Higher peanut prices and solid yields so far this harvest, along with continued high nitrogen costs, could entice Mississippi farmers to plant more acres of the legume in the coming season.

According to USDA, peanut acreage in the three largest U.S. peanut-producing states, Georgia, Alabama and Florida, declined by 10 percent, 9 percent and 15 percent, respectively, in 2007.

In addition, parts of the Southeast peanut crop suffered through a significant drought this season, impacting yields. In Georgia, yields were comparable to last year, but because of reduced acreage, peanut production in the state is forecast at 1.53 billion pounds, compared with 2.13 billion pounds two years ago.

U.S. peanut production has declined from 4.8 billion pounds in 2005, to 3.46 billion pounds in 2006, to a forecast 3.42 billion pounds in 2007.

Lower production in the Southeast, as well as reduced stocks and high grain prices are helping drive peanut prices higher.

“Peanuts are going for $475 a ton, which is $120 more than what we were getting last year,” said Josh Miller, a peanut producer and president of Delta Peanut, a buying point in Anguilla, Miss. “The buyers we're dealing with have already offered a contract for 2008, for $475 a ton.”

A big factor behind peanut bullishness is that high wheat prices — as well as prospects for increased income with double-crop soybeans — could tie up a lot of sandy ground in Georgia, according to Miller, who thinks peanut prices could go even higher in 2008. “Those in the peanut industry are doing like everybody else. They're fighting for acres.”

Miller noted that shellers are passing on the high prices, as well as storage and handling costs, to end users. “This has saved farmers from having to pay storage and handling, which ended up being around $60 a ton.”

Prior to 2007, the government paid peanut storage and handling under the 2002 farm bill. That program expired this year. “A lot of farmers were real nervous about who would pay that,” Miller said. “That's one reason we didn't pick up more acres in 2007. They didn't want to jump in and all of a sudden have to pay $60 for storage.”

Miller, who says peanut prices could cap out at around $500 a ton, has already booked his own peanuts at $475 a ton on about 1,000 pounds per acre.

With the Anguilla facility and another buying point in Greenville, Miss., available to take peanuts, “we're a long way from capping out on storage,” said Miller, when asked if he was concerned about processing more acres in 2008. “Birdsong, our customer, says it hopes we have that problem because it's losing acres in Georgia.”

According to USDA, Mississippi's peanut acreage remained steady this year at around 17,000, concentrated in seven counties. Miller pegs acreage a little higher, at 18,000 to 19,000. Of course, plantings are insignificant compared to Georgia's 520,000 peanut acres in 2007.

Peanuts are also attractive to many Mid-South cotton producers because they don't require commercial nitrogen, which has become a big ticket item in cotton production the last few years.

“Plus peanut yields have been phenomenal,” Miller said. “Almost everybody has been harvesting 1.5 tons. Some have been bringing in 2-ton peanuts. The state is having a pretty good year. I think the timely rains in July are the big reason.”

These types of yields could net returns similar to cotton, without as much risk, noted Miller. “Eighty-cent cotton is hard to beat, but cotton producers around here are growing cotton for $600 an acre or more because of plant bugs. They're spraying all the time.”

While peanuts are susceptible to disease and, therefore, require an intensive fungicide program, “this year was a fairly light year for disease in peanuts in our area,” Miller said. “I sprayed my peanuts three times. We're so new to it here, I guess we haven't built up as much disease pressure. That's one reason our costs are so much lower than in Georgia and south Mississippi.”

Mississippi peanut acreage jumped in 2003 after the 2002 farm bill lifted quotas, making it possible for more producers to grow peanuts.

Most of the state's peanuts are grown in southeast Mississippi. Some are grown in the south Delta, and a few are scattered across northeast and north central Mississippi. Fewer than 5 percent are irrigated.

Peanut harvest began in mid-September and should be complete by mid-November. Peanuts are dug out of the ground and inverted so the vines can dry for three to four days. A peanut combine separates the nuts from the vines, and the crop is hauled to the buying point.

Moisture samples are taken, and the peanuts are dried on a trailer if needed. They are then graded, purchased and moved into storage. Mississippi peanuts are used primarily in peanut butter and candy bars.

“We produce excellent-quality peanuts in Mississippi. The Southeast in general produces the highest quality peanuts in the world,” said Mike Howell, area agronomic crops agent in Harrison County with the Mississippi State University Extension Service.

“Farmers get paid on a 72-grade peanut, and it's not uncommon for our producers to have peanuts in the upper 70s and 80s.”

Diseases can transfer between peanuts and soybeans, but peanuts make a good rotation crop for corn or cotton. Peanuts can be grown on any soil type, although they perform best on sandy soils. Heavy soils make harvest difficult for this below-ground crop.

“We can find sandy spots in most counties in Mississippi,” Howell said. “The southeast part of the state will probably remain the best part of the state for peanuts, but peanuts can be grown anywhere there is sandy soil, such as along rivers and creek bottoms.”

Howell said the state has high yields because it has low disease pressure. “You have to rotate peanuts because of disease pressure,” Howell said. “We're on new soils, so we don't have the disease pressure now that other states face, but we probably will in five or six years.”