The international market holds the key for growth of the U.S. peanut industry.
“Our future is tied up in the export of peanuts,” says Jeff Johnson, president of Birdsong Peanuts. “Peanut farmers in the United States are producing more peanuts than people can consume,” Johnson said during the recent Southern Peanut Farmers Federation annual conference in Panama City, Fla.
Yield estimates this year already show the peanut crop likely will exceed 3,000 pounds per acre.
“Every year 150,000 to 200,000 tons of peanuts add to carryout numbers. Where do all these excess peanuts go?” asks Johnson.
The domestic market is a large consumer of peanuts and U.S. demand has grown but is slowing.
“We are producing more peanuts than we can sell. We don't need an industry with over-capacity. Only 1.6 million tons of peanuts are actually used by the American economy and U.S. consumers aren't going to eat more peanuts than they want,” says Johnson.
That leaves the international market, where competition is significant, to reduce carryout.
“I feel like Brazil is the biggest threat,” says Johnson. “Labor there is $5 a day, they still have idle land, and peanuts are a good rotation crop for sugarcane, another important crop.”
Brazil hopes to export 200,000 tons of peanuts per year. “They could go beyond that,” says Johnson.
Competition has already staked a claim in the world market.
“For the first time, the United States is considered a residual supplier in Europe and that is not a good thing,” says Johnson. “The market will not pay more for U.S. peanuts than they will for Argentinean or Brazilian.”
What will reduce carryout?
“We can give some away but it still won't fix the problem,” says Johnson.
He says peanuts offer help against malnutrition in some developing nations. A peanut butter-like-formula may help malnourished children gain weight. That's a good thing for the peanut industry to do, he says, but will not reduce stocks significantly.
Johnson recommends three measures to help the industry grow.
- Support political action committees.
- Reduce costs throughout the system.
- Support agronomic research.
“We will never grow peanuts as cheaply as Argentina or Brazil, but we hope to reduce costs enough to offset transportation charges,” says Johnson.