Producers continue to have serious concerns regarding the 2012 farm bill and the possibility of peanuts again being excluded from options of risk management, Grissom told senators.

“Peanut growers currently rely on direct payments, the marketing loan program, and counter-cyclical payments as a safety net to use in obtaining loans from their bankers to plant a crop each year.

“If we had the choice, we would support the continuation of these programs at the current levels. However, faced with the prospect of significant cuts to the agricultural budget as part of current federal deficit reduction efforts, we understand that the Agriculture Committee needs to look at new farm program options.”

The absence of a crop revenue insurance policy for peanuts, he said, only serves to make the lack of risk management tools much worse. “Most of the commodity program options being discussed this year are predicated on the existence of crop revenue insurance as a foundation of the policy. That option is simply foreclosed for peanuts because RMA has not yet been able to clear a revenue policy for our crop.”

In addition to having a viable crop revenue insurance program in place by 2013, peanut producers need a choice between a new revenue program for peanuts and a target price program for peanuts, said Grissom.

Under both proposed choices — a counter cyclical-type program and a new revenue program — peanut farmers would continue to have a marketing loan program as it exists in the current farm bill in order to market their peanuts.

“This producer choice option is critical due to the difference in the economic environment for peanuts relative to the Midwestern corn and soybean farmers.

“Farmers can only sell to two major shellers and a few small shellers, which is an oligopoly marketing environment. Thus, peanut farmers are subject to potential major price swings. When prices become depressed which peanut farmers experienced in 2009, revenue insurance programs do not provide a safety net.”

A peanut revenue insurance program must be developed and made available to peanut growers beginning with the 2013 crop year, said Grissom.

“The price on which this program is based shall be the Rotterdam prices index as adjusted to reflect the farmer stock price of peanuts in the U.S. This price may be adjusted by USDA’s Federal Crop Insurance Corporation to correct distortions or anomalies that would undermine the program.”

Peanuts are unique in needing crop insurance that accounts for differences in the four peanut types — Runner, Virginia, Spanish and Valencia peanuts, said Grissom. “We support the Agriculture Committee’s inclusion of language in the farm bill ensuring that USDA adjusts the relative price for these four types of peanuts from the Rotterdam price.”

Once the necessary improvements to peanut crop insurance are in place, he said, any savings that are achieved from cuts to the ACRE program, direct payments and counter-cyclical payments should first be devoted to the implementation of a revenue insurance program that is as beneficial to peanut growers as the revenue insurance programs available to other commodities.

Any additional savings should be directed to a new farm level revenue “assurance” program for peanuts that is comparable to that of other commodities, so peanut growers have the same access to additional risk management tools beyond those provided in the new revenue insurance policy, said Grissom.

(Regardless of the outcome of the new farm bill, peanut growers have been known over the years to help themselves. As an example, the Georgia Peanut Commission recently announced $260,000 worth of funding for 2012-13 research projects. To see where that research is going, click here. You might also be interested in reading about how national peanut specialists see the coming season shaping up. For that see Peanut agronomists share forecasts for 2012).