Burley tobacco (Type 31) production began in southern Ohio in the late 1860’s and subsequently spread into the tobacco growing areas of Kentucky (including adjacent areas in Ohio, Indiana, and West Virginia) and Tennessee and the mountain portions of Virginia and North Carolina.
In the 1940’s, burley production in the U.S. was increasing rapidly, making it difficult for burley producers in Tennessee to find an efficient means to handle increased production. The Federal Tobacco Program, established by USDA in 1938, provided a system whereby cooperatives could purchase excess production and store the tobacco until the market provided an outlet.
In 1953, Tennessee burley growers organized Burley Stabilization Corporation (BSC) to serve growers in Tennessee. BSC located its offices in Knoxville, TN and operated in 20 market locations across the state. In 1958, BSC expanded its operation to represent burley growers in western North Carolina. Expansion was completed with the inclusion of burley growers in Virginia in 1971. This made BSC the third largest farmer-owned cooperative at that time.
BSC played an important role in the administration of the Federal Tobacco Program for more than 50 years. That program provided for stable prices by adjusting supplies each year. BSC would borrow money from USDA to purchase excess tobacco at auction markets; then process, store, and sell that tobacco. And then repay the loans.
The Federal Tobacco Program was successful as long as the U.S. was the leading global producer of burley tobacco. But the Program resulted in escalating prices which eventually caused U.S. producers to lose market share to foreign producers. This system in the U.S. thus lost its capability to function as initially designed. Elimination of this Program became the only real solution to the U.S. tobacco marketplace dilemma.
In 2004, the Fair and Equitable Tobacco Reform Act ended the Federal Tobacco Program, further facilitating a new marketing system with individual growers contracting directly with the purchasers of their tobacco to determine production volumes.
BSC quickly responded to these changes, strategically restructuring in order to supply leaf tobacco from the world’s best burley growers to companies producing the world’s best quality tobacco products.