This is not your father's — or your grandfather's — GFA Peanut Association. GFA, which was formed in the 1930s to help administer the government's peanut program, has evolved in the past year to become one of the nation's first cooperative marketing associations (CMA) for peanuts.
The GFA Peanut Association was formed in 1937 at the request of the federal government, which was not satisfied with how the peanut price support program — begun in 1935 — had been handled in its first two years. In addition to assisting the government with its price support program, GFA also helped growers market their peanut crop, improve production and reduce waste, and deal with other problems common to peanut producers.
Beginning in 1952, explains manager Jimmy Godwin, GFA became more of a marketing agent for peanut producers. “We signed a contract that made us non-competitive with the industry. We did all of the government loans for peanuts in the Southeast. Whenever a sheller had purchased all of the peanuts he wanted, we would make a loan to the grower to insure that he'd get the minimum support price,” he says.
GFA's transformation into a cooperative marketing association, says Godwin, was necessitated by the passage of the new farm bill and the elimination of the peanut quota system.
“We had to take this step to stay in business after the new farm bill was passed. There had never before been a need for a peanut CMA, but that changed with this new peanut program. We were approved as a CMA this past October, and this will be our first full year of operation,” he says.
Godwin likens the current GFA to StaplCotn — the oldest and largest cotton marketing association in the United States. “A producer signs an agreement appointing us as his marketing agent. As things now stand, we take the farmer's warehouse receipt to the designated county office to get a loan. We hope to reach a point where we can draw the money down directly, like the cotton CMA's, and we're working to get to that point. But for now, we have to stand in line like everyone else.”
GFA, which is located in Camilla in southwest Georgia, doesn't have the disadvantage of large overhead expenses, he says. “We're not trying to declare a dividend and satisfy stockholders. We pass any profits back to the producers. We'll take out an administrative charge, but that won't be very much if we get enough tonnage. There will be a handling fee of about $5 per ton for the peanuts, and everything else will go back to the farmer.”
The primary goal of GFA, notes Godwin, is to give farmers an option when selling their peanuts.
“Farmers are now getting premiums of $25 to $35 per ton, and we don't think this would be happening if not for us. The fact that we keep our doors open helps the peanut farmer get a better price. It's strictly a matter of competition — we need more competition in the peanut business.”
It'll be important, says Godwin, for GFA to meet some type of minimum performance goals this year. “We're an unproven product, and many growers will be watching how we perform this year. If we're still around next year, they'll come talk to us.”
Acting as procurement agent for GFA is Progressive AgCo, a consulting group made up of south Georgia farmers. Managing Director Jim Carver says a series of meetings this past winter convinced his group of the need for more competition in the peanut industry.
Over the past two decades, 45 entities in the peanut shelling industry have shrunk to about 10, with Golden Peanut and Birdsong controlling 73 percent of farmer-stock production and more than 65 percent of the buying points.
“We were seeing less and less competition in the marketplace. The solution, as we saw it, was a cooperative marketing association, and GFA already had everything in place to form the first CMA for peanuts. Their paperwork had been cleared out of Washington, and they hired us to go out and do their farmer-stock procurement,” says Carver.
GFA, he adds, has put together a “complete” system. “They're totally integrated. They've contracted with two shellers, and they've contracted with buying points. They're also contacting brokers to get peanuts contracted into the domestic supplies. From warehouse storage to buying points to the end user, they're totally integrated. GFA will make marketing much simpler for the grower,” he says.
GFA, explains Carver, is offering four grower options for contracting, and they are as follows:
Option I — $385 for 50 percent of crop — not in pool. Remaining production on farm number at $355 and in pool to share in all profits. Peanuts delivered to GFA warehouse only.
Option II — $20 advance at signup on 50 percent and still in pool. Remaining production on farm number at $355 and in pool to share in all profits. Peanut poundage at $20 advance signup will share in all pool profits less advance. Peanuts delivered to GFA warehouse only.
Option III — $370 for 100 percent of 2,000 pounds dryland/3,000 pounds irrigated peanuts at delivery and remaining peanuts in pool at $355 at delivery. All peanuts under this option will share in pool profits less $15 premium. Peanuts delivered to GFA warehouse only.
Option IV — $355 and in separate pool from Option I, II and III. Will share in pool profits and can be delivered to any non-GFA warehouse.
On Option I and II, 50 percent is based on 2,000 pounds on dryland acres and 3,000 pounds on irrigated land. Producer has the option to prove his average yields.
Payments will be based on net pounds before shrink at GFA warehouses or buying points but not on net pounds at other sheller warehouses. Those would be based on weights from warehouse receipts.
“We've done everything all of the other major players have done in any contracting situation,” says LaDon Durham, also of Progressive AgCo. “Most of the questions I've received have been in regards to how much of the pool we'll be able to make. It's difficult to answer that completely in the first year of operation. But I feel like we can offer close to what most of the shellers have offered their growers.”
The new peanut program, adds Carver, allows a grower to take his peanuts to a non-GFA buying point, and he still can participate in the CMA under Option IV.
“GFA will deliver those peanuts to the buying point. Growers will get one check — when they're finished — from GFA, and then they'll get an equity payment in April and in August. The paperwork will be handled at GFA's headquarters, and the producer will just have to deliver his peanuts. It will be the simplest way of marketing and handling peanuts,” says Carver.
The first goal of the GFA board of directors, he says, is the make the business of growing peanuts more profitable for the producer. “The first three weeks we were out there, we saw contracts move upward three times. We've already made peanuts more competitive.”