Almost as far as the eye could see, great golden mounds of flue-cured tobacco stood in rows on the vast warehouse floor, and on one of the mounds farmer A. V. McDonald Jr. planted himself the other morning.
It was his tobacco, product of long months of hard work and tender care, and he was nervous as he waited for the cigarette companies' buyers to come down the row and pronounce their verdict on it.
McDonald fared about as he expected. His wasn't super-quality leaf and so didn't bring top dollar (the high here this year has been $2.05 a pound). But the 50,000-pound crop, he figured, will average around $1.80--not bad compared to the market-wide mark of $1.76.
Farmers such as McDonald are always apprehensive at market time in the six-state flue-cured belt, of which North Carolina, with more than $1 billion in flue-cured income per year, is the gold-plated buckle.
But this year, particularly here in Wilson, the world's largest tobacco market, it's a bit tenser than usual. The market has gone to pot, so to speak, and no one is quite sure what to do about it. Demand and prices are soft, and more tobacco than usual is going into the loan pool that the federal government maintains as a floor for tobacco prices.
None of this is small potatoes. The multibillion-dollar tobacco industry is a bulwark of the Southeast's agricultural economy. Virtually every up and every down it undergoes reaches beyond the region. It touches foreign trade, affects federal budget outlays, sets a tone for congressional debate and influences political careers.
The federal support program was nearly toppled in Congress this year and last. Tobacco-state legislators, to save the supports, assured their colleagues that most of the industry's problems would end with passage of a new program requiring growers, rather than the government, to pay for any losses on price-support loans.
Rep. Charles Rose (D-N.C.) and Sen. Jesse Helms (R-N.C.) were the leaders of this rescue effort. But their reassuring promises may have been premature; the support program and a related allotment system continue to be the subject of a smoky controversy.
Farmers who must pay stiff rentals to lease government-granted growing allotments held by non-farmers are angry. Some have formed a new association to give fulltime farmers -- outnumbered about 4 to 1 by allotment holders -- a larger voice in policy matters.
Exporters, seeing both loss of markets and a steady rise in imports, complain that the allotment and price-support systems are killing overseas sales by pricing U.S. tobacco out of competition.
Horace Renfro, who grows tobacco south of here, summed up some of the feeling. "The allotment has been of great value to us since we were boys," he said. "But we are anticipating effects that are dreadful. I think the days of our program are numbered."
A couple other farmers who didn't want their names used (they also work at the warehouse) agreed with Renfro. Said one, "The program has outlived its usefulness. . . . I own a quota of my own, but those who own it won't plant it -- it amounts to a welfare program for them with their lease income."
Another added, "The price support is too high and the poundage quota is too short. . . . The allotment system has to go. I have to pay $1,400 in lease fees just to plant a crop. Instead of an artificial price of $2 a pound caused by the lease, I could sell it for $1.35 and make a profit and we could gain back our overseas market."
And then, in an ultimate expression of tobacco-country heresy, he said, "Tom Eagleton is the best friend we've got up in Washington." Eagleton, as every Carolina farmer knows, is the senator from Missouri who took on Helms and tried to wipe out the allotment system.
Aside from the incredibly complex federal dairy support system, there's nothing quite so complicated or controversial in American agriculture as the tobacco program. Its aim is to set a price floor that allows farmers a profit and to keep supply in line with demand by limiting poundage that can be marketed.
But for a variety of reasons, the flue-cured tobacco program has gotten out of whack. The counterpart program for burley tobacco, grown principally in Kentucky, has stayed on a more even keel. Generally high supports for lower grades of flue-cured leaf, not attractive to buyers, have forced the quasi-governmental marketing cooperative that oversees the program to take huge amounts of tobacco under loan. Reduced poundage quotas, in combination with steadily rising allotment rentals, have put additional pressure on farmers.
Fred Bond, manager of the Flue-Cured Tobacco Cooperative Stabilization Corp., the government's agent in overseeing the loan and warehousing program, says that close to a fourth of this year's crop is going into the loan pool. Usually, the figure is about 10 percent.
What this means is that the Stabilization, as it is called here, will have interest expenses of at least $45 million this year to pay off the loans made to farmers whose crop went into the pool, unwanted by buyers. The coop's costs will continue to grow unless and until the pooled tobacco is sold in the future.
Under the revised program, farmers will have to pay those costs through a levy of 3 cents per pound. As Stabilization inventories increase, the chances of a higher assessment increase, putting the growers under new pressures.
Bond and other officials are nervous about the trend -- soft market, average crop, mounting imports, slumping overseas sales, increasing production costs and steadily rising price-support levels that contribute to tobacco's vicious circle.
"The most important point I am concerned about," Bond said the other day, "is that there is a limit to what the grower can pay . . . a point where he won't have enough tobacco to sustain his costs. You look at the picture now and say, God, it's dismal, but over the next four or five years, who knows what it will be."
The immediate future will be determined to some extent by Secretary of Agriculture John R. Block, who must announce, by Dec. 1, the 1983 national flue-cured marketing poundage quota. This is one of the regulators that tells growers how much leaf they can send to auction.
Because of rising stocks in warehouses, industry sources speculate that he will reduce the quota by at least 10 percent to cut supplies. Farmers -- and allotment-holding non-farmers -- then will vote on whether they want to continue the program.
Meanwhile, as stocks grow, farmers' production costs are up, in part because of higher rents on allotments held largely by non-farmers. Exports continue to drop as imports of cheaper tobacco increase. The newly doubled federal excise tax on cigarettes and a wholesale price increase are expected to push consumption down, and that has made company buyers more cautious.
"All told," said Robert H. Miller, a tobacco economist with the Department of Agriculture in Washington, "it means the industry is not in the best of shape."
Fred Bond's concern is reflected throughout the industry, from the conservative and politically powerful North Carolina Farm Bureau to younger, more vocal farmers who can get into tobacco production only by leasing an allotment that is, in effect, a license to grow.
Farm Bureau commodity specialist Bill Little, based in Raleigh, said, "We are all concerned . . . and there are no easy answers. We need to have some tobacco in stock, but this could lead to lower poundage quotas for next year. But then you could cut the quota so low that this would encourage more foreign sales here."
Hugh Kiger, executive vice president of the Leaf Tobacco Exporters Association in Raleigh, is one of the strongest critics of the present support system. "We estimate that export sales will be off 10 to 15 percent this year and it is our contention that it is because our price is no longer competitive. . . . We saw this coming. We felt the legislation didn't go far enough in allowing the secretary of agriculture to reduce price supports by only 6 cents per pound."
Kiger, a retired Agriculture Department trade official, noted that U.S. farmers in the early 1960s had 60 percent of the world market for flue-cured, the principal tobacco in cigarettes. Today, the share is less than 30 percent. U.S. export volume is near the level of the early 1960s, but it has not grown commensurate with expanded world demand.
And, he added, as long as U.S. prices continue to inch up year by year with the nearly automatic price-support increases, cheaper foreign leaf will become even more attractive to American cigarette companies. One result: the likelihood of more tobacco going on loan into the pool.
Atlas Wooten, a Pitt County farmer who is president of the Tobacco Growers Information Committee, another industry organization, expressed some of the same worries. But, he said, sooner or later political and financial powers are going to have to understand a new fact of life:
"If we are going to have a no-cost program, as it has been advertised, we farmers are going to have to have some control over it."