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Peanuts are a unique commodity and should probably be treated as such in new farm legislation. At a recent gathering in Panama City, Fla., growers were told of some of these possible options.
Minimal marketing alternatives
“Also, there are minimal marketing alternatives. With only a handful of shellers to buy peanuts, the perceived risk associated with waiting to sell peanuts may be too great. What if the sheller won’t buy my peanuts next year?”
Another factor influencing marketing decisions is storage, says Arthur. “Few farmer-owned peanut storage facilities also reduce the number of marketing alternatives. Shellers typically cover storage costs for growers with contracts. Growers without contracts must obtain a higher price from the eventual buyer just to cover the $60 storage and handling. If 3.5 percent shrink is deducted, add $12.50. Growers also may pay out-handling ($8-$45), and any other fees. Assuming four to five months in storage, a non-contracted grower must negotiate an additional $68.50 per short ton to be equal to a contacted grower,” she says.
Producers need to ask themselves, as time nears for a new farm bill, if they want to seek solutions to the problems that currently plague the peanut program, says Arthur.
“Are peanut farmers happy with the status quo? Are they interested in more marketing alternatives or do they prefer to leave marketing to shellers? Also, what are some realistic program adjustments we can make? Do farmers need additional guidance in identifying funding opportunities, and are peanut farmers in a position to capitalize on enthusiasm for local foods?”
Solutions currently being considered by USDA would be geared towards empowering growers, says Arthur. “A lot of people say a lower National Posted Price is the answer, but we don’t see that as a cost-effective way to empower growers.”
Interest in a peanut revenue insurance program appears to be increasing grower support for mandatory reporting requirements, she says. Expected benefits include reduced risk for insurers considering revenue insurance, as well as higher coverage levels under such a program, increased coverage levels under the existing disaster program, a higher price guarantee under ACRE, higher coverage under SURE, and better price information for peanut growers negotiating contracts or cash prices.