Saturday, December 31, 2011

Farmers Decide If They Want Quotas on Tobacco Crop, 1938

By Dr. J.B. Hutson, assistant administrator, Agricultural Adjustment Administration, published in the December 1938 issue of The Southern Planter magazine

Voting for the second time under the marketing quota provisions of the Farm Act of 1938, producers of cotton, flue-cured, dark, and burley tobacco will go to the polls in December to decide whether they want quotas to apply in 1939.

Quotas were effective for cotton and these kinds of tobacco in 1938 after farmers voted by a large majority in favor of controlled marketings.

Under the Agricultural Adjustment Act of 1938, the various kinds of tobacco are treated as separate commodities and a marketing quota is announced for any kind when the supply exceeds the reserve supply level. The supplies of flue-cured, dark, and Burley tobacco are above the reserve supply figures or quota level.

The growers of cotton and flue-cured tobacco will decided on December 10 whether they want quotas on next year’s crops, and the producers of dark tobacco and Burley will vote on December 17 to determine whether quotas will be in effect in 1939. If more than one-third of the growers voting in either of the referenda oppose the quota, it will not become effective for the crop in 1939.

Voting places will be set up in the various communities in each county where cotton or either of these kinds of tobacco is grown. A separate referendum will be held for cotton and each kind of tobacco and any farmer who grew any of these crops in 1938 will be eligible to cast one ballot for the crop he produced. One exception to this statement should be made. Sea Island cotton is not subject to marketing quotas and farmers who grow only Sea Island will not vote. Only a few thousand bales of this long staple cotton are produced, however, and consequently only a few producers will be affected.

The marketing quota plan is only a part of the Triple-A program. This part of the program is in effect only when supplies are high and farmers vote 2-to-1 in favor of it. The conservation part of the program, with acreage allotments and soil-building practices, is in effect ever year, and if cotton and tobacco farmers plant within their acreage allotments, marketing quotas would not be necessary in most years. But, when planting and heavy yields push supplies up over the marketing quota level, farmers would fare better with marketing quotas in effect than they would with uncontrolled marketings.
Without an effective control program, a fluctuating price to the producer from year to year has been the only effective means for controlling the marketings of cotton and tobacco. Continuous excessive marketings reduce income from cotton and tobacco until production is no longer profitable, and growers are forced to reduce their marketings while the excess of past years is being used up. This is the trade’s method of adjusting supply in line with demand. Then, when burdensome supplies have been reduced, prices rise again.

This is illustrated by what happened in flue-cured tobacco during the period of 1929-32. The 1929 crop of 750 million pounds brought 18 cents per pound, and the 1930 crop of 865 million pounds averaged only 12 cents per pound. Because of excessive supplied which piled up from these big crops, growers were forced to reduce the 1931 crop down to 669 million pounds and received an average price of only 8.4 cents per pound. Supplies were still too high, and although producers marketed only 373 million pounds in 1932, the excess supplies from previous years kept prices at a low level, the average for this small crop being 11.6 cents per pound.

Thus it can be seen that years of heavy production not only are followed by smaller crops but by lower prices if supplies are out of line with demand.
For the rest of this story, see pages 4 & 13 of the December 1938 issue of The Southern Planter.

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