Or the existing auction market might be an outlet for this tobacco. But the lack of a government price support program along with a limited volume and buyer competition would adversely affect this marketing option. Although Georgia growers are among the most efficient flue cured producers, it is possible tobacco companies may opt to have production spread over several geographic areas to protect against weather and disease risks. Cigarette manufacturers frrequently contend they are unable to buy tobacco separated by stalk position. Farmers reply that they would be glad to oblige if companies would pay sufficient premiums for tobacco harvested in more stalk positions.
Growers can lower harvest costs by harvesting fewer times by combining stalk positions.
And we hear farmers contend that there is little competition among the leaf merchants during the auction. In return, manufacturers contend they must buy whatever is placed on the auction floor in order to obtain the volume of U.S. tobacco needed for their blends. While U.S. cigarette manufacturers cite the quota reductions and consequent short supply of U.S. tobacco as one of the reasons to institute contract purchases, a more substantial reason may be quality considerations. The restricted supply may lead to price compression among grades of tobacco and contract purchases may help alleviate this. Further, concerns over nitrosamines and pesticides residues, and the difficulty of monitoring these compounds increases the benefits of contracts to tobacco producers.