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Peanut industry becomes victim of its own success

Higher yields of course result in more peanuts And even if they are of superior quality ndash which is the case with US peanuts ndash they arenrsquot doing anyone much good if they canrsquot be sold
<p>Higher yields, of course, result in more peanuts. And even if they are of superior quality &ndash; which is the case with U.S. peanuts &ndash; they aren&rsquo;t doing anyone much good if they can&rsquo;t be sold.</p>

In three short years, the United States has become the world’s foremost low-cost producer of peanuts, a result of vastly improved varieties and refined production techniques. Demand also has surged, thanks largely to a superior product and vigorous marketing and promotion campaigns. It’s a classic case of becoming a victim’s of one’s own success.

In this case, the U.S. peanut industry has made all the right moves in recent years to position itself where it is today. It has adopted a blueprint for success and executed it beautifully. But with these actions have come untended consequences, including a supply/demand imbalance.

Through the remarkable work of peanut plant breeders and of innovative, progressive farmers, yield averages have reached a new “normal,” which stands now at about 4,000 pounds per acre.

I can remember when 4,000 pounds per acre was anything but average – when it was more than enough to land a producer in someone’s high-yield club. And that has less to do with me being old than with the dizzying pace of progress in peanut production. In other words, it hasn’t taken that long to reach some lofty goals.

Higher yields, of course, result in more peanuts. And even if they are of superior quality – which is the case with U.S. peanuts – they aren’t doing anyone much good if they can’t be sold. While it’s true that the domestic market for peanuts is growing at a consistent rate, it’s still a relatively low rate of 2 to 3 percent per year, and it’s a mature market, which means we probably won’t be any substantial growth in the future. It’s also a rate of growth that is dictated largely by the uncertainties of the national economy.

Of course, one alternative to correcting the imbalance is to reduce plantings, but that won’t be happening anytime soon, thanks to the new Farm Bill. In the past, growers have adjusted their acreage according to market indicators. But peanuts planted on farms with generic base will have an attractive safety net, and estimates for a 2015 acreage increase range from 15 to 20 percent across the Peanut Belt.

So what’s to be done with the higher volume of peanuts that has resulted from a robust 33-percent yield increase? The only option remaining is to increase exports. It’s certainly doable, considering the U.S. is the reigning low-cost producer worldwide, but our peanuts must remain competitive in an extremely price-sensitive market.

Maintaining this competitiveness was the stated purpose of a recent proposal by the National Peanut Board that would restrict research institutions from sharing commercial products, specifically seed varieties developed with grower-funded research funds, with international competitors (NPB recently met with industry stakeholders from throughout the U.S. to discuss this proposal, and you can read about this meeting in greater detail in this issue of Southeast Farm Press).

This is no doubt a huge issue for the industry, and NPB members have staked a clear position that they believe it is harmful to the interests of U.S. peanut farmers if their research dollars are used to develop seed varieties that are then shared with competing countries.

Research scientists and university representatives also have voiced opinions on this issue, and some of those are in opposition to NPB’s position. The very nature of scientific endeavor is that of the shared discovery, so the passion expressed by some of these individuals should not be unexpected or minimized. And with an ever-dwindling base of financial support, research institutions want to retain their right to protect and possibly sell what they deem to be their intellectual property.

NPB acted judiciously in delaying a final decision on such an agreement for one year, during which time a consensus hopefully can be reached that will allow the industry to continue moving forward on the research front.

The issues that face the U.S. peanut industry are complex, and, at times confounding, but bravo to all involved for facing them head-on, and in the light of day.

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