UPPER MARLBORO -- Yesterday was payday for Southern Maryland tobacco farmers.

Hundreds of growers -- bundled up in layers of work clothing to ward off a morning chill -- showed up at the opening session of the annual leaf auction at the Marlboro Tobacco Market Inc. warehouse to get a feel for how much they will be banking from a drought-damaged crop harvested in the fall.

Nobody was celebrating.

Prices were lower than a year ago, and there was concern that they could fall even more before the four-week sale ends.

Buyers for foreign cigarette companies seemed reluctant to pay top dollar for the better-quality leaf tobacco.

In an even more ominous development, domestic companies were passing on the purchase of lower grades of tobacco, forcing the ware- house to buy the leaf in hopes of boosting prices.

There is also growing concern that the 60-year-old auction system could be coming to an end in Maryland, leaving farmers to go one-on-one with buyers to determine the value of their tobacco.

Yesterday, farmers grumbled, but most accepted the price bid for their leaf.

Not Tom Fowler, a grower from Dunkirk.

"Prices are too low," the soft-spoken Fowler said in explanation for folding the ticket on a number of the 4-foot-high baskets of tobacco he had on the floor. Folding the ticket is the way farmers reject the price offered for their crop.

"They were paying 30 cents a pound; prices haven't been that low in 30 years," Fowler said. He said similar quality leaf sold for $1.30 a pound 45 minutes earlier.

Fowler complained that even some of his better quality, reddish-tan leaf with a silky feel didn't bring as much this year as last. "I got $1.90 [a pound] this year for tobacco that I got $2 for last year," he said.

"I thought prices would be a little better," said Lindsey Reid, a 65-year-old farmer from Huntingtown who said he has been growing tobacco all his life. "You're never really happy with the price."

Hill Summers, manager of Marlboro Market warehouse, purchased about a quarter of the leaf sold yesterday.

"I'm trying to get prices up," Summers said, "but I can't keep this up much longer."

The warehouse was buying the tobacco in the hope that the leaf can be resold at a later date for a higher price. "Sure, we're sticking our necks out," Summers said, "but that is what we get paid for."

The warehouse receives a 4.5 percent commission on each pound sold.

"What this means is that the warehouse is holding the price up," said David L. Conrad, a University of Maryland tobacco extension agent.

"Is this 50-cent tobacco or 75-cent tobacco," he asked as he pointed to a 308-pound basket of tobacco the warehouse bought for $1.45 a pound. "Who knows. Right now we have not found the bottom of the market."

When the first dozen piles of good-quality tobacco in bales brought $1.80 a pound, Earl "Buddy" Hance, a Calvert County tobacco grower and head of the Maryland State Tobacco Authority, theorized that the Swiss tobacco companies dropped the price 10 cents a pound because they didn't like the way it was packaged.

"Last year, the Swiss said they didn't want bales, and the Swiss pay the top price," Hance said. Most growers still tie leaves into hands and pile them on four-inch-high wood baskets.

Maryland Type 32 tobacco is part of a blend that makes up cigarettes. It makes up about 2 percent of the blend and is added primarily to make cigarettes burn evenly.

Foreign tobacco companies buy about a third of the state crop each year. Switzerland, Germany and Italy are the big buyers, but Maryland leaf also goes to another half-dozen countries.

Those foreign companies could determine the future of the auction system here, which dates to the late 1930s.

According to Hance, some of the domestic buyers want to get away from the auction system and contract directly with tobacco farmers to grow the leaf for them. "But the foreign buyers like the auction system, and its continuation will depend upon the foreign countries," he said.

A contract arrangement would not bode well for farmers, said Mary Bottner of Mitchellville, who got out of tobacco when her grown sons wanted to move into other lines of business.

"It would be the old divide-and-conquer strategy," she said. "One farmer wouldn't know what price his neighbor was getting and would probably sell for a lower price.

"That's one more thing for tobacco farmers to worry about."

Pub Date: 3/24/99