The peanut industry will be better
The difficulty in today’s farming environment is to be optimistic about anything. The entire peanut industry has been battered about the recall. All segments are searching for ways to improve markets and remain optimistic.
The National Peanut Board is tracking consumer opinion, and early results show that almost all consumers are aware of the Peanut Corp. of America and the salmonella outbreak, that people have gotten sick and died and that products containing peanuts have been recalled.
The survey also shows that almost 20 percent of consumers have stopped eating peanut butter, even though it was not part of the recall.
While consumers might be confused for a time, the industry can be proud of the proactive team that has worked around the clock to be sure media report the facts and to get the facts to consumers and the industry. Farmers invested in check-off programs and associations and when the battle cry came, they were ready.
It’s The Economy
Producers knew a 2,550,000 ton crop would mean a decline in prices. USDA estimates the total supply, counting the carry forward, at 3.1 million tons of peanuts for 2009. On disappearance, usage is estimated at 1,795,000 tons, up 2.9 percent before the recall. Peanut crush is the same, with seed and residual is up 15.3 percent (not likely).
Peanut exports were predicted to increase 10 percent for a total disappearance of 2,229,500 tons. That means the industry will have 880,000 tons carry forward to the next crop. Pipeline takes about 300,000 tons, so excess is about 580,000 tons or about 26 percent of the demand for peanuts. Overall, a 30 percent acreage reduction is recommended.
From the Ag Outlook, cotton acres are expected down, corn is struggling to remain above $4 per bushel and soybeans, which are not a good rotation for peanuts, are still above $8 per bushel. Competition for land is not the same as a year ago.
Manufacturers are advertising. Legislators are introducing food safety laws, and inspections at all locations have increased. Food and Drug Administration agents are looking at peanuts in the field, at buying points and in warehouses to determine if agricultural practices have increased any bacteria on crops.
Market Loan Assistance And Budget
With prices low, the counter-cyclical payment could approach the maximum of $104 per ton, but that comes after the season is over, and calculations are difficult to make.
What’s A Farmer To Do?
Plant conservatively to survive this crisis, and the peanut industry will be better in the future. Keep up with the markets and try to be optimistic.
Leading Market Indicators (as of March 2, 2009)
• 2008 Crop predicted at 2,496,650 tons