Representatives of the Georgia Peanut Commission met recently with U.S. Department of Agriculture officials in continued efforts to express the severe plight of peanut farmers under the administration of the new farm bill.
A representative of Birdsong Peanut Company joined the meeting to express concern over the current market situation and the impact it has on the whole industry. He presented evidence supporting the commission's claim that the posted price has injured exports of peanuts from the 2002 crop. This has caused ripples through the entire market, as the domestic market now appears glutted.
“I was very pleased with the reception we got. They listened intently and it is quite evident this is still a program that's under development in the department. All I can say is nice things about the way this meeting was handled and I hope that the result is positive for all of us,” stated Don Koehler, the commission's executive director.
Koehler presented economic data during the meeting to support the commission's efforts to increase Loan Deficiency Payments (LDP's) to producers in light of a very soft market. Farmers have found themselves with no market in recent weeks and the government isn't prepared yet to make price support loans.
Peanut farmers have faced severe drought, which reduced yields during the growing season. These yield losses were further complicated with excessive rainfall, including two tropical storms at harvest. It is normally the time that crop loans should be settled and many farmers find themselves coming up short.
“We have got to get a break for our farmers,” said Armond Morris, Chairman of the Georgia Peanut Commission. “The export market is essentially dead for the 2002 crop at this time and that is depressing prices across the board.” Birdsong Peanuts is one of the historic pillars in the US export of peanuts. Exports normally account for about 30 percent of the market for edible peanuts produced in the United States.
“The commission was very pleased Birdsong Peanuts could join our effort. They have real world data and experience in the export market,” commented Bob Redding, the commission's representative in Washington. “This is one of many meetings at USDA and Capitol Hill we have had on the loan repayment issue. Although the problem has not been corrected to date, this meeting provided us an opportunity to share the direct economic impact of the announced loan rates on export activity and our producers' income.”
The commission stated a need to see LDP's at about $85 per ton if the market is to once again find energy. Because exports need to be committed soon for the balance of the crop, time has become of the essence. Failure to make those commitments will cause the market to shift to other peanut producing countries to satisfy demands. Currently, LDP's are established by the USDA at about $21 per ton.
LDP's are government payments made to producers in the event that prices are depressed and the market is below the support price stated in the government loan program. They are paid as a disincentive for farmers to forfeit peanuts to the government, thereby increasing the potential for government cost.
The new federal peanut law includes a peanut quota buyout of 55 cents per pound, a loan rate of $355 per ton, handling and storage fees of $60 per ton, direct payments of $36 per ton paid on newly established peanut bases, and the potential for up to $104 per ton of base in the event the market is below a target price of $495 for peanuts. It was signed into law May 13, 2002.