Farm Progress

Mad as hell: End of peanut quotas hurts landowners

May 2, 2002

7 Min Read

The Heard family of south Georgia is mad as hell, and they're ready for the truth to finally be told about how the federal government's new peanut program will benefit them and other landowners and producers.

“The national publicity makes everyone think that taxpayers are giving us a windfall, or a welfare payment,” says Jerry (Joe) Heard Sr., patriarch of a Baker County farming family that has held peanut quota since the inception of the program. “We never have asked for a handout, we never have wanted a handout, and we aren't getting a handout now.”

The Heard's introduction to how the “national press” operates came a few months ago when an Associated Press writer called up and asked to do an interview about the Heard family's storied history of peanut production. No mention was ever made of the new government program or proposed quota buyout.

“You can imagine our reaction when the story led off by saying that 32 members of the Heard clan of south Georgia stand to gain $6 million from the new peanut program,” says Jerry Heard Jr., oldest of Joe's two sons.

His first reaction to the story, he says, was anger.

“Both sides of the story were not told. Their report mentioned only the money we'd receive from the quota buyout. It said nothing about all of the money owed on these quota pounds, and it said nothing about how these quota pounds make up part of the value of the land.” says Jerry.

“If landowners didn't receive something for the quota, then I'm afraid many farm loans would become bad due to devaluation of the land.”

The story, he adds, relied heavily on figures compiled by the Environmental Working Group (EWG), and some of those numbers were inaccurate.

“The EWG's website states that I own 500,000 to 600,000 pounds of quota, and that my brother Jeff owns 500,000 to 600,000 pounds, Jerry says. “Together, we own 700,000 pounds. It's not credible information.”

The Associated Press story was picked up by newspapers throughout the United States and even a few foreign countries.

“I got telephone calls and letters from Michigan, California and Texas,” says Joe. “The public is viewing this as some type of welfare program for farmers, and it's just not true.

“If we don't get this new program, it'll be devastating for producers. People don't realize what'll happen in south Georgia without a peanut program.”

The proposed new peanut program, says Joe, isn't exactly what most growers and landowners wanted.

“We really didn't want this program, but we knew changes had to be made,” he says. “Our markets are eroding, and we're losing out to Argentina, China, Mexico and other countries. So, we'll try and go along with the new program, but we damn sure don't like it.”

The landowner, he continues, is the biggest loser in the new peanut program. “As an example, we can look at a 250-acre tract of land for which I paid $2,000 per acre or $500,000. There are 145,000 pounds of quota on that 250 acres, and the quota rents for 12 cents per pound. That's $17,400. Two-hundred of those acres are irrigated, and that rents for $125 per acre.

That's another $25,000. The land rent added to the quota rent equals $42,400 rental income from that land.

“If the interest on that $500,000 land purchase is 8 percent, we're talking about $40,000 in interest. Taxes on that 250 acres is about $10 per acre or $2,000. So, you have a cost, not counting the principle, of $42,000. With an income of $42,400, it's pretty much a wash.”

If you subtract the quota rent from the income, you're left with an income of $25,000, he says. And even with a quota buyout of 50 cents per pound, you'll be left with a loss, says Joe. “At 50 cents per pound, you're looking at about $10,000 per year from that 145,000 pounds of quota.

“Add that to $25,000, and you've got an income of $35,000. Apply that against the cost of $42,000, and you've got a loss of $7,000 per year on that 250 acres.

“This is land that has been highly improved, with irrigation and peanut quota. The public should know that the landowner is not getting a windfall from this new peanut program.

“I've bought all of my land, and my sons have bought all of their land. And if that land had quota pounds on it, we paid a lot more for it.”

If the peanut program passes as it has been proposed, Joe anticipates that most producers who have grown peanuts in the past will continue to grow them.

“Producers should just about break even with this new program — they won't do much better or worse than with the old program. But growers will never again see the chance to get a better price for their product. The producer will get from the same to a little less than he has received in the past. The landowner will take the biggest hit from the new program.

“Shellers have been paying $610 to $640 per ton for peanuts. With the new program, they'll be paying less than $350 per ton. But if I was a betting man, I'd bet that peanut prices at the grocery store won't be dropping anytime soon,” says Joe, who, in addition to being a quota holder, also runs the Five-Points Peanut Co., about 13 miles west of Newton, Ga.

Jerry Heard Jr., who farms 2,100 acres with brother Jeff, says a new government farm program is vital to the future of U.S. agriculture. “How can a U.S. farmer compete with other countries, where workers are paid $1 per day? There's no level playing field, and it'll never be level unless the government steps in and makes up the difference. Call it a tax or a subsidy or whatever you want, but somebody has to make up the difference.

“The only option is that all U.S. farms can go out of business, and we can import all of our food just as we do our oil,” he says.

Jerry and his brother normally plant 700 acres of peanuts, 700 acres of corn and 700 acres of cotton each, maintaining a rotation they say is ideal for peanuts. This past year, the Heard brothers averaged 5,850 pounds of peanuts per acre over 676 acres.

“If the new program is implemented this year, we'll probably plant the same acres we've always planted. Over the years, we've always done well with at least two of the commodities. We never lost money, until two years ago, when we sold cotton for about 40 cents,” says Jerry, who has served on the FSA Committee in Baker County for three years.

“The past three years have not been good ones for making profits on the farm. The FSA has been our lifeline.”

He encourages all farmers to participate in county elections of COC members. “Every county committee needs to work closely with the CED to maintain a good working office, and to help farmers get 100 percent from government programs as they qualify.”

The Heard brothers have worked hard over the years to make their operation as efficient as possible. All but 30 of 2,100 acres are irrigated, and unproductive land has been planted to pine trees.

“There are no more corners to be cut. If there are, we don't know about them. Nobody comes onto our farm and does anything unless it's a mechanical or technical problem that we can't handle ourselves. We put out all of our own products.

“We don't know enough yet about the new peanut program to begin developing a marketing strategy for our crop. The same marketing tools available for cotton now will be available for peanuts. We didn't have to worry about that with the quota system.”

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