By Brad Haire
University of Georgia
"The biggest issue facing the peanut industry is the oversupply this year's crop will create," said Nathan Smith, a peanut economist with the UGA Extension Service.
U.S. farmers are expected to produce a record 2.6 million tons of peanuts this year, Smith said, about 900,000 tons more than last year.
Georgia farmers are on track to have a state record of 1.2 million tons, he said, about 250,000 tons more than last year.
Farmers have had problems with some peanut pests this year, said John Beasley, an agronomist with the UGA Extension Service. But a wet summer has hit Eastern peanut-producing states in all the right places, contributing to the crop's good growth.
"Unless something really bizarre happens in the next month or two, the peanut crop will certainly be a good one," Beasley said.
U.S. peanut farmers planted about 1.6 million acres of peanuts this year, 13 percent more than last year. Georgia farmers planted about 770,000 acres, 22 percent more than last year.
Farmers planted more peanuts this year because prices were good last year, Smith said, and prices for other crops like cotton and soybeans are low.
U.S. peanut consumption has increased by 17 percent in the past two years. "This has certainly helped the industry," he said. But exports have been down in recent years.
The United States could have a peanut surplus of up to 1 million tons to carry over into next year, he said, about twice as much as it usually carries.
The oversupply has affected prices this year. Direct contracts between peanut shellers and farmers are few and priced low. Contracts last year were around $400 per ton. Most of the peanut crop will have to go into the government-funded U.S. peanut program this year. It guarantees farmers $355 per ton.
This year's oversupply could cause even bigger problems next year, Smith said.
"It's going to create a storage problem for next year when warehouses are full and there is a need to store the '06 crop," he said. "Unless we can move these peanuts in the export market, peanut prices could be even lower next year.”