What is in this article?:
- Peanut growers facing serious acreage cut decisions
- Getting quality product
- Protects against risk
- Weather problems
• “We need to get back to a reasonable carryout level, which would equate to production this year of about 1.5 million farmer stock tons. With an average 3,400 pound U.S. yield, that would suggest 900,000 acres for 2013, or about a 38 percent decrease from last year and a 30 percent decrease from the 2008-12 average.”
OE CAMPBELL, from left, Golden Peanut Company, Camilla, Ga., visits with producer Keith Driskell, Grand Bay, Ala., and Kris Balkcom, Auburn University Extension agronomy and soils research associate, at the annual meeting of the Mississippi Peanut Growers Association.
Protects against risk
“In the absence of a futures market and the volatility that we have because of the geographic limitations of where peanuts are grown, this balanced approach to marketing is the best way to protect yourself against risk.”
U.S. peanut markets — and acreage and production — have been “a roller coaster ride” of variability since government quotas were phased out in 2002, Lamb says.
“There were drops in 2006 and 2007, an upturn in 2008, then back down for a three-year period, followed by 2012’s steep climb, when we planted roughly 1.6 million acres.
“Last year at this meeting, following 2011’s very short crop, I estimated we needed about 1.4 million to 1.5 million acres for 2012, based on average yields. We went a bit too high on the acreage response, but that wouldn’t have been to bad if we’d had average yields.
“What happened, though, was good weather, good rains, cooler temperatures — and everything came together for yield.”
Yields following the end of the quota system in 2002 had been averaging about 3,040 pounds per acre, until 2008, when new cultivars started becoming available that boosted the average to about 3,350 pounds.
“But 2012 blew all that away,” Lamb says. “We had a U.S. average of almost 4,200 pounds per acre. Absolutely unbelievable! Mississippi averaged 4,400 pounds per acre, Alabama about 4,000 pounds, and Georgia 4,550 pounds on about 800,000 acres. These were incredible, mind-boggling yields, and the U.S. produced just under 3.4 million farmer stock tons in shell.”
In the supply/demand picture, he says, carryout is the key number watched by the industry. “This number represents the amount of peanuts available in the pipeline at the end of the marketing year on July 31 to carry processors until new crop deliveries start in October.
“A carryout of about 500,000 tons is when the system gets a little nervous. Shelling capacity in the U.S. is about 165,000 farmer stock tons per month, which means that over the three-month August-October period, we need about 500,000 tons to keep the mills in operation. If carryout gets to or below 500,000, that’s when the price signal starts coming down the chain to the growers in the form of attractive contracts.”
But, says Lamb, that encourages growers to increase production, only adding to the roller coaster effect.
“In 2006, we brought forward roughly 630,000 tons and produced 1.8 million tons, with a demand of 2 million tons. This gave us a forward carryout for 2007 of roughly 500,000 pounds.
“Contracts were offered early in 2008, and producers responded by planting more peanuts, plus it was a good production year, roughly 2.5 million farmer stock tons. Adding peanuts brought forward from 2007, plus some imports, gave us a 3.2 million ton supply to work with in 2008. Subtract demand, and we had roughly 1 million tons of carryout going into 2009.
“In just one year, we went from a 500,000 ton carryout and a nervous market to over 1 million tons of carryout a year later — an excessive amount. It took a while to work that off.
“From 2008 up to 2009, we produced a significantly smaller amount of peanuts, but with carry forward and imports we still were dealing with roughly a 3 million ton crop. Subtracting demand, we still had about 900,000 tons to carry forward.