The Alabama Peanut Producers Association (APPA) board of directors has joined with the Florida Peanut Producers Association and the Georgia Peanut Commission to present a united front through the Southern Peanut Farmers Federation in support of a new peanut program.

Alabama producers join those from Florida, Georgia and Texas in endorsing a marketing loan concept peanut program that was presented recently to the U.S. House Agriculture Subcommittee on Specialty Crops.

“Growers looked at every option available. The need for being competitive with imports along with the political realities in Congress dictate that growers consider a new direction for our program,” says Carl Sanders, president of APPA. “Any program must address these key issues plus provide adequate production management and provide a fair compensation that is quota related.”

The program approved by the Alabama board is consistent with the marketing loan concept that has gained support from peanut producer organizations representing approximately two thirds of the peanuts grown in the United States.

First time in history

“This is the first time in history that peanut growers, shellers and manufacturers all support one program concept,” says Armond Morris, chairman of the Georgia Peanut Commission. “Now that Alabama is on board, the Southern Peanut Farmers Federation endorses one concept — the marketing loan.”

The Southern Peanut Farmers Federation's unity in endorsing the marketing loan proposal will further strengthen the concept, says Larry Ford, president of the Florida Peanut Producers Association. “This will allow the federation to speak on the issue with a unified voice,” says Ford.

The marketing loan concept, as outlined in congressional hearings, would be similar to marketing loan programs used for other crops. It would include a non-recourse loan rate of $500 per ton, which would be available to all growers.

Because of the significant decrease in the price of peanuts, the new program would include an annual escalator based on the cost of production and applied to the marketing loan rate. It would be tied to the consumer price index with a maximum increase or decrease of 2 percent per year of the total loan rate.

And, to accomplish the objectives of the program, the marketing loan would not be subject to payment limitations; or, a commodity certificate program, similar to the program in effect for other commodities, would be made available to peanut producers to minimize forfeitures and encourage the orderly marketing of peanuts pledged as security for loans.

In addition, the program would include an annual de-coupling payment to current quota holders of 14 cents per pound. Since these payments would be decoupled from production, they would not be subject to any World Trade Organization (WTO) restraints. For purposes of the transition payment, the quota would be held at the 2001 level for the life of the bill.

Many observers in Washington and the peanut-producing states believe it will be difficult to pass a new peanut program that maintains the quota system.

“That's why we're favoring the marketing loan concept,” says Don Koehler, executive director of the Georgia Peanut Commission. “Based on what we're hearing in Washington, there's strong opposition to the quota program, and it passed by only three votes in 1996.”

Worst scenario

A continuation of the current peanut program, or one similar to the current program, would be the worst thing that could happen to growers, says Koehler. The future of the current no-net cost program, he says, would include an eroding domestic marketplace, declining quota poundage as quota peanuts are replaced by lower cost imports, producers increasingly required to offset government costs, virtually no export market, declining import tariff protections, increased foreign competition, and economic incentives for new investment in peanut-producing countries.

The objectives of the marketing loan program for peanuts, notes Koehler, is to develop a program where producers have more opportunity for profitability than under the current program, provide equitable treatment to those who have invested in the peanut program, be more competitive in the global marketplace and limit government cost exposure.

The National Peanut Growers Group (NPPG), meanwhile, has endorsed a “marketing competitiveness” peanut program that would retain a form of the current quota system of growing and marketing peanuts. While the NPPG is made up of eight state producer groups, not all of its members are supporting the marketing competitiveness concept.

Under the NPPG proposal, the support rate for the producer would be 39 cents per pound or $780 per farmer stock ton. Handlers would buy daily from a determined world price of about $500 per farmer stock ton or 25 cents per pound. The government would pay the difference, or about $336 million per year.

The proposal also includes a cost of production adjustment provision that would be adjusted annually at a rate of not less than 2 percent, using the Consumer Price Index.

Congressmen from peanut-producing states have urged the two grower coalitions to agree to a compromise plan.