1 1976 equals $277,500,000 and 12,500, respectively. Detail by States not available but the 1972 distribution continued. 2 Estimated.

3 Includes 2 plants in Louisiana.

These four leading states account for well over 80 percent of the business volume of plants in tobacco processing (stemming and redrying). Virtually all of this processing is done at specialized plants, with only about 3 percent of the U.S. total done at other kinds of factories primarily cigarette plants.

The Manufacturing Industry.—The 180 manufacturing establishments in the tobacco products industry are located in twenty-nine states. With nationwide sales organizations, however, the industry provides employment in all fifty states. In contrast to tobacco growing, which is highly labor intensive, cigarette manufacturing is less so. Other tobacco product manufacturing is less so. The high degree of concentration of cigarette manufacturing means virtually all of the output is found in three States as follows:

1 1976 equals $3,591,900,000 and 40,800, respectively. Detail by States not available. 2 Estimated.

Other tobacco products account for less than 10 percent of the retail value of tobacco products but are manufactured in more numerous, smaller scale factories than cigarettes. The number of factories manufacturing cigars and chewing and smoking tobacco has been declining for many years, but remain more scattered geographically than in the case of cigarettes.

Tobacco Product Distribution-The tobacco industry has perhaps the most widely dispersed distribution system to be found for any product in the country. There are about 3 thousand wholesale establishments handling the distribution of tobacco products to retail channels. In 1976, wholesale sales amounted to nearly $11 billion. Table 3 presents wholesale and retail sales data by State as well as excise tax collections for the combined tobacco products industries. Overall, the distribution of this product through wholesale and retail channels involves an estimated 200 thousand persons.

TABLE 1.-TOBACCO: ALLOTMENTS, FARMS, PRODUCTION PRICE, VALUE, BY STATES, 1977

Source: Data from Agricultural Stabilization and Conservation Service, and Economics, Statistics, and Cooperatives Service.

37-447-789

TABLE 2.-TOBACCO, ESTIMATED COSTS AND RETURNS, ALLOTMENT VALUE, BY STATES, 1977

Source: Robert H. Miller, Economics, Statistics, and Cooperatives Services, U.S. Department of Agriculture.

TABLE 3.-TOBACCO PRODUCTS-VALUE OF PRODUCTS DISTRIBUTED AND STATE TAX COLLECTIONS, BY STATE,

1 Wholesale value increased uniformly by States to equal U.S. retail total.

Source: "Tax Administrators News," Federation of Tax Administrators, April 1977, p. 41; U.S. Bureau of the Census, 'Governmental Finances in 1975-76," GF-76, No. 5, 1977, pp. 47-49; "NATD Coordinator," National Association of Tobacco Distributors, 1977, pp. 213-8.

Senator FORD. The next witness representing tobacco warehousemen will be Mr. Phil Wells, president, Burley Auction Warehouse Association and he's from Glasgow. Phil, will you come forward and we would be delighted to hear your testimony.

STATEMENT OF PHIL WELLS, PRESIDENT, BURLEY AUCTION WAREHOUSE ASSOCIATION, GLASGOW, KY.

Mr. WELLS. Thank you, Senator. The statement I would like to read to this committee, with some changes, is the official position of my association on S. 3118, and it's already been presented to you in Lexington yesterday, but I would like to present it from this section of the State of Kentucky today.

Senator FORD. Fine. I appreciate it Phil. If you would proceed, we would be delighted to hear it.

Mr. WELLS. My name is Phil B. Wells, Glasgow, Ky. I am president of the board of the Burley Auction Warehouse Association, a trade association representing auction warehouses in eight States comprising 379 warehouses on 61 markets. In addition, I serve as a director of the Council for Burley Tobacco, a member of the Governor of Kentuckey's Agricultural Advisory Committee, and director of the Kentucky Tobacco and Health Institute. Also, I am testifying as a tobacco warehouseman.

I would like to commend Senator Ford and the Consumer Subcommittee of the Senate Committee of Commerce, Science, and Transportation for holding this hearing to consider S. 3118, the Smoking Deterrence Act of 1978.

May I begin saying that for over 200 years burley tobacco has been an economic lifeline to Kentucky. Beginning in 1790 when Kentucky was part of Virginia, farmers shipped over 250,000 pounds of leaf to New Orleans.

Although times have changed, the importance of tobacco to Kentucky is now greater than ever. We rank the highest of any State as to the percentage of cash receipts from tobacco to total farm marketings. It is not only our largest cash crop, but this year's crop will contribute over $600 million to our economy. This comes from 179,000 acres, 143,000 allotments, and over 120,000 tobacco farm families depending on tobacco for their livelihood. In addition, they in turn employ many thousands of Kentuckians during the growing, harvesting, and marketing season.

This is just a beginning of the economic lifeline that begins on the farm. The $600 million cash receipts in less than 2 months' time is conservatively turned over four to five times throughout almost every segment of our consumer market. Merchants, bankers, local governments, or you might say, every Kentuckian shares in the economic benefits from Kentuckey's golden burley.

There are the manufacturing plants, numerous processing plants, and over 200 auction warehouses that will handle this year's over 425 million pounds of the golden leaf.

All Kentuckians are proud of this important cash crop and what it means to our Commonwealth. We are also proud of the fact that it is the most successful commodity program that has been administered at the Federal level without cost to the taxpayers. There is a united effort