The Texas peanut industry is feeling the pinch after the Federal Drug Administration (FDA) found the Peanut Corporation of America (PCA) was willfully allowing salmonella contaminated peanut butter products into the food supply.
TPPB Director Ted Higginbottom, who raises peanuts in Seminole, said the impact of the salmonella outbreak on Texas peanut production reaches beyond the recalls.
"It's a trickling effect in the peanut industry," Higginbottom said. “The negligence of one company is hurting everyone from the farmer to the sheller to the food manufacturer.”
Since the salmonella outbreak in the PCA Blakely, Ga., facility, food manufacturers have seen a dramatic drop in peanut butter consumption, even though a large majority of peanut butter products were not recalled. On Tuesday, PCA’s Plainview, Texas plant voluntarily closed after suspicion that their products could also be contaminated.
Consumer apprehension caused by the product recalls is hurting the peanut industry, despite the fact that only about 1 percent of peanut products have been recalled. When demand for peanut butter products drops, so will the willingness of food manufactures to contract normal amounts of peanuts from producers.
"It’s unfortunate peanut growers in Texas can do everything right to produce a healthy and safe product to feed both their families and the nation, and then have to carry the burden for something they could not control," Higginbottom said.
In addition to the challenges presented by the salmonella outbreak, producers in Texas are also coming off a less than profitable year in 2008 due to high input prices and challenging weather conditions. The challenges of last year are carrying over into 2009, as drought conditions worsen across the state.
"A lot of producers in Texas are already behind after a rough 2008 and were looking at peanuts to carry the load," Higginbottom said. "Losing value in the market due to the salmonella outbreak will make it very difficult for everyone in the industry."
While there is never a good time for a salmonella outbreak, the timing could not have been worse for an industry valued at $1 billion to the Texas economy.
"This is the time in the year shellers are contracting producers' needs for the coming growing season, and producers are going to their bankers to borrow money to operate on for the year," Higginbottom said. "With a shaky market and unpredictable demand for the coming year, producers are going to be forced to make some tough decisions."
TPPB continues to encourage consumers to purchase retail peanut butter brands, because they are not linked to the PCA product recalls. For a complete recall list, go to the FDA's web site at www.fda.gov.