One for the Books

Enjoy the current market position, but remember a Farm Bill and trade agreements are needed.
By Amanda Huber

Plain and simple, there were not enough peanuts produced in 2016. But that’s what we know in hindsight. At planting, producers were cautioned not to plant too many peanuts and, for certain, don’t plant without knowing where those peanuts were going to go. Producers did just that–most holding to similar acreage as planted the year before or just a bit less. Drought and other weather conditions did the rest to make the crop come in nearly a million tons below expectations, although that large estimate was much debated.
Demanding Market

“Last year was one of the few years where demand was more than supply,” says Dell Cotton, Virginia Carolina Peanut Growers Marketing Cooperative. Demand was 2.9 million pounds and the crop came in short of that amount. “But that’s a good thing for us. We want demand to be higher.”

Tyron Spearman, executive director of the National Peanut Buying Points Association and marketing editor of Peanut Grower, says “This is the first time we’ve been this short on peanuts. At first it was estimated that there would be a crop of nearly 3.8 million tons. We ended up with 2,767,000 tons.

“We got some Seg. 3s and a lot that came in as Seg. 1, but have high aflatoxin. We’re having to reclean those to see if we can get them to clear inspection.”

Spearman says some of the decrease was related to extended drought and increased temperatures. “Peanut plants do not always want to peg down into scorching soil when the temperature is high and soil moisture is long since gone.”

Exports Slow
As for exports, Spearman says peanuts moving out of the country have slowed down just because there are not any in the market to really move.

“Canada continues to be our biggest buyer of peanuts and peanut butter,” he says. “China was big last year and kept peanuts out of the government loan program.”

Cotton says that South Africa and Argentina had problem crops last year, “and that opened opportunities for our peanuts.” He also points out that exports to China, while considered in-shell peanuts, are not always edible-use peanuts.

“What they are buying is important, but don’t get fooled by those numbers because it doesn’t always mean edible peanuts. Some of that was farmer stock that was possibly forfeited the year before and went into the Chinese oil market. But, they are buying peanuts from us and let’s hope it moves from farmer stock to more edible use.”

Spearman says the European Union continues to be a juggernaut of regulations that are tough to meet. “Meeting their level of less than four parts per billion is difficult even for the United States. You realize that one part per billion is like one second in 32 years. Now, with new testing equipment that can detect even smaller amounts of chemicals, producers are being told not to use certain products on their peanuts.”

Back To School
For school nutrition programs, Spearman says peanut allergy, plus a general change to school cafeterias has left peanuts and peanut butter off the menu in many schools.

“These days, school cafeterias mostly want ready-made meals, something they can pull out of a box or bag and put on a tray for kids,” Spearman says. “However, with that trend in mind, Smuckers is building a new plant to make ‘Uncrustables,’ the peanut butter and jelly sandwich with no crust, and they plan to supply several million sandwiches to the school lunch program.”

Farm Bill And Trade Agreements
Spearman says it is time producers look ahead to the Farm Bill and make sure legislators, especially any new ones, hear from the actual producers, as well as from state and industry representatives.

“Can we save what we have in the Farm Bill? The Price Loss Coverage and Agricultural Risk Coverage–will those provisions remain? What about peanut base, will it be updated?”  Spearman says.

“We need to keep separate payment limits for peanuts. Currently, peanut has its own payment limit provision, which will be important to keep.”

Cotton says trade agreements are also something producers need to talk about. “Most of our agriculture commodities rely on exports. We must have trade agreements to move our crops into export markets. Talk to your legislators and make sure they understand how important trade agreements are to agriculture.”

A Look Ahead

For 2017, Spearman says, the big question is will China return for more peanuts and at what price will look elsewhere?

“Shellers are upgrading plants to try to shell faster and move more peanuts into the market. Warehouse expansions are going on throughout the network,” he says. “Work with your buying point. The government does not want your peanuts. They want them moved into the market.

“Also, for good average yields and good quality for the market, it’s important for producers to stick with a good rotation.”