March 27, 2003

Peanut growers see widening gulf between prices

FRANKLIN--If you notice increasing prices on jars of peanuts in stores, it’s not because of peanut growers, said M.L. Everett, a Southampton County peanut grower.

During a gathering of peanut growers in late March, some growers expressed concern about the ever-widening gap between farmgate prices and retail prices of peanuts.

Peanuts were Virginia’s second leading cash crop in 1999, but by 2001, they had dropped to No. 4. They generated cash receipts of nearly $59 million in 2001.

They could drop below the No. 4 spot because the 2002 Farm Bill dismantled a price support system and a quota system that prevented over-production of peanuts and kept prices at a fair level for growers.

In the mid-1990s, some Virginia growers received as much as $1,000 per ton for raw peanuts. This year, they’ll be lucky if they receive a contract for $500 a ton.

During a March 21 meeting of the Peanut Advisory Committee of the Virginia Farm Bureau Federation, some growers indicated they would like a cost-analysis of what shelling companies pay for raw peanuts, shellers’ operational costs and what they charge consumers.

“We never seem to get our fair share,” Everett said. “It comes down to one thing: How cheaply can shellers get peanuts?

“If the sheller can prove to me that they can’t sell to the consumer any cheaper, then I’ll get out of the business,” Everett said.

The Economic Research Service of the U.S. Department of Agriculture analyzes price spreads between the farm value of crops and their retail prices. The retail price of peanut butter increased from $1.80 a pound in 1998 to $1.82 the next year to $1.89 in 2000. During the same time, raw peanuts on the farm decreased from 46 cents to 42 cents, according to the ERS.

Farmers continue to see rising costs in fertilizer, fuel, crop protectants and equipment. Harvey Dunn Jr., a Sussex County grower, said fuel “is one of our biggest increases in our production costs this year. Everybody else can tack on a fuel surcharge, except for the farmer.”

Everett noted that one particular farm equipment manufacturer employs an economist to determine “what we can pay for equipment and still keep our head above water.”

In March, many Virginia growers still were deciding how many acres to plant or whether to even bother planting peanuts this year. And to add insult to injury, South Carolina growers are being encouraged to plant Virginia-type peanuts, traditionally grown in Virginia and North Carolina, said Charles W. Swann, an Extension peanut specialist at the Tidewater Agricultural Research and Extension Center in Suffolk.

The large, high-quality Virginia peanuts account for about 15 percent of domestic production and are favored as snack peanuts, according to USDA. Runner-type peanuts account for about 75 percent of peanut production and are used mainly for peanut butter but also for peanut candy and some snack peanuts. Other types are Spanish peanuts and Valencias.

Contact Eric Miller, VFBF field editor, at 804-290-1133.