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Council for Tobacco Research

Kentucky & Tobacco A Chapter in America's Industrial Growth [Discusses the History of Burley Tobacco Agriculture and Industry in the State of Kentucky]

Date: 1962 (est.)
Length: 63 pages
11313500-11313562
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Type
REPORT
BIBLIOGRAPHY
Master ID
11313500-3562
Request
37(B)
Depository Date
30 Sep 1996
Named Person
Usda
Univ, K.Y.
Agricultural Experiment Station Univ, K.Y.
Burley Auction Warehouse Assn
Burley And Dark Leaf Tobacco Export Assn
Transylvania
Us
Ny, J.
Weekly Register
Ky Gazette
Us Army
Louisville And Nashville Railroad
Us Senate Finance Comm
Frank Leslies Illustrated Newspaper
Us Congress
Dark Tobacco District Planters Protective Assn
Hill Billies Assn
Night Riders Assn
Harpers Monthly
Commodity Credit
Agricultural Adjustment Administration
Arnold, B.
Barkley, G.
Baruch, B.
Biddle, A.
Billings, E.R.
Bingham, R.N., Louisville Courier, J.
Bohmer, C.
Boone, D.
Bradford, L.J.
Burleigh
Campbell
Cobb, I.
Ellis, S.
Fink, M.
Finley, J.
Fore, J.
Gates
George, Great Britain
Halley, S.
Jackson, A.
Kautz, F.
Krock, A., Louisville Times
Lebus, C., Burley Tobacco Society
Miro, D.E., L.A.
Morrow, T.
Napolean
Sapiro, A.
Shelby, I., K.Y.
Short, P.
Steed, V.
Stone, J.C., Burley Tobacco Growers Cooperative Assn
Walker, T., Loyal Land
Watkins, T.G., Louisville Courier, J.
Webb, G.
Wilkinson, J.
Author
Tobacco Inst
Box
212
UCSF Legacy ID
wgg6aa00

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There have been little or no changes during the past few years in the number of markets, warehouses or sell- ing periods in the Kentucky tobacco-sales towns. The latest auction season was, therefore, a typical one. The colorful, exciting annual event took place in 216 sales warehouses of 30 Burley markets during the 1960-1961 season. Sales started later than usual because harvests had been delayed and the weather for curing unfavor- able. They began near the end of November and con- cluded from about mid- to late January except at Lexington, where volume usually necessitates closing a few weeks later. Lexington, the world's largest "loose- leaf" sales center, ranks first among Burley markets; gross sales totaled about 68 million pounds of the 1960 crop. Burley auctions ran from 10 selling days at Mayfield where other types of tobacco are sold throughout the sales season, to 38 days at Lexington. Under regulations, firms operating on a basket basis-"hands" are packed on baskets in sales lines on warehouse floors-sold a maxi-
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mum 1,260 baskets in a three-and-a-half-hour daily pe- riod. Auction houses that sold on a poundage basis were limited to 302,400 pounds a day-the allowable maxi- mum is 1,800 baskets-for each group of buyers. When the final figures were in they showed that 325,226,209 pounds of the producers' 1960 Burley crop had been sold with a value of $208,640,946-an average price of $64.15 per hundred pounds. (The 1961 Burley crop produced in Kentucky was about 355 million pounds. Its average price at auction was just under 67 cents per pound. ) Other markets, other types Sales across state lines are part of the selling pattern. In this category was a total of some 4.5 million pounds of 1960 Burley. Over two-thirds was sold in Tennessee; more than 900,000 pounds in Indiana. Boundary state r~~i Harvesting Burley tobacco and ~~ r• L~I:K ..? -.~ spearing onto sticks Courtesy of the U. S. Department of Agriculture 11
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Preparation for auction in a Lexington warehouse Courtesy of the U. S. Department of Agriculture farmers sent in around 10 million pounds of Burley-4.7 million pounds or so pretty evenly from Indiana and Ohio-to be sold in Kentucky auction warehouses. Warehouse sales of the fire-cured types on 14 floors in three markets yielded $6,191,920 for about 15 million pounds. Over 10.2 million pounds of the One Sucker type brought close to $4 million through the 19 sales warehouses of four markets. Nearly 6 million pounds of Green River tobacco sold in the 14 warehouses of three markets for more than $2 million. There was the usual across-the-border movement of fire-cured and dark-air types into and from Kentucky for auction sell- ing. The cash receipts total from sales of Kentucky to- bacco represents 75 per cent of the value of all farm cash crops grown in the state. Among the nearly 400 Kentucky fiims and individuals that buy, sell, process, sort or otherwise handle tobacco leaf are 167 companies operating more than 200 auction warehouses. A well-established trade organization, the Burley Auction Warehouse Association takes an active 12
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role in maintaining market places for producers and sellers. Six-continent market Since the early national period, Kentucky tobacco has had foreign outlets. The types now exported-and for more than the past century - differ from those that reached European importers via the Mississippi in the late 18th century or went first to eastern ports of the United States from early in the 19th century. Burley leaf is shipped to all continents. West German}•, Sweden, Mexico, The Netherlands, Egypt and Australia are the major buyers. A little of it, though very little, even reaches such places as Barbados, Israel and Ireland. The total value of the 33.5 million pounds (80 percent of it unstemmed) shipped to foreign buyers in 1960 was $27,669,000. Kentucky Burley had a considerable share in this trade. In the broad field of foreign markets the 13
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Burley and Dark Leaf Tobacco Export Association func- tions as an agency to increase consumer outlets for these leaf types. The fire-cured types went chiefly to The Netherlands, Switzerland, France and Belgium, with markets in all continents taking small to fairly large amounts. The only large buyer of Green River tobacco is the United King- dom. Importers in that country took over half of the 818,000 pounds, worth close to $409,000, shipped out in 1960. For a variety of reasons, including foreign over- stocking, exports of One Sucker leaf dropped to a little more than a seventh of the 1959 total. Over 70 percent of the 314,000 pounds sent abroad went to Belgium. Black Fat One Sucker tobacco is the principal raw ingredient in an unusual commodity: Black Fat. This is supplied by a separate and highly specialized division of the export industry: the rehandling trade. This trade came into being in the 1880's as a direct result of a shipwreck on the northwest African coast. Some of the vessel's cargo of tobacco leaf had been sal- vaged. It had become black and gummy but the inhab- itants of the area liked it that way. Thereupon a small number of American export companies went into the business of supplying this special dark tobacco. Tradition has it that the original consignments of leaf, once the trade began, were treated with oil as were the hogsheads. This was a practical step necessitated by poor harbor facilities or shallow waters. At various points of entry in northwest Africa, the hogsheads were floated ashore. Their oily coating protected the leaf from a saline bath. 14
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Some fire-cured tobacco is included with the One Sucker type. The blend is treated by methods regarded as dark trade secrets. The preparation of Black Fat (sometimes referred to as Dark African) is governed by the various local markets for which it is intended, and its utilization by very knowing and particular consumers. Connoisseurs' market To prevent rejection by buyers, therefore, a dozen stringent requirements apply to the final form of Black Fat, among them being the grade, quality, color, and especially the length and width of leaf, the dressing and even the shape and size of the container. Hands of four to six leaves are steamed and then almost saturated with mineral oil (partly as a preservative). Sometimes other flavorings are added and the treated product is packed in boxes under very high pressure. Then it is shipped, chiefly to Nigeria and Ghana-together these countries took over 3.4 million pounds in 1960-and in far smaller amounts to other countries, including the West Indies. The declared export value of about 4.5 million pounds of this unmanufactured, semi-processed tobacco in 1960 was close to $4 million. Black Fat is the preferred smoking tobacco of nu- merous African natives. Some of these people mix the composition with a powdered fruit nut to make snuff. Various tribes use Black Fat as a commodity in exchange for rubber, hides, oil, and other native products. Poduction Line and Producers The export trade involves the labor and services of trucking firms, railroads and cargo lines. It is an impor- 15
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tant but small part of Kentucky's complex tobacco in- dustry. The manufacturing of tobacco, together with its labor force, plants and other factors associated with it, represents the major economic segment of the industry. In this division the chief production is cigarettes. The making machines of five factories, all in Louisville, turned out nearly 86 billion cigarettes in the latest year of record, about a sixth of the national total in 1960. Domestic consumers smoked all of these except a small quantity -15 millon or so - that went to over- seas customers. Over 15.2 million pounds of chewing tobacco and more than 13.3 million pounds of smoking tobacco came out of nine Kentucky factories. Four establishments manufactured nearly 119 million cigars, of which all but a small portion were in the medium-price class. Foreign buyers took over 2.2 million of these. Of the 5 million small cigars produced, around a fifth were exported. The adjusted value of tobacco products, created by the process of manufacturing, was $253,384,000. This indicated value serves to measure the contribution of Kentucky's tobacco manufacturers to the economy. Ex- clusive of plants under construction, new capital expen- ditures of tobacco manufacturers operating in Kentucky came to $9,380,000. (The figures are derived from the latest Census of Manufactures, 1958. The)° are some- what higher today because of increased consumption of cigarettes and cigars, and new plant expansions.) Apart from seasonal workers, who increase the total by several thousand, the average number of employes in Kentucky's tobacco plants is in the range of 11,000. Their wages in 1960 were close to $48 million. Addi- tionally, a labor force of varying size is employed by re- handling plants, leaf tobacco dealers, packers and others. 16
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IJupply network There is a steady flow of materials, equipment and supplies into Kentucky to meet the needs of farmers and manufacturers. A map of the sources would include a good part of the United States. Among the many hun- dred individual items essential to production in fields and factories are plant nutrients and agricultural equip- ment, heavy machinery of domestic and foreign manu- facture, precision instruments, paper goods, packaging material, and flavorings. The great number of trades and services generated by the social uses of tobacco has long added to the eco- nomic importance of the tobacco industry. In Kentucky itself are 30 firms that specialize in services, materials and equipment for farmers and manufacturers. Outlets and outlays Kentuckians are no different in their tobacco-buying pattern from other Americans-the largest consumers of cigarettes anywhere. In 1960, through 27,632 retail out- lets (vending machines and private clubs included), they bought over 7 billion cigarettes in 355,817,000 packages. They also bought cigars, smoking and chewing to- baccos and snuff, pipes and other smokers' articles. The wholesale value of tobacco products distributed in the state in 1960 was estimated to be $84,577,531. Of this total, cigarettes represented over $72 million, cigars, over $7.7 million. Fscal contributors Everyone buying a package of cigarettes in Kentucky, as elsewhere in the United States, pays a federal tax of 17
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8 cents. Additionally, a state excise of 21/a cents is ap, plied to each package and there is a 3 percent sales tax. Under state licensing regulations, wholesalers pay $25 annually for each establishment, retailers $10 an- nually for each place of business or vending machine. The total yield from these various tax sources represents a substantial contribution to federal and state treasuries. Voices have been raised in protest against the multi- plicity of taxes. A practical Kentucky farmer, Virgil Steed, author of a book published in 1947, is among the commentators on the subject. He remarked: "The prof- iteering middleman (in tobacco commerce ) is govern- ment - municipal, state and Federal ... tobacco has carried more than its fair share of the tax burden." The original tax on cigarettes in Kentucky, 1 cent on each 20, became effective in 1936. Increased to 3 cents in 1954, it was reduced to the present rate in 1960-a small but welcome recognition that cigarette consumers are being over-taxed. Since the inception of the tax the gross yield to June 30, 1961 has been over $135 million. Income from this source goes into the state general fund. Its benefits to all Kentuckians -smokers or not-are visible through the construction and maintenance of schools, hospitals, roads, bridges, and in community services. Kentucky's predominant agriculture and the commer- cial operations that meet consumer demands for tobacco products have an impact on every division of the state's economy and on a good part of its social life. The current commerce has its roots in times long past. The theme of tobacco is intimately woven into the history of the Blue- grass State and the theme is not only an interesting one; some of it is unusually dramatic. Ys
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ORIGINS AND DEVELOPMENT OF TOBACCO AGRICULTURE AND INDUSTRY IN KENTUCKY .j

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