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Low Prices Jeopardize Tobacco Farmers' Future
By Genaro C. Armas  Associated Press
NEW HOLLAND, Pa. — After 20 years, Dennis Hess is about ready to kick the tobacco habit.

Looking to rebound from a disastrous 1998, Hess and more than 500 Pennsylvania tobacco growers formed a cooperative. They hoped their collective strength would gain them better prices at Lancaster County's first-ever farmer-owned auction.

Instead, prices have gotten worse as demand for tobacco drops. That is making growers like Hess, 47, of New Holland, think twice about planting a new crop next year. His 10 acres of tobacco already have dwindled to four over the past several years and now he is considering planting sweet corn and pumpkins.

"I will not sell at this price," said Hess, who also helps run the auction at a warehouse in New Holland.

A pound of tobacco sold for about 55 cents on Friday; a pound sold for about $1.04 when the auction first opened Jan. 13. Hess and other members of the Pennsylvania Tobacco Marketing Association had hoped to get at least $1.25 a pound when they formed the cooperative.

"I've got bales sitting at home already from last year's crop," Hess said. "If this keeps up, I'm not going to grow tobacco next year."

As auction manager, Hess goes around with the auctioneer and the tobacco buyers as they sift through rows of tobacco bales stacked three and four high. Those that get bid on are given a white tag. If a farmer rejects the bid, he replaces the white tag with a red tag.

During the first two weeks of this nearly seven-week auction, there have been a lot of red tags.

That means growers will either take a chance that prices will go up the next auction day or pull their crop off the block and hope their luck changes next year.

"They can't afford to do that, but they can't afford to take these prices either," said co-op organizer Jane Balmer, who helped get 3 million pounds pledged to the auction.

She grows 10 acres of tobacco at her Mount Joy farm, much of which is waiting to be sold. Ms. Balmer also still has a wagon-full of unsold tobacco bales from last year's crop sitting in a barn.

"We never expected these kinds of prices," she said. "There's a lot of people here who are saying, 'I'm not going to do this anymore,' or 'I'm going to cut my acreage in half.'"

Thirty years ago, Pennsylvania farmers harvested about 30,000 acres of tobacco. That number is down to about 7,000 today and will continue to decrease as prices plummet, Hess said.

Lower supply and demand, coupled with the lesser quality of this year's crop, are the main reasons for the low auction bids, said farmer Gene Martin.

Martin, 38, sold the tobacco he grew on his New Holland farm without the co-op's help in early December for about $1.25 per pound. It costs about $1 to grow a pound of tobacco.

With his crop sold, he helped buyer Golden Leaf Co. of Kingsville, Va., mark the quality of tobacco at the auction Friday.

"I sold early because I was undecided if I really wanted to join the co-op," Martin said.

Pennsylvania owns just a small slice of the national tobacco market. The state's crop is valued at about $25 million, compared, for example, with Tennessee's $200 million harvest.

Bigger tobacco states like North Carolina, which grows 300,000 acres, also are facing similar problems.

"They're really left scratching their heads," said Russell Redding, Penn.'s deputy secretary of agriculture.

Meanwhile, the co-op and auction will continue in New Holland.

"With prices this low, I'm hoping that buyers begin tripping over themselves to get in here," Hess said.

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