Wednesday, September 19, 2007

The Tobacco Program

Freakonomics points to an interesting Wall Street Journal article on tobacco growing. It's on the rebound, in new areas (southern Illinois) and with new growers. I sent this comment:

The writer didn't make much of the point, but it sounds as if much of the new tobacco acreage is being grown under contract. In the old days tobacco was sold at auction in an auction barn (I'm getting too senile to remember the company, Phillip Morris maybe?, that used that in its commercial. The old system was effectively a cartel, operating under delegated power from the government based on farmer referenda. Under the new system, risk may be handled by the contracts between grower and company. That's a system similar to that used for eggs and poultry for decades, that recently moved into hogs as well.

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