Today’s major peanut customers are increasingly interested in food safety, including issues relating to herbicide residuals and microbiology, says Kris Lutt, president of Golden Peanut Company.

“Additionally, customers are interested in how they can increase their ability to manage risk and volatility. These interests create opportunities, including improvements in non-yield characteristics, increasing collaboration with customers, and improving farmer stock quality,” said Lutt, speaking at the past year’s meeting of the American Peanut Research & Education Society.

Golden Peanut Company is a leading sheller and processor of peanuts and peanut products with headquarters in Alpharetta, Ga. The company’s primary product lines include raw shelled and in-shell peanuts, peanut flours, peanut extracts, roasted aromatic and refined various peanut oils, and peanut seed. It serves peanut growers and operates plants in all major peanut growing areas of the United States, Argentina and South Africa.

Peanut Futures: Marketing for Profitability, an exclusive editorial series sponsored by DuPont Crop Protection, examines recent developments in U.S. and international peanut markets. This is the sixth story in the series.

When talking with peanut customers today, Lutt says there’s definitely an increase in discussion about food safety.

“You’ll recall that in 2012, we had a pretty significant recall on peanut butter. We know that there’s a lot of changing legislation when it comes to food safety,” he says.

One of the most recent things on customers’ mind is residuals, specifically cadmium, adds Lutt. “We hear questions such as how often do you check for cadmium and what’s the level for cadmium. Certainly there has been some research in the past on this issue.”

Another concern involves glyphosate residuals.

“Customers want to know if it’s on peanuts – on shells, on the skin or on the kernel itself? You have to consider what’s allowable from crop to crop and from seed to seed. With almond hulls, the allowable amount of glyphosate residue is 25 parts per million. But for peanut hay, it’s .5 part per million. For peanuts themselves, it’s .1 part per million.

“When we initially talk to customers about this issue, we point out that no one is going to purposefully use glyphosate on a peanut field. On the other hand, you might have an end row of cotton planted next to peanuts, and you could get overspray, so you get into discussions about how we can guarantee that a farmer doesn’t get overspray from a cotton field next to a peanut field. Or maybe a grower had corn or soybeans in that field last year, and he sprayed glyphosate. From our perspective we try to deal with that, and our regulations make sense when it comes to those concerns. We even had a customer ask how we could guarantee that birds don’t fly over our peanut wagons. Sometimes, these can be trivial discussions, but they’re still on the mind of customers.”

Customers are also interested in how they can handle the risk in price volatility, says Lutt.

“We’re the guy in the middle now. On one hand, customers want to know how they can get steady prices over time. And farmers want to know how they can manage volatility and get the prices they need. Everyone wants no volatility and set prices, so we continue to search for some sort of ends to a means there. At the end of the day, the customer wants to know if they can get what they want, when they want it, and at a competitive price.”

How do we get a competitive advantage, and how do we provide what the customer wants? Asks Lutt. “As a sheller and an industry, we look at how we can bridge the gap between those two things. What are the non-yield characteristics that most customers are concerned about today?

“I would say that whenever we talk to customers, they have concerns about whether the taste and flavor will diminish. They’re also concerned about the size. For a lot of these applications, they have equipment that was sized for peanuts many years ago. The sizes and the distribution of the sizes have changed in recent years.”

In a general sense, says Lutt, there are more splits in peanuts now. “The market deals with that, and there are opportunities as far as seed purity is concerned.”

Lutt says the industry should explore how to get more grower-customer collaboration on these issues.

“If you think about it, we have meetings among researchers, and we have meetings where sellers and marketing people meet. But we don’t have many meetings where we have the marketing people talking to the research people. We need to start asking what our needs will look like in 10 years, what will snacks look like, and will peanut butter be different in 10 years? How do we get that breeding edge today together with what the companies think they’ll be selling in 10 years? There are opportunities for collaboration there.”

Issues at the farmer stock level

As for farmer stock peanuts, Lutt sees the two primary issues being aflatoxin and increasing the quality of in-shell peanuts.

“As an industry, we do a good job of dealing with aflatoxin. Once we get that farmer stock peanut, through segregation, blanching, and through re-milling, we’ve done a good job of handling that once we have a peanut with aflatoxin.”

But improvements can be made on the front end of that process, he says.

“In terms of managing our farms better, how do we better identify historically where we have pockets in the field that need more emphasis and attention? We need to get to the point to where the farmer can go to the sheller say that he has a higher level of certainty that a particular load has to be dealt with in a special way. In my opinion, we haven’t taken advantage of some of the technology that’s available, and we need to develop new technology that will help us deal with the issue more effectively.”

In an export and worldwide market, the industry needs to be looking at increasing the quality of in-shell peanuts, says Lutt. “We need to look at how a grower can more effectively accomplish this. We need to work with breeders to get an in-shell peanut that’s marketable in this worldwide market that has better shell strength.”

Whether a producer brings in farmer stock with 5, 8 or 10-percent cracked or broken, he is paid the same in today’s system, says Lutt.

“There’s not a bonus or incentive for a farmer to do better, other than him just taking pride in trying to be a top producer. There are opportunities there for the grower, the sheller and ultimately the retailer.”

The U.S. peanut industry, he says, has much to be proud of.

“We have a low-cost source of protein that serves nutritional needs around the world, and it’s a great tasting product that people love. Whenever you think about sustainability and all of those things that people are interested in today, we meet all of the criteria.”