After nearly a half century of planting peanuts with a guaranteed price on at least a portion of their crop, peanut farmers are eyeing changes legislated in the Farm Security and Rural Investment Act of 2002 to determine how the new program will alter production and marketing strategies.
Mark Boardman of Lamesa, Texas, has been growing peanuts since 1993 and says changes in the decades-old peanut support program will alter the way he markets his crop.
“This year my peanuts are going to the loan. This is new to me. In the past, I've grown peanuts I knew were going to Hershey and I knew they would end up in a Pay Day candy bar,” he said.
Program changes, in a nut shell, include:
The 2002 farm bill ended the traditional quota system.
Peanuts are now just like any other commodity.
There is now a market loan program, a base yield, and a target price.
The old quota system was designed to ensure an adequate domestic supply of peanuts; the new farm bill is supposed to make American peanuts competitive on the world market but give growers a safety net in the form of a marketing loan.
“This new farm bill is going to allow us to be competitive and that's what we need,” Boardman said.
West Texas already has a competitive advantage in that it is the only region in the United States that can successfully grow all four varieties of peanuts: Virginia, runners, Spanish, and Valencias.
Dr. Justin Tuggle, general manager of DeLeon Peanut Company, Inc., says DeLeon Peanut helps its growers market the crop, and he like Boardman, said marketing the 2002 crop has been different because of the new farm bill.
“In the old program, most growers in this area were export growers.” he said. “They had to have a contract for the peanuts to be planted and sold, basically. They were at great risk if they didn't have a contract when they planted, because they may not have been able to sell them and they went in the loan for about $132 a ton.
“With the new program, they've got a marketing loan available for all types with prices equal to or better than what they had been receiving on some types of peanuts in West Texas for the last five years.”
He said growers can now put peanuts in a government public storage warehouse and have nine months to market the crop.
“This year, they can sell their crop at harvest, pre-contract, sell some later after harvest, or they can put it in the loan, so they've got a lot of different options to look at. The key to using the new farm bill is marketing.”
He said growers need to pay attention to the market, and grow varieties of peanuts in demand.
“People are looking at their base payments, counter-cyclical and decoupled payments, and are trying to figure out how they will get $495 per ton from the market price and program payments,” he said.
“They should consider that payment as separate and that they're going to receive it, and grow the peanut for the market.”
West Texas peanut producers have several advantages:
Four different varieties of peanuts can be successfully grown in the region.
It is less expensive to grow peanuts there than other parts of the United States.
With proper management, diseases are not usually a problem.
In-shell markets offer a good opportunity because the Europeans and other export markets like the Texas in-shell peanuts, which are known for good quality.
With a new farm bill to make production more grower-friendly, West Texas peanut growers can better provide the world with high quality peanuts of all varieties. Runners are grown primarily for peanut butter, Virginias and Valencias to crack open at a ball game, and Spanish, for Pay Day candy bars.
Most West Texas peanut industry observers said this year's crop is good — not excellent, but better than last year.
It has been a good year, and with the farm bill in place a little help from Mother Nature, peanut growers can have a little more success in years to come.