Tobacco co-ops competing for place in current market

Perhaps the most drastic changes among the tobacco cooperatives has been made by the Burley Stabilization Corporation (BSC), which served Tennessee, North Carolina and Virginia. • In 2010, it moved its headquarters 200 miles to get closer to its primary production area, and it has implemented an aggressive new contracting and marketing program. It had to: the price support program was ended after that season, and the cooperatives had to find new services to offer to their members. Perhaps the most drastic changes among the cooperatives has been made by the Burley Stabilization Corporation (BSC), which served Tennessee, North Carolina and Virginia. In 2010, it moved its headquarters 200 miles to get closer to its primary production area, and it has implemented an aggressive new contracting and marketing program.

“The geographic distribution of burley production in the three states we traditionally served changed after the buyout,” Daniel Green, BSC chief executive officer said. “It seemed wise to put our operational headquarters in middle Tennessee where it would be in closer proximity to the chief burley producing area.” The Burley Stabilization Corporation had been located in Knoxville, Tenn., from 1953 to 2004. It was a satisfactory location for most of that time. But after deregulation, it was soon clear that plantings were going to shift, probably north and west of Knoxville. Springfield, where the cooperative already owned some storage facilities, proved to be the best choice.

But the cooperative also obtained a warehouse in Greeneville in eastern Tennessee to continue to serve its members there and in neighboring North Carolina and Virginia. Because tobacco farmers in those areas typically grow on a relatively small scale, Green predicted the Greeneville facility will receive 35 percent of the pounds delivered from this crop, but will serve 60 percent of the growers. “We are expecting about 600 growers to deliver tobacco to that facility.” Over the past two years, BSC has also significantly increased its operations in Kentucky.

Of the four states now served by BSC, Green said that Tennessee growers would account for around 50 percent of the pounds, while Kentucky would account for 35 percent and North Carolina and Virginia would account for the rest. After the buyout, BSC leaders wanted the cooperative to expand its program by marketing pounds for growers. It seemed to them, as to other farmers associated with cooperatives, that there was going to be an obvious source of supply once the system converted from quotas to contracts.