“In 2010, drought in the Wiregrass area of Alabama and in southwest Georgia, helped alleviate some of the over-supply. But production of 2 million farmer stock tons, carry forward of 900,000 tons, plus imports, put us back to dealing with 3 million tons of peanuts. For three years, we had 3 million farmer stock tons of peanuts to cope with.”

In 2010, Lamb says, there were large losses due to aflatoxin, which cost millions of dollars, primarily to shellers, and extensive product loss.

“The quality problems in 2010 got us back down to a more reasonable carryout of 665,000 tons. Then came 2011 with weather problems again in the Southeast and a significant drought in Texas.

“We only produced 1.8 million farmer stock tons and imported 70,000 tons, which gave us only a 2.5 million ton supply to work with. There were additional losses due to quality problems, which resulted in a carryout in 2011 of only 380,000 tons — the reason uncontracted peanuts at the end of 2011 were bringing as much as $1,000 a ton.

“That carried forward into 2012, with early contract offers in the $1,000 range, and farmers responded by planting a lot more peanuts.

“We brought forward only 380,000 tons, but we produced a 3.4 million ton crop. Add 10,000 tons of imports, mostly products, and we get roughly 3.76 million farmer stock tons.

“We thought the supply was high when it was 3 million tons for three consecutive years, and then all of a sudden we were dealing with 3.7 million farmer stock tons. What a difference a year made.”

The over-supply, Lamb says, “is putting a lot of risk on the entire system — growers, shellers, purchasers, sellers of shelled stock peanuts, and manufacturers, although to a much lesser degree.”