Peanut consumption is at a record high, but farm income is down

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Posted 9:37AM on Monday, April 1, 2002

VIENNA, Ga. - U.S. peanut consumption is at a record high, possibly because of better promotion, new products and increased awareness of the health benefits, the U.S. Agriculture Department says. But the earthnut craze is not fattening the wallets of farmers who grow them, and some are calling it quits this year. Peanut farm income slumped to $896 million last year -- the lowest in 20 years and the second consecutive year below $1 billion, the USDA says. Americans are expected to consume 2.3 billion pounds of goober peas during the current marketing year, which began in August 2001 and ends this August. That's up from a decade low of nearly 2 billion pounds in 1995. The industry responded to the '90s downturn with studies that showed its products were somewhat uninspiring, were poorly promoted and lacking in variety. Since then, it has introduced new products, such as flavored snack nuts, and it has funded health studies showing that peanuts in the diet can reduce harmful cholesterol levels. Growers, meantime, have been saddled with lower profits, increased foreign competition, higher production costs, four years of drought and uncertainty over the government peanut program. Farmers tend to be eternal optimists, but some have done the math and decided they couldn't continue to pour money into a losing enterprise. "I made a decision to get out while I could," said Wayne Smith, 51, of Pinehurst, who has been farming for 32 years. "It wasn't a spur-of-the-moment thing. I've been agonizing since June." Smith, who is considered an above-average farmer, normally grows 1,200 acres of cotton and peanuts on his family's 165-acre farm and on rented fields. High production costs and low peanut prices make it difficult for farmers to get a fair return on their investment in equipment, seed, chemicals, fuel and labor, he said. "The main thing that's killing us is what we have to pay for it, compared with what we're getting for it," he said. John Beasley, a peanut specialist with the University of Georgia's Extension Service, said he knows of other growers who have quit, or who at least have decided not to plant this year. "Those who have crunched the numbers and looked at all possibilities for the upcoming crop year, have seen it was not going to work out," said Beasley, who recently completed a series of production meetings with growers in all of Georgia's 50 peanut-producing counties. "It's very disturbing to me that some of our best have ... decided it was not going to work for them." Beasley said the lack of a new farm bill also is adding to the growers' woes. Congress is expected to replace the current Depression-era program, which allows some growers to produce peanuts at premium prices, with a program similar to wheat or corn. Farmers would no longer have to rent or own a peanut "quota" to grow edible nuts for the U.S. market. The change would open the market to all producers, and government payments would be based on each grower's past production. Leaders of the House-Senate conference committee considering the Farm Bill say they expect final decisions on the legislation in April. If Congress is unable to pass a farm bill, growers would continue operating under the old one for another year. The delay has left peanut farmers in limbo, wondering how much operating capital they can borrow, how many acres they should plant and which fields to designate for peanuts or cotton. "Here we are about three to four weeks from planting the seed," Beasley said. "There's a tremendous amount of preplanning decisions that have to be made that affect agronomic practices. Those decisions can't be made now because ... there's been no decision made on what kind of farm bill they'll be growing under." Smith said he may have to find another line of work, but at least he'll save his family's farm. "Had I kept farming another 12 months, the farm would have been the bank's, not mine," he said. "I'm ashamed it had to come to this. But when you're taking out more than you're putting back, there's no way you're going to make it. The old mentality that it's going to get better next year is a thing of the past."