While acreage declines, yields increase
The peanut industry has struggled in the past year due to oversupply, lower prices and a health scare. Acreages planted declined as growers opted to plant other crops producing greater income.
In 2009, Virginia peanut growers planted 11,500 acres, compared with 23,000 in 2008, says Dell Cotton, executive secretary of the Virginia Peanut Growers Association, Inc. He says many states that grow peanuts experienced declines in planted acres due mainly to a surplus of peanuts, which was caused by the record crop produced nationwide last season. The decrease nationwide, though, was down only about 28 percent compared with about 50 percent in Virginia.
“In my lifetime, I never would have thought peanut acreage would drop this low in Virginia,” says Billy Bain, a grower in Dinwiddie County, Va.
Bain was one of two growers who raised about 100 acres of peanuts in 2009, says Mike Parrish, the county peanut extension agent. In the past seven to eight years, peanut production in Dinwiddie County dropped from nearly 6,000 acres to less than 100 acres.
In 2001, Bain grew about 605 acres of peanuts, but in 2008 he raised only about 265 acres. Following his steady decline in plantings, he only grew about 53 acres in 2009. He made up the difference in income by raising more soybeans, expanding from 1,500 to 2,000 acres because their price was higher than peanuts.
Bain says growers in Virginia cannot continue growing peanuts for a price range of $450 to $475 per ton, and adds that the only way a grower can profit doing that is to grow peanuts that yield an average between 4,500 and 5,000 pounds per acre.
Dinwiddie County growers averaged nearly 4,000 pounds per acre in 2009, Parrish says, which he attributed to the majority of the crop being irrigated. Bain says his crop averaged just over 4,700 pounds per acre, due to good growing conditions throughout the year, and that 90 percent of his crop was irrigated.
In 2008, Virginia peanuts yielded almost the highest ever, Cotton says, with growers seeing an average yield of 3,300 pounds per acre on the 23,000 acres planted. He predicts the 2009 crop will top that average yield at an estimated 3,600 pounds per acre.
“While this sounds extraordinary, one must remember that there are some benefits to growing fewer acres of peanuts,” Cotton says. “These benefits are that peanuts migrate to the better land, and definitely producers are able to have longer rotations, the probably single most important determinant in improved yields other than maybe the weather.”
In Virginia, Cotton says Southampton is the largest peanut-producing county, followed by the counties of Greensville, Suffolk, Surry, Isle of Wight and a few others.
With less planted acreage in 2009, can Virginia peanut growers rebound in 2010 and beyond from pre-buyout days? And can Virginia become known again as one of the top peanut-producing regions of the country?
“We will not see 75,000 acres of peanuts in Virginia again,” Cotton says. “We have lost too much land as well as too much of the buying network infrastructure.
“We don’t necessarily have to have that many acres to have a healthy growing environment in our state,” he adds. “Unlike many states, our producers for the most part are happy with 200 or 230 acres of peanuts, not 1,000 acres. We have the ideal farm situation in our growing area, but we must also remember that these farmers must grow the crop that gives them the best return on their investment.”
The return to increased peanut acreage won’t come easily. Virginia lacks the field sizes to grow large acreages, he says, and the state has the highest cost of production among active peanut-growing states, largely due to diseases. Another reason is that other states, typically not known for growing peanuts, can raise them cheaper than Virginia growers. Of course, once those areas experience peanut diseases in greater quantity, their costs will likely increase, he says.
“We hope through better rotations and with other cultural practices that we can hold onto peanuts as a viable crop in our state,” Cotton says. “Not only is the crop important to the farm economy, but we have some aspects of the industry that are scarce in other areas, such as the abundance of gourmet peanut processors. They are in this region for a reason, and hopefully we can do our best to make sure that a viable growing and processing industry is maintained here.”
One of the biggest drawbacks is the price offered by contractors. Cotton says Virginia and Carolina growers cannot plant peanuts, especially in the northern section of the state, for the price offered in 2009. “This year’s price will not only have to allow the farmer a profit, but will also have to compete with good cotton and soybean prices, which farmers are locking in currently,” he says.
Parrish says if peanut contractors offer contracts at or above $600 a ton in 2010, he believes growers will raise more peanuts. However, if contracts offered are near $450 a ton, he predicts no growers in Dinwiddie County will plant peanuts this year.
“This is directly related to contract price and the fact that growers cannot contract out more than one year at a time without a lot of market uncertainty,” Parrish says. “It’s hard for a producer to put together a financial plan for more than one year out. Contract pricing and availability today seems to be more uncertain than the weather. One good thing for our area producers is the fact that they still have a great peanut growers association that is working to find ways to strengthen the Virginia-Carolina peanut market.”
He says Virginia growers would like to grow more peanuts because they fit well in a cotton, grain or tobacco cropping rotation. “Peanuts have always been a great crop to rotate with, and at one time it was a dependable cash crop,” Parrish says. “Each year we go without growing peanuts, it is reducing the quality of the peanut equipment and infrastructure to handle peanuts in the area. Over the last two years, I have seen more older equipment headed to the scrap yard. Ten years ago, an old peanut harvester or digger would never leave the farm until all the parts had been salvaged to keep other pieces of equipment going in a pinch. If the market is going to make a comeback, it has to be economically feasible to encourage production investments and upgrades.”
Educating the public is a good next step to consider, Bain suggests. He says Virginia types are gourmet peanuts with a better taste but when making a purchase consumers just focus on buying peanuts without considering the taste or size.
He says shellers need to promote that idea of specialization by emphasizing the positives of Virginia-type peanuts and prominently displaying the Virginia-Carolina marketing logo.
On February 5, 2009, the U.S. Department of Agriculture (USDA) announced it planned to suspend and proposed to debar Peanut Corporation of America (PCA) and its subsidiary Tidewater Blanching LLC from doing business with the federal government. PCA was at the heart of the salmonella scare.
The USDA immediately excluded PCA from participating in government contracts or subcontracts, as well as federal non-procurement programs. The peanut product company also was excluded from doing business as agents or representatives of other contractors, including serving as a subcontractor to other individuals or companies doing business with the government.
The suspension was to remain in effect for one year, and the debarment was proposed for three years.
In addition, U.S. Secretary of Agriculture Tom Vilsack removed Stewart Parnell, president and chief executive officer of PCA, as a member of USDA’s Peanut Standards Board. Ironically, the board advises the ag secretary on quality and handling standards for domestic and imported peanuts marketed in the United States.
“The salmonella incident hurt the industry as a confused public just threw up its hands and quit buying all peanut products,” Cotton says. “We all know that our peanuts typically are not made into peanut butter, which was the direct focus of the recall. Again, though, I think it is fair to say that all regions suffered.
“We seem to have recaptured most, if not all, of the consumption lost during the incident,” he continues. “While the awful economy has also hurt many segments of our industry, the peanut butter category has shone. The general public knows that peanut butter provides a cheap source of nutrition and protein and our industry will continue efforts to regain and increase market share.”
Parrish believes the salmonella outbreak and the press it received hurt the industry, but probably for a shorter period of time than people would expect. He says the overproduction in some states created the larger impact on overall price for peanuts than the salmonella scare.
He adds that more growers south of Virginia are raising runner-type peanuts (smaller), which he believes should help in marketing Virginia-type peanuts (larger) grown in the state and in North Carolina. He hopes the Virginia-type peanuts marketed as specialty products will do well in established stores with niche markets.
Virginia and the whole peanut industry face a tough climb back up to their prominence in production after oversupply, low contract prices and a disease scare. At this point, what 2010 will hold depends on many factors, with price leading the way.
“It is my hope that a decent price on contracts will bring some of those lost growers back,” Cotton says.
Rocky Womack has written about agriculture and business for more than 25 years and currently serves as a contributing writer and correspondent for agriculture and business magazines, domestically and internationally. In the past, he has worked as a magazine editor and daily newspaper writer. Womack has won numerous awards for his interviewing, writing and in-depth reporting.