It all depends on the warehouse as to how much debt you have and how many employees you have as to how many pounds you have to have to operate. North Carolina had 88 tobacco warehouses last year, but farmers plan to sell 1 million pounds or more at just 27 warehouses in the state this year, he said. Boyd said that some growers signed contracts out of fear of being left out. Some growers jumped at contracts because they set a pre-disclosed price schedule and let growers avoid warehouse fees of 5 cents or 6 cents a pound, he said. You've got growers who are saving those costs, plus having an agreed-upon figure as a base rate.
Some farmers prefer that rather than face the whims of the auction market.
Others, however, feel you're totally subservient or at the mercy of the contract. The shrinkage and shuttering of tobacco warehouses is troublesome to many in the industry. Larry Wooten, the president of N.C. Farm Bureau, worries about the loss of competitive bidding for North Carolina leaf. As contracting has overtaken the industry, Wooten has emphasized that the auction system must be preserved as a competitive alternative to company contracts. Hamm thinks that auctions will retain a place.