Farmers to see Better Peanut Prices in 2011
Tuesday, February 1st, 2011
Farmers are being offered more than last year to grow peanuts, but officials don't expect to see a lot more acres planted.
In fact, peanut acreage in the Wiregrass in 2011 could decline. Some farmers are weighing whether to plant peanuts or cotton, and because the price of cotton is higher it could come out ahead.
As commodities, cotton at $1 a pound is comparable to $600 a ton for peanuts, said Randy Griggs, executive director of the Alabama Peanut Producers Association.
Shellers were offering about $550 a ton for peanuts in December, Griggs said, and growers are expecting peanut contracts to reach the $600 range. Last year's average price was $425 to $450 a ton.
Kris Balkcom, a peanut specialist with Auburn University, said cotton is currently about $1.10 a pound.
The changing picture of supply and demand, and the farmers' need to rotate crops to keep their land productive, all play into decisions on what to plant. In any case, both Griggs and Balkcom said growers are optimistic that the upcoming peanut season will be better than 2010.
Griggs said good peanut crops in 2008 and 2009 were followed by bad weather and poor yields last year. Peanut inventories nearly doubled during those good years, he said, but fewer high-grade peanuts harvested in 2010 have caused prices offered for next year's crop to rise.
Balkcom said yields in 2010 in Alabama were about 2,600 pounds per acre, with yields in Houston County slightly under that average. Yields were 3,500 pounds per acre in 2008 and 3,100 pounds per acre in 2009.
Peanuts grown in the Wiregrass are for the edible market, Griggs said, with roughly 50 percent used for peanut butter and the rest as confections, solid nuts and exports.
In a good year, less than 5 percent of peanuts grown locally are not good enough for the edible market. In 2010, he said, the figure was between 20 and 30 percent.
Griggs said area farmers usually rotate cotton, peanuts and corn, and sometimes convert farmland into pastures because grass-type plants add back to the soil. Peanuts are planted in a field about once every three or four years, Griggs said.
Although commodity prices are up, so are production costs. Balkcom said price increases for diesel fuel, propane for drying peanuts, fertilizer and seed will have an adverse impact on profits.
Griggs said contracts with shellers are usually signed by planting time, which in the U.S. is after the last frost in April or May when soil temperatures reach 65 to 70 degrees. Shellers buy peanuts from growers and sell them to manufacturers.
The range of peanut production in Alabama has expanded since the mid-1990s. Griggs said between 12 and 16 counties were major players back then, but now 35 or 36 counties grow peanuts.
Farmers can plant peanuts where the soil type will permit, Griggs said. The runner variety planted here is grown mainly in Georgia, Alabama, Florida, Mississippi, Texas and Oklahoma, and accounts for 80 percent of total U.S. production.
Other varieties include Virginias (about 15 percent of U.S. production), Spanish (4 percent) and Valencia (less than 1 percent).