Planting peanuts without a contract could be a risky proposition this year, considering the great likelihood of increased acreage, says Nathan Smith, University of Georgia Extension economist.

“If you plant peanuts without a contract, you run the risk of getting lower prices because the production is likely to be greater this year,” said Smith at the recent Georgia Peanut Farm Show in Albany.

Interest in peanut production is high for 2012, thanks to recent production shortfalls and resulting higher prices, he says. All of this sets the stage for an interesting year.

“In Georgia, we had our smallest acreage in three decades in 2011. Our final estimate was 475,000 acres, and the U.S. acreage was down almost as much as in 2009.

“Domestic use has stayed stable and has improved. The current situation is a supply problem with peanuts, and the big question is whether or not we’ll have enough peanuts in 2012,” says Smith.

A couple of states had record peanut yields this past year, he adds. “Florida tied their record average yield from the previous year and Mississippi had a 4,000-pound yield, and Georgia’s yield was adjusted up to 3,520, so some of those 6,000 and 7,000-pound yields we heard about brought up Georgia’s average yield.

“We had a higher-than-usual amount of abandoned acreage in Georgia in 2011.”

The U.S. average peanut yield in 2011 was basically the same as in 2010, at 3,300 pounds per acre, says Smith.

“The record was set in 2008, at 3,426 pounds per acre, and in 2009, it was close to the record.

“Over the last four to five years, the United States has been above 3,000 pounds per acre, and the trend has been about 3,350. Acreage has responded to market conditions, with boom and boost-type cycles, and we ended up at 1.141 million acres this past year.”

Going into 2012, U.S. peanut acreage needs to be above or at least at the level of 2010 acreage just to keep things at the current level, says Smith.

“The projection now is that we’ll end the marketing year at about 525,000 tons. In the U.S., the question is how many of those tons are edible because of quality issues from 2010 and 2011.

“Georgia has the same amount of Seg. 2’s and Seg. 3’s as the year before. Alabama’s quality was better than in 2010. So things could get tighter before we start filling back up the pipeline,” he says.

For the marketing season that ended in July 2011, the total edible use of peanuts was up, says Smith.

“The domestic market was positive in terms of growth, and it came from candy and snacks instead of peanut butter. When peanut prices went up, we recaptured some market share that was lost in the recession of 2008-2009.

“When they updated the numbers in November, we saw another increase in use for candy. Peanut butter also showed some increase. From the consumption viewpoint, things looked positive.”