31, 843, 776 54. 17 32, 547,838 50. 79 28, 043, 577 42. 55 29, 332, 61S 52. 17 29,271, 307 54. 17

South Hill 

Total, Virginia 

12,269, 512 57.00 13, 808, 894 55.57 13, 929,874 49.93 9, 145, 756 39.40 10, 591, 738 47.23 10, 656, 370 50.85

167, 929, 290 54.83 173, 759, 152 53.10 181, 657,541 50.47 141, 540, 471 42.37 154, 386, 474 52.04 158, 743, 676 54.19

North Carolina:

Burlington 7, 350, 332 53. 23 9, 235, 876 49. 31 9, 160,566 47. 31 6, 264, 126 37. 32 9, 701, 016 50. 56 12, 723, 452 53. 66

Greensboro 5,407, 928 50. 94 5, 890, 804 44. 96 8, 681,150 2 44.04 5, 586, 362 38. 00 9, 054, 948 49. 96 10, 116, 366 51. 83 Madison 10, 658, 288 50.85 8,278, 188 2 43. 51 11, 403,242 47. 11 7, 784, 024 41. 57 9, 038, 864 52.91 10, 578, 596 53.01 Mebane 6, 869, 826 53. 39 5,472, 634 50. 12 5, 720,989 48. 11 2,648, 186 37.97 3, 175, 318 47.75 4, 152, 046 51. 10

Mount Airy 15, 216, 960 52. 20 14. 686, 822 47. 52 13, 959,442 45. 08 8, 087, 930 44. 06 13, 263, 474 1 54. 65 14, 504, 758 54. 19

Reidsville 14,430, 731 54. 23 12,412, 612 48. 64 13, 540,792 47. 19 10, 570, 910 2 35. 21 10, 915, 806 50. 09 12, 582. 988 53. 27 Roxboro 9,605, 860 55.07 8, 516,648 53.44 9, 606,136 51.07 7,241, 670 38.21 8. 419, 344 50.41 10, 055, 657 52.48 Stoneville 7, 697, 743 51.22 6,472, 966 44. 01 7,200,256 47. 58 5,483, 742 41.47 6,844, 586 53.62 8,671, 688 54.03 Winston-Salem 69,475, 570 50. 87 67, 488, 764 46. 36 66, 819,976 44. 46 58. 608, 654 43. 62 63, 403, 740 52. 15 68, 591, 180 53. 65

Total,North Carolina_

Total 

145, 713,238 51. 87 138, 415, 314 47. 13 146, 092,549 45. 86 112, 275,604 41. 50 133, 817,096 51. 88 191, 976,731 53. 38

314, 642, 528 53.45 312, 174, 466 50. 45 327, 750,090 48.41 253, 816, 075 41. 99 288, 203, 570 51. 97 310, 720.407 53. 79

See footnotes at end of table.

03311£10J1 DNI,123111VW sapuovaa 
Old belt flue-cured 11(a)—USDA figures—Gross pounds and averages 1950-60

1956 1957 1958 1959 1960

Pounds Average Pounds Average Pounds Average Pounds Average Pounds Average

Virginia:

Brookneal 5, 481, 008 50.35 3, 867, 674 49.68 4, 672,042 57.20 4, 774, 046 53.71 4, 191, 342 57. 64

Chase City 4, 398, 122 49.83 2, 885, 934 2 46. 17 3, 063, 734 58. 10 3,557, 554 50. 48 3, 248, 730 2 55.24

Clarksville 8,268, 540 49.80 5, 049, 892 49. 19 5, 154,084 57.86 5, 320, 560 51.42 5, 384, 570 57.32

Danville 79, 654, 556 3 6 6 52.75 63, 662, 912 6 7 8 52. 09 66, 622, 614 '3 7 8 56.79 64, 832, 654 3 4 6 54.54 69, 641, 632 3 4 6 59. 27

Kenbridge 10, 660, 028 1 5539 7,511, 658 48.38 8, 786, 344 59.91 9, 475, 534 55. 18 9, 870,244 59. 81

Lawrenceville 3, 951,032 51. 49 2, 183,320 46. 83 2, 356, 632 16. 90 2, 140, 926 51. 19 2, 239, 738 58. 76

Martinsville 7, 376, 506 49. 45 3, 833, 510 53. 22 4, 090, 560 55. 58 6, 684,058 54. 37 7, 165,382 56. 97

Petersburg 9, 973, 908 54. 64 5, 968, 656 50. 90 5, 627, 114 1 60. 22 6, 540, 588 1 56. 52 7,001, 890 1 61. 03

Rocky Mount 1, 303, 386 48. 14 2, 953, 652 54. 32 3,354, 800 57. 57 2, 201, 730 56. 02 1, 498, 811 55. 78

South Boston 34, 146, 398 51. 13 24,583, 401 50. 82 26, 685, 154 58. 05 23, 740, 464 52. 89 25, 575, 652 57. 68

South Hill 14, 914, 415 52. 24 8,501, 632 47.30 8,565, 137 57.94 8, 258, 028 50.90 9, 717, 480 58.63

Total, Virginia 180, 129,473 52. 19 131, 012, 175 50.96 138, 979, 043 57. 51 137, 526, 600 53.89 145, 536,917 58.70

North Carolina:

Burlington 15, 505, 832 49. 75 8, 599, 758 51.89 8, 286, 270 55. 25 7, 968, 922 52. 53 9, 121, 516 58. 48

Greensboro 10, 339,312 2 44. 94 6, 494, 438 53. 70 5, 946,124 54. 74 6, 612, 424 50. 66 6, 753, 332 57. 85

Madison 10, 041, 276 46.15 6,686, 615 54.37 6, 772, 468 55.69 6,614, 574 2 50.15 7, 500, 692 57. 56

Mebane 4, 959, 228 48. 54 3, 359, 902 49.86 2,172, 582 2 54. 69 1,911, 350 52.86 2, 565, 448 58.89

Mount Airy 11, 826,252 47. 22 10, 150, 280 1 55. 49 8, 499, 829 57. 74 8, 046, 526 52. 68 8,970, 722 58. 83

Reidsville 14, 186, 180 47.22 7, 972, 834 52. 63 8, 341, 804 55.06 7, 741, 426 51.87 8, 117, 990 56.84

Roxboro 9, 639, 957 49.89 5,346, 113 49.24 7, 384, 748 56. 88 6, 887, 208 52. 44 7, 842, 266 60. 32

Stoneville 7, 627, 396 47.40 5, 553, 216 54.27 4, 099. 048 55. 42 5, 270, 122 50.77 4, 688,206 56.34

Winston-Salem 68, 520,278 46. 74 49,921, 822 54.96 59, 722, 230 57. 81 61,852, 402 52.93 61, 103, 652 58. 37

Total, North Carolina 152, 645, 711 47. 25 104, 084, 978 53. 97 111, 252, 102 56. 90 112, 904, 954 52. 38 116, 663, 824 58.29

Total 332, 775, 184 49.92 235, 097, 153 52. 29 250, 204, 145 57.24 250, 431, 554 53.21 262, 199, 841 58. 52

1 Highest average in the old belt.

2 Lowest average in the old belt.

3 Danville average higher than North Carolina.

Danville average higher than old belt.

Danville average lower than Virginia.

Danville average higher than Virginia.

7 Danville average lower than North Carolina.

Danville average lower than old belt.

Source: Tobacco Market Review, 1950-60.

003V£10,1, DICIa3111VW sapimvua 
TOBACCO MARKETING PRACTICES 33

Mr. COOLEY. May I interrupt?

Mr. ABBITT. Yes.

Mr. COOLEY. What would be the situation if your petition were

approved—what do you hope to accomplish by the petition?

Mr. TERRY. I hope to have a fixed sale in Danville.

Mr. COOLEY. How will you get it?

Mr. TERRY. Well, first, I have to have inspection service.

Mr. COOLEY. If you have an inspection service how could you be

assured that you would have a sale?

Mr. TERRY. I would not want inspection service if I did not reasonably think I would have buying service.

Mr. COOLEY. All right. If you had the sale the Government would

have to send somebody there to inspect the tobacco.

Mr. TERRY. Yes.

Mr. COOLEY. You have to have the sales first 

Mr. TERRY. I have to get the graders first.

Mr. COOLEY. No—the graders will follow the sales.

Mr. TERRY. The tobacco has to be graded before it can be offered

for sale.

Mr. COOLEY. That is right. I have been through this over and over

again. I am not complaining about what you are trying to do. I

have worked on this with the officials of five companies, trying to get

them there 

Mr. TERRY. That is exactly what we are contending for in this

regulation.

Mr. COOLEY. I say, that there is no way that you can get them.to

meet with an official of the Government, with you or with me or with

anybody else. I know what you are up against. You are trying to

get the sales.

Mr. TERRY. We do not want the Government to make these people

do it. All we want you to do is to take this provision out of this

regulation.

Mr. COOLEY. That will not help you a bit, however. You still have

to have buyers or you would be back where you were before you had

the regulation. You are not going to get the buyers there by this

change.

Mr. TERRY. That is what the regulation says that the tobacco has

got to be graded first.

Mr. COOLEY. Exactly.

Mr. TERRY. And when they walk up and look at a basket of tobacco,

unless it is graded, they will not do anything.

I just want them to put additional inspectors in Danville.

Mr. MATTHEWS. Will you yield?

Mr. COOLEY. Yes.

Mr. MATTHEWS. The chairman has brought out a problem that has

always been of interest to me, that is, how to get the buyers to come to

the market. I just get down on my knees and beg them. And I say

all of the markets, you cannot single any one of them out—I do not

know if there is any way to do it and I do not want the buyers to get

mad with me—if there are any here this morning not to hold it against

me. If there is any way of sending the buyers to every market it

would certainly be a big help. The Florida belt, I believe, has some of

the finest tobacco in the world, but every year I have to beg these
34 TOBACCO MARKETING PRACTICES

gentlemen to come to it. They are very independent. As has been

said, you cannot get two of them together. They will not give you

any commitment whatsoever.

I just do not know what legislation can help or what we can do

here to help in that kind of a situation. I just do not know about

that. If anybody in the audience can tell me after this meeting is

over how I can be sure to get all of the buyers to my market I certainly will be grateful to them.

Mr. TERRY. A tobacco auction sale is like any other auction sale.

He will appear there if he wants what you have.

Mr. ABBITT. Is there a need for this?

Mr. TERRY. I think the testimony, Mr. Chairman, unquestionably

shows that the need presents itself.

Mr. ABBITT. Do you believe that they will have buyers there 

Mr. TERRY. Yes.

Mr. ABBITT. If the tobacco there is inspected?

Mr. TERRY. That is a factor. I do not think there is anybody in

this room who can testify that they can get it in writing, however.

Mr. ABBITT. Do you have any further statement to make?

Mr. TERRY. Like I say, Mr. Chairman, I did not know that there

was going to be a hearing here. I did not come prepared to testify,

that is, at any length. I thank you for being here and I would appreciate your taking a close look at these exhibits I have presented for

the record. I would certainly appreciate your considering this part

of the regulation 291—E and decide if you think it is possible to get

a commitment from the tobacco company in writing or to have them

at a public hearing.

Thank you, sir.

Mr. ABBITT. Thank you. If you wish to submit a written statement

we will be glad to receive it.

Mr. TERRY. Thank you.

Mr. COOLEY. I would like the record to show that Mr. Dave Henderson, our colleague from North Carolina, is also present.

Mr. ABBITT. We will be glad to hear from you now.

Mr. HENDERSON. Mr. Chairman and gentlemen, I should like to

say that I have had many communications from people in my district who oppose this change in the marketing procedure.

Thank you very much.

Mr. ABBITT. We appreciate your coming. I know that you are

vitally interested in the tobacco program. We appreciate your

cooperation.

The Chair now recognizes Mr. Ford of Lakeview, S.C. We will

be glad to hear you.

STATEMENT OF W. JESSE FORD, LAKEVIEW, S.C.

Mr. FORD. Mr. Chairman and members of the committee, what I

want to talk about has not been talked about here. It is a matter

of whether or not tobacco can be marketed in such manner as being

untied.

Mr. Amur's'''. Unfortunately, that is not before the committee at

this time. You can take that up with the Department.

Mr. FoRD. It is in the newspapers.
TOBACCO MARKETING PRACTICES 35

Mr. ABBITT. As I say, that is not before us today.

Mr. FORD. I do not know who put it in the newspapers. If you

want to look at this, all right.

Mr. ABBrrr. We do not have that before us today. Let me see it.

Mr. FoRD. I was notified yesterday to be here at 10 o'clock this

morning.

Mr. MATTHEWS. Do you not think that we ought to take it up at

some other time? Senator Johnston may have lengthy hearings on

that in the Senate.

Mr. ABBITT. I do not see where it says anything about hearings before our committee.

Mr. FORD. He called me and told me to get here.

Mr. ABBITT. Who is that?

Mr. FoRD. Senator Johnston. A hearing on the House side. I do

not object to what you said. I just want to add more to it.

Mr. ABBITT. Suppose you go ahead and tell us what you have in

mind.

Mr. FORD. In this, North Carolina, South Carolina, and Virginia

are losing around 20 million pounds or more a year going to Georgia.

Mr. ABBITT. Losing it from Virginia?

Mr. FORD. No, sir, I am from South Carolina.

As you know they put a yellow tag on it and the buyers will not

buy it.

The point is this, that we think in our area, Congressman McMillan's area, that tobacco would be better as it is now tied, to take the

strings of, but if the U.S. Department of Agriculture decides to

change the regulations, we think then more markets should be permitted so that the farmer will not take a whipping in the deal. We

think that possibly 10 cents a pound would be involved.

I live in an area where there are markets all around me.

Mr. ABBITT. Georgia sells under that?

Mr. FoRD. That is correct.

Mr. ABBITT. You would rather have a better price for it?

Mr. FORD. They are doing very well this year.

Mr. ABBITT. They are not doing that this year?

Mr. FORD. Because of the Supreme Court.

Mr. COOLEY. You take your tobacco down to Georgia?

Mr. FORD. No, sir. My neighbors are doing that—people in my

area 50 miles, 100 miles from me.

Mr. COOLEY. They are taking it down to Georgia and selling it?

Mr. FORD. Yes.

The differential is over a 10-year period no more than 2/12cents a

pound.

Mr. MATTHEWS. What is the differential now?

Mr. FoRD. 21/2 cents a pound.

Mr. MATTHEWS. 21/2 cents a pound?

Mr. FORD. That is correct.

Mr. MATTHEWS. Some of your neighbors will go to the market to

sell it untied because they feel that they do not get enough money to

tie it.

Mr. FORD. Over a 10-year period the record shows a 21/2-cent per

pound differential, and that is it.

Mr. AnBrrT. Do you advocate that producers sell it untied?
36 TOBACCO MARKETING PRACTICES

Mr. FORD. No, sir.

Mr. ABBITT. What do you advocate'?

Mr. FORD. I advocate that if the U.S. Department of Agriculture

decides to have untied tobacco for a limited period of time, or for a

limited number of pounds per acre in North or South Carolina, particularly in South Carolina, that we have more markets because the

season will not be but one-third as long.

Mr. ABBITT. We appreciate hearing from you. I am glad that you

came here.

Mr. FORD. I have been in the warehouse business for a long time and

in the growing business, too. We feel that we are unjustly judged.

These cards show the differential proposed to be 6 cents per pound.

It is about even this year, not much difference.

Mr. ABBITT. You mean one price'?

Mr. FORD. All prices.

Mr. COOLEY. There is a differential between the tied and the untied,

is there not'?

Mr. FORD. Yes, but buyers come on up all the way.

Mr. COOLEY. What is it you want'?

Mr. FORD. So they can change the regulations pertaining to tied

or untied tobacco.

Mr. COOLEY. Change it how'?

Mr. FORD. Change it—let them take the untied, for two reasons.

Mr. COOLEY. You are advocating then to permit you in South

Carolina to sell your tobacco untied'?

Mr. FORD. No, sir, not necessarily.

Mr. COOLEY. You said that.

Mr. FORD. I said if the Department of Agriculture decided that.

Mr. COOLEY. The Department has not decided that, however.

Mr. FORD. This article I have here says that they considered it.

Mr. COOLEY. You have one of the best Senators in the whole United

States representing you in the Congress down there.

Mr. FORD. He sent me over here.

Mr. COOLEY. And that is Olin Johnston. I know that he is interested in the tobacco farmers of South Carolina.

Mr. FORD. We grow 150 million tons of tobacco in South Carolina.

We grow tobacco in 36 counties out of the 67.

Mr. COOLEY. You say that you are in the warehouse business'?

Mr. FORD. I have been—I am not now—but have been for 15 or 17

years and in all lines. We just do not get any differential at all.

Mr. COOLEY. You do not get the differential'?

Mr. FORD. No, sir. Tied or untied. In other words, I have seen

bills this year that came back for 65 and 67 average from growers,

whole truckloads. So I do not know what to do about it, except if

the Department tries, and this article here said that they are considering it—if they decide to go ahead and let the various markets

sell either for 2 weeks or 8 days or so many pounds per acre untied

that might be all right, but I do know that if they turn it loose in that

small area—you know that Georgia grows tobacco in a large area, in

other words, you can ride clear through the State of Georgia and

hardly ever see a patch of tobacco, yet whenever you come to the

market, there are 26, I believe, something like that—when you get

down there you find the warehouses full of tobacco and a good bit of
TOBACCO MARKETING PRACTICES 37

it comes from South Carolina and North Carolina and it might come

from Virginia.

Mr. COOLEY. Mr. Abbitt pointed out to you that there is nothing

before this subcommittee now that has to do with the proposition you

have discussed.

Mr. ABBITT. I might point out to you that there are people here

from the Department connected with the Tobacco Division who would

be glad to consult with you. We appreciate your coming. I know

that the officials are here and that they would be glad, I presume, to

talk with you. And you can take their message back.

Mr. MATTHEWS. I want to thank you for your statement. We have

enjoyed it and thank you for giving it to us. It has been very helpful.

From this standpoint of congressional procedure, if there is any bill

contemplated I would imagine that Senator Johnston would be the

man to spearhead it. I know that you plan to see him today to talk

with him.

Mr. FORD. I have already seen him.

Mr. ABBITT. We appreciate very much your coming here.

Mr. FORD. Thank you, sir.

Mr. ABBITT. And the newspaper article and your card will be made

a part of the committee files.

(The documents referred to may be found in the files of the committee.)

Mr. GODFREY. I should like to put into the record the two press

releases announcing these hearings, the one of May 16 and the one

of July 3, announcing the hearings in Danville and in Winston-Salem.

They were, also, published in the Federal Register as the press release

indicates. And it might be well to put into the record a portion of

the regulation outlining what is required in addition to the statement

on the adequate set of buyers.

Mr. ABBirr. Without objection, that may be done.

(The documents referred to follow:)

U.S. DEPARTMENT OF AGRICULTURE

WASHINGTON, May 16, 1961.

HEARINGS SET ON APPLICATIONS FOR MORE TOBACCO SERVICES

The U.S. Department of Agriculture today announced public hearings on applications for inspection and price-support services and for additional inspectors

on "designated" flue-cured tobacco markets at Danville, Va., and Winston-Salem,

N.C.

At the present time each of these markets has four sets of buyers, and four

sets of inspectors. Each is requesting an additional set of inspectors.

"Designated" markets receive free and mandatory inspection and market news

services under the Tobacco Inspection Act. Price supports are available on

tobacco sold on these markets.

The hearing on the Danville market will be in the courtroom, U.S. Post Office

and Courthouse Building, 700 Main Street, Danville, beginning at 9:30 a.m.

May 24.

The hearing on the Winston-Salem market will be in the auditorium, County

Agricultural Building, 537 North Spruce Street, Winston-Salem, beginning at

9:30 a.m. May 25.

Notice of the proposed hearings is scheduled for publication today (May 16)

in the Federal Register.
38 TOBACCO MARKETING PRACTICES

U.S. DEPARTMENT OF AGRICULTURE

WASHINGTON, July 3, 1961.

HEARING TO RESUME ON TOBACCO-MARKETING SERVICES AT DANVILLE,

WINSTON-SALEM

Continued hearings on providing additional tobacco inspection and price-sup--

port services at Danville, Va., and Winston-Salem, N.C., markets will be resumed

at 9:30 a.m. July 12 and 13, the U.S. Department of Agriculture announced

today.

One hearing will reconvene July 12 in the courtroom, U.S. Post Office and

Courthouse Building, 700 Main Street, Danville. The other will resume July 13.

in the auditorium, County Agricultural Building, 537 Spruce Street, WinstonSalem.

Hearings of which these are continuations were held May 24 and 25 in Danville and Winston-Salem.

At the present time, each of these markets has four sets of buyers and four

sets of inspectors. Each is requesting an additional set of inspectors.

Because the hearings in the two places involve common questions, interested

parties and witnesses will be heard as to either or both markets at either or

both places of the hearings.

The notice of hearings is scheduled to appear in the July 1 Federal Register.

Copies of the notice can be obtained from the Tobacco Division, Agricultural

Marketing Service, U.S. Department of Agriculture, Washington, D.C.

(a) Reasonable inspection and price support services.—The extension of

tobacco inspection and price-support services to new markets and additional

sales will be conditioned upon the reasonableness of such services existing in

the applicant market area. Transactions in tobacco as conducted at auction

markets involve the sale of tobacco at a bona fide auction sale participated in

by an adequate set of buyers. Determination with respect to the reasonableness,

and consequently with respect to granting or denying additional services, will be

based on evidence (1) that the applicant market or sale will function as a bona

fide auction sale and has firm commitments from an adequate set of buyers

that they will participate in the sale if inspection and price-support services

are provided, and (2) that additional services are justifiable in relation to other

market data, including the volume of tobacco produced in the area surrounding

the applicant market or sale; the roads and road distances involved in moving

tobacco to the proposed market or sale in relation to other tobacco marketing

centers; the relative availability of facilities for redrying and packing tobacco

handled or to be handled in the proposed market or sale; the location of other

markets on which tobacco produced in the marketing area of the proposed market

or sale may be marketed; the number of tobacco growers to be affected by the

proposed market or sale; volume of tobacco likely to be sold in the market or

sale; relationship of sales in the applicant market or sale to sales in other markets in the type-producing area; and other economic factors affecting the marketing of tobacco, by growers, in the area of the appicant market or sale and

in the type-producing area.

Mr. ABBITT. The hearing will stand adjourned.

(The following letter and telegram were also submitted to the subcommittee:)

PLANT FOOD INSTITUTE OF NORTH CAROLINA AND VIRGINIA, INC.,

Raleigh, N.C., August 14, 1961.

Hon. HAROLD D. COOLEY,

U.S.Congressman, Washington, D.C.

DEAR CONGRESSMAN COOLEY : I certainly appreciate Christine's letter of August 11 notifying me of the meeting on Wednesday, August 16, on the subject

of tobacco marketing practices.

I regret so much that I cannot be present as I am scheduled to be in Tappahannock, Va., with a group of businessmen, fertilizer representatives, and

farmers. At this particular meeting I am representing not only my own organization but the agronomy department at Blacksburg, Va. It would be difficult for me to change my schedule.
TOBACCO MARKETING PRACTICES 39,

I am tremendously interested in all practices pertaining to tobacco and particularly marketing practices. We have experienced grading and marketing

tobacco on markets without a full set of buyers throughout North Carolina,

Virginia, Georgia, and Florida. In every instance the farmers lost very heavy

in the interim period when we did not have a complete set of buyers. In some,

Instances the companies have never put on a complete set of buyers for various

reasons.

By all means, we should be very careful in arrangements that will not provide for a complete set of buyers when we increase markets, on old markets,

or new markets, since I know it is not the desire of Congress or the Department

of Agriculture to cause undue hardship on the part of growers. I would vote

against any practice that would permit markets to be operated without a complete set of buyers and would like to be recorded in the records as not favoring

any practice that would permit markets to operate without a complete set of

buyers.

I contacted the Farm Bureau office but Mr. B. C. Mangum was not in; however, it was my understanding that he would attend the hearing on the 16th to

represent us in North Carolina. Mr. Fred Royster is also out, but I feel quite

sure he will be present also.

Sincerely,

E. Y. FLOYD, Director.

ROXBORO, N.C., August 15, 1961.

Hon. HAROLD D. COOLEY,

Member of Congress, Washington, D.C.:

Appreciate your ti,vo letters on tobacco hearing. Sorry cannot go. Like to.

have you use your power to stop big markets trying to kill small markets.

CLAUDE HALL.

(Whereupon, at 12 noon, the hearing was adjourned.)

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