Published on 10/25/00

Peanut Prices Low on Farm, Steady in Store

After battling another difficult growing season, farmers are getting low paychecks when they take some of their peanuts to the market. However, consumers will see no change in prices at the supermarket, says a University of Georgia expert.

Market prices for peanuts remain low. This is due to world competition, says Nathan Smith, a UGA Extension Service economist.

"The world market is trading at about $345 per ton, with Argentina and China selling for even less," Smith said. This is below the cost of producing the crop for many Georgia growers.

Domestic, Export Markets

Each year the U.S. Department of Agriculture predicts how many peanuts will be needed for U.S. consumption. These are known as quota peanuts. They're used for peanut butter, candy bars, snacks and other goods made for American consumers.

Farmers get about $610 per ton for these peanuts through a federal program. Georgia will produce about 487 million tons of quota peanuts this year, about 40 percent of the national crop.

Many farmers grow peanuts beyond their quota. These are known as additional peanuts and are commonly grown for markets outside the country. Since these markets are limited, farmers with additional peanuts are having to compete this year, Smith said.

Many farmers may have to put this season's additional peanuts into the government loan, which gives a minimum of $132 per ton, Smith said. That's far below what it costs them to grow the peanuts.

No Change in Store Price

Despite the third year of poor growing conditions, farmers are expected to reach the national quota. This means that consumer prices shouldn't change, Smith said. For every 25 cents' worth of a candy bar, he said, the peanuts cost 1 cent.

"Even if the quota is not met, additionals can be converted into quota peanuts to assure enough peanuts for making peanut butter, candy and snacks," Smith said. Americans eat about 2 million pounds of peanut butter and 1.6 million pounds of roasted peanuts every day.

Peanuts Vital to Economy

Peanuts comprise one of the state's largest cash crops, worth about $400 million this year. The crop is grown in 70 counties in the state.

The total value of the crop is hard to pin down. But peanuts add about $1.1 billion to the state's economy in direct income, related jobs and other jobs, services and economic activity, Smith said.

About 95 percent of the crop is planted to runner varieties, the kinds that make the best peanut butter. Around 75 percent of the state's peanuts are used to make peanut butter.

Improving Production, Appeal

A spending bill recently cleared both the House and Senate to provide for several agricultural research projects. The projects will promote the quality and competitiveness of the American peanut industry and reduce the risks of peanut allergies.

Congress approved $250,000 for research on Tomato Spotted Wilt Virus, $400,000 for the National Center for Peanut Competitiveness and $500,000 for peanut allergy research.

The NCPC works to increase profitability for farmers and looks for better ways for peanuts to appeal to consumers. The research focuses on reducing peanut food allergy risks. In its second year, the UGA project will support efforts to reduce the potential for peanut-related illness. One of the goals is to develop a vaccine for people who are allergic to peanuts.

Brad Haire is the former news editor with the University of Georgia College of Agricultural and Environmental Sciences.