Burley Tobacco Warehouses Are Empty
By Bruce Schreiner
Associated Press Writer
Thursday, Jan. 25, 2001; 1:00 a.m. EST LOUISVILLE, Ky. Keith Lambert's near-empty warehouse has become a testament to the hardships and changes in burley tobacco country.
This time a year ago, his Farmers Tobacco Warehouse in Owensboro would have been a hive of activity as farmers dropped off truckloads of golden leaf for sales that stretched four days a week into February.
Now the vast warehouse is almost empty. A mere 30,000 pounds of burley is stacked in a building that can hold 600,000 pounds. No tobacco has been auctioned off there since Jan. 18, and only one other sales day is scheduled next month to finish off any late tobacco.
"We don't think there's enough volume to have anything else," Lambert, the warehouse co-owner and manager, said Wednesday. "You see one or two pickup loads of tobacco come in a day, instead of 30 or 40 or 50" in past years.
Activity has dropped off at other tobacco warehouses across Kentucky, the nation's leading burley producer.
Burley was sold in just three of the state's 23 markets on Tuesday and in five markets on Wednesday. A year ago, at least half the markets would have had sales, said Ben Crain, president of the Burley Auction Warehouse Association.
Three Kentucky markets, in Lebanon, Paris and Bloomfield, have closed for the season, according to the Agriculture Marketing Service in Lexington. Sales will be limited to once per week in each of the remaining markets until the last burley is sold, Crain said.
"It's the lowest volume year that I've ever experienced," said Crain, owner of Fourth Street-Gentry Warehouse in Lexington. Crain has been a warehouse operator for 26 years, and before that was a buyer for a tobacco company.
Crain and Lambert blame the drop-off on steep quota cuts and the arrival of direct burley purchases by the largest tobacco manufacturer.
Since 1997, burley growers have endured a 65 percent free-fall in quota, the legal authority to grow and sell tobacco under the federal price-support system. The quota drop means less tobacco is available to auction at the massive tobacco warehouses in towns across Kentucky.
The amount of tobacco shipped to warehouses declined further when Philip Morris USA, the world's largest tobacco manufacturer, began contracting with growers directly to supply a portion of its burley needs.
Last year, about 550 million pounds of burley was sold at auction warehouses across the Burley Belt. This year, auction sales will plummet to about 225 million to 235 million pounds, said Scott Althauser, leaf processor for the Burley Tobacco Growers Cooperative Association.
Althauser said the decline has put warehouses in financial peril.
"You're going to see a great exodus in the warehouse business, I'm afraid," Althauser said. "When revenue does not meet your expenses, it's not a very hard decision to make."
Warehouse operators had braced for a decline in business due to quota cuts. But the full impact from contracting took them by surprise.
Althauser estimated that direct contract sales took about 115 million pounds of burley tobacco out of circulation from the auction system.
On the Net: Burley Tobacco Growers Cooperative Association: http://www.burleytobacco.com/
Agriculture Marketing Service: http://www.ams.usda.gov/
© Copyright 2001 The Associated Press