Under the contractual agreement with CCC, and auction warehouses, Stabilization makes loans to eligible flue-cured tobacco farmers whose tobacco has been grown within their allotted quota and which does not bring the minimum price established for that grade at the auction market. The farmers' tobacco which is consigned to the cooperative is pledged as collateral to CCC for the money borrowed.
Farmers vote every three years by referendum on continuation of their program.
S cope of Operations Flue-cured tobacco is sold by farmers at warehouse auctions after U.S. Department of Agriculture graders evaluate each lot of tobacco under standards according to type and quality. The grade assigned determines the support price. If a farmer's tobacco fails to bring an auction bid price of at least one cent per pound above the support price established for that grade, and if the farmer meets all USDA requirements, the tobacco is eligible to be accepted into Stabilization's inventory. The farmer is paid for the tobacco at the point of sale. Tobacco received by Stabilization at the auction market is trucked to contracted processing facilities for reweighing and regrading.