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Tobacco is notorious for being one of the most difficult commodities to grade. Here, we determine the implicit prices of various tobacco characteristics using a hedonic price model. The factors affecting the price received for burley tobacco include reputation of the producer, month of auction and lot size in addition to variables representing quality characteristics. Many of these characteristics can be controlled by producers through production, harvesting, and curing practices. The implicit prices should help farmers evaluate whether they should adopt processes to increase quality. In spite of the large number of factors included, only about half of the price variation across lots could be explained. Thus, the difficulty of grading tobacco is confirmed. Since a universally acceptable grading system is unlikely, any attempts to develop an electronic market will likely need to include pictures of the tobacco and may need more precise measurements of characteristics such as texture, aroma, and uniformity.

Hedonic prices of malawi burley tobacco