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Peanut demand remains strong

U.S. demand for peanut butter is surprisingly strong considering the double calamities that hit the market in 2008 and 2009.

“Peanut butter is the best buy in the supermarket,” said Tyron Spearman, Tifton, Ga., editor of the Peanut Farm Market News and incoming president of the American Peanut Council.

Spearman told participants in the Oklahoma Peanut Expo at Lone Wolf, that the “salmonella scare is over with” and peanut demand has bounced back from what could have been a long-term catastrophe.

“We had never had salmonella in peanuts before,” he said. “This was a once-in-a-lifetime situation.”

He recalled how a Georgia plant put salmonella tainted peanuts into the market where they were used in crackers and some other products. “It was never in peanut butter.”

But the public assumption was that tainted peanuts could have entered into peanut butter and other foods. “It took an industry campaign to turn it around,” Spearman said. “It worked!”

He said court cases against the company are pending.

That scare hit at a particularly bad time for the peanut industry. A burdensome supply of peanuts from a record 2008 crop had pushed farmer stock prices down and a declining economy threatened to further erode markets.

“But 2009 was a remarkable year,” Spearman said. “We were not devastated by the economic crunch or the salmonella scare. The export market was hurt some as consumers overseas cut discretionary spending.”

A poor economy often helps peanut butter sales, he said.

Latest demand estimates for the 2009-2010 marketing year show peanut butter consumption up 8.5 percent. Peanut candy use is up by 1 percent. Snack peanuts are down 11 percent and in-shell peanut consumption is estimated 9.2 percent lower.

Overall demand is up 3.2 percent over last marketing year.

Exports will be off some 17 percent from last year with raw shell peanuts down 28.9 percent and in-shell down 1.9 percent. Peanut butter for export is up 1.09 percent.

Spearman said Canada is the top customer for peanut butter. “They eat more peanut butter than we do in the United States,” he said.

Peanut producers made serious production cuts last year to bring supply and demand closer in line. Georgia cut acreage from 685,000 to 508,000. Texas cut acreage from 253,000 to 155,000.

Spearman said acreage will increase slightly for 2010 with industry experts recommending a 5 percent to 8 percent jump. Potential profit from competing crops may affect final planting. Spearman said cotton will be the primary competitor with prices up from around 56 cents a pound last year to 82 cents a pound. Corn at $3.71 a bushel is down from $3.76; soybeans are off from $9.80 to $9.52 and wheat at $4.88 is down from last year’s $5 a bushel.

Spearman said peanut farmers need to keep track of other issues including the possibility for early discussions on the 2012 farm bill. “Rep. Collin Peterson says to stay within the funding baseline. Don’t expect any new money. Some (legislators) are trying to get rid of direct payments for peanuts, but have not done so yet. We’ve heard of efforts to re-establish base acres based on the last five years of production.”

He said the program could use some changes. “We have no transparency in how USDA determines price."

Spearman also announced that the counter cyclical payment for the 2009 crop will be $9.20 per ton.

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TAGS: Peanuts
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