Tyron Spearman, long-time peanut marketing expert and publisher of the Spearman Reportsays most of the world is in the same boat as the U.S. when it comes to quality and quantity of peanuts.

“Argentina has some peanuts, but quality is always an issue. Other peanut producing countries had similar challenges as U.S. growers, and the result is just a so-so year for peanuts worldwide,” Spearman says.

Marshall Lamb, head of the USDA National Peanut Lab in Camilla, Ga., says as many as 30-35 percent of the 2010 peanut crop could go into the loan program for oil, because of quality problems.

“The crop looked good, yields were good, and even visually looking at the crop, it looked good from a quality standpoint, but the quality just wasn’t there when chemical analysis was done on samples,” he adds.

Approximately 45 percent of the 2010 crop delivered to buying points had to be further processed to reduce the aflatoxin level enough to deliver these peanuts to a buyer to use in edible peanut products.

Long-time North Carolina Peanut Grower and recent winner of the Virginia-Carolina Peanut Profitability Award, Vic Swinson says his crop of peanuts in 2010 was difficult to figure out. “Our yields were good, but the quality just wasn’t there. We had to blanch and re-sort lots of peanuts to get them ready to sell,” he says.

The 2010 crop put some shellers and buyers in a precarious financial position and may yet knock some of them out of business, Leek says.

“I talked to one sheller who told me 100 percent of the peanuts he bought that were in the #1 category, or good for the edible market, went to oil. Another sheller told me he spent 25 cents per pound, not per ton, to clean up the peanuts he bought,” Leek says.

“Just to make these peanuts edible, shellers who bought some of these high aflatoxin peanuts had to pay up to $500 per ton just to make the peanuts edible,” Leek adds.

“When you add 25 cents per pound to the cost of the peanuts, plus sheller costs, many peanut buyers lost money on every pound of peanuts they bought in 2010. Obviously, not many buyers are going to want to repeat that business decision next year.”

“Further processing was expensive. Many shellers and buyers went out on a financial limb to reduce the threat of aflatoxin, and still a lot of these peanuts won’t be used in the edible market, Leek adds.

Based on trend yields, the 2011 peanut crop is projected at 3.6 billion pounds — a 14-percent decline from last year and a 5-year low. The decline in acreage is likely to go considerably higher, because thousands of acres in the drought-plagued Southwest peanut belt either didn’t get planted or were destroyed and not re-planted.

Even the country’s top peanut producing state — Georgia — is looking at a huge drop in peanut acreage and perhaps a big dip in yields as well. Planting time drought and high temperatures have left little planting moisture for dryland peanuts and has clearly taken a toll on irrigated peanuts.

Georgia is projected to plant and harvest the fewest acres of peanuts since 1982. Nationwide, peanut acreage could fall below one million acres, or as much as 20 percent below projected pre-plant estimates.

Not only is this year’s crop one of the smallest on record, but yields are expected to be below average. As of mid-July, only 30 percent of the crop nationwide was rated in good-to-excellent condition.

Long-time South Carolina Peanut Specialist Jay Chapin says the key to reducing insect and disease damage to the 2011 peanut crop is water.