Public Policy Administration and Market Congestion: Flue-Cured Tobacco

Abstract

DURING 1964-1968 the market for flue-cured leaf tobacco was disrupted by severe and persistent congestion.' appeared in the early weeks of the tobacco marketing season: farmers were willing to place more tobacco in the market at the transaction price than the buyers purchased. Congestion appeared intermittently during the last three decades, but at no time was it as severe or as recurrent as during 1964-1968. Congestion was expensive to farmers, tobacco auction warehouses, and tobacco companies; a voluble controversy over its cause swirled through the industry. The United States Department of Agriculture (U.S.D.A.) played a principal role in the affair, and Congress, in its subcommittees for tobacco policy, was involved occasionally. Restrictions on quantities marketed per week denied access to the marketplace for some tobacco that farmers were willing to place there, insulating the market price from market forces. It is my view that two sets of restrictions caused congestion: restrictions imposed by the tobacco companies,2 and the U.S.D.A. restrictions on marketing tobacco untied. My analysis attributes principal responsibility to the U.S.D.A. Technological and economic changes