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Looks like peanut growers pay attention to market factors

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• Peanut acres are down this year.

• No surprise given last year’s record-busting crop. The market wasn’t aiming for near as many acres this year.

• But when you see a number as low as 417,000 acres for Georgia peanuts, well, that catches your eye.

Peanut acres are down in 2013. That’s no surprise given last year’s record-busting crop. The market wasn’t aiming for near as many acres or production this year.

But peanut acreage numbers released last week, well, show peanut acres, or farmers, can still surprise.

The numbers as we now know them:

• National Agricultural Statistics Service has U.S. peanut acreage pegged around 1.1 million acres. Georgia, the country’s leading peanut state, roughly planted 500,000 of those acres.

• Farm Service Agency so far has 1 million acres accounted for, with Georgia acreage dipping down to 417,000 acres. That FSA number could change and the final acreage might not be known for another month.

Either way, acreage is down this year compared to last year. Way down.

The old quota system for peanuts of course regulated production. Did until 2002 when the buyout came and the program ended. Since then, well, the peanut market has been a rollercoaster: highs, lows, dips and turns.

Earlier in the spring, smart industry folks and farmers I spoke with figured most farmers, considering the over-production of 2012, would return to a typical rotation-type acreage number. Some did, I’m sure. But overall the numbers show they planted much less.

Farmers not scared to deviate from rotation

Peanut farmers have shown they can deviate from historic rotations to meet market demand, or make the best financial investment and decision for their total farm acreage. Sometimes they shoot too high on acres, but they are willing to shoot low, also.

Seems this year, and if the current numbers out there now hold close to steady, peanut growers planted 25 percent to 30 percent fewer peanuts than they do in a typical three-year rotation cycle. 

High corn prices early in the spring helped woo those peanut acres away. Corn prices have since gone down, and are on the verge of their own boom-or-bust cycle. But when you see a number as low as 417,000 acres for Georgia peanuts, well, that catches interest. Georgia peanut rotation acres, if you average out the last 10 years or so, falls around 600,000 acres.

We are now a decade into what has become the boom-bust cycle in the peanut markets. Farmers over-produce one year, like last year, and they then pull the acres away for two or three years to subdue the hangover from that last over production.

Example: U.S. growers over-produced in 2005, 2008 and 2012. Of course, “over-produced” is a relative term. Simply put in this case, it means production, plus carryover from the previous year, way out-paced demand, or consumption.

Many experts agree now that the industry likes about a 600,000-ton carryover from year to year, a nice level to keep shellers shelling as they wait on the new crop to come in with no shock to the supply line. But when you get into the 1 million ton carryover world, like we are in now, well, markets react. Prices go down and acreage follows. And here’s the thing: Growers obviously pay attention.

Regardless of how the final acreage is tabulated or massaged, peanut acreage numbers are headed in the right direction to get back to a more stable supply and demand situation, proving peanut farmers don’t have an indulgent urge to put peanut seed in the ground if the price, or if they think the price, won’t be there to make it worth the effort.

At least they can hold back that urge to plant a bunch of peanuts to every three or four years, or they just react to the booms and bust farming seems to always generate. It’s an interesting thing to watch, I guess, if you aren’t strapped to the front car of that rollercoaster.

Blogger's note: Nathan Smith, University of Georgia peanut economist, helped a mathematically challenged farm reporter with the numbers in this blog.

 

 

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