Hard times have fallen on many peanut farmers in eastern New Mexico and western parts of the Texas Panhandle.

For one, an unforgiving, multi-year drought has hampered agricultural operations across the region. But perhaps an equal challenge for many has been problems associated with the closing of the Sunland peanut plant in Portales, New Mexico, once the largest buyer of Valencia peanuts grown across the region.

The plant, which was the largest producer of organic peanut butter in the nation, closed in the fall of 2012 after U.S. Food & Drug Administration (FDA) inspectors uncovered a major salmonella outbreak that sickened as many as 42 people in 20 states.

Conditions at the Sunland, Inc., plant were described as “startling” by inspectors who noted rodent problems and found peanuts stored in containers that allowed rainfall and bird droppings to contaminate raw peanuts. Other problems throughout the plant included bacterial infestations that eventually resulted in the decision to close the plant.

For the latest on southwest agriculture, please check out Southwest Farm Press Daily and receive the latest news right to your inbox.

When the FDA closed the facility, high-grade Valencia peanut growers, along with the plant's major creditors, were left holding the bag because of unpaid deliveries. After months of negotiations and heated discussions in a U.S. Bankruptcy court, the plant was finally offered up on the auction block.

Caught in a quandary

Over the two years that followed the closing of the plant, regional peanut farmers have been in a quandary. After an initial sale by the bankruptcy court to Hampton Farms, a North Carolina-based peanut roaster that makes peanut butter in North Carolina and Virginia, for $20 million, the plant sale was ruled null and void because of confusion in the bidding process. Another auction was set, and this time, Golden Boy Foods of Canada beat out Hampton Foods in the bidding process by for just over $25 million.

Hampton Foods had already acquired the smaller Portales Select Peanut Company in 1997 and was hoping to expand operations with acquisition the Sunland plant. Today Hampton remains the only buyer of locally grown peanuts.

While Golden Boy officials say they are probably going to re-open the old Sunland facility and resume organic peanut butter production, so far that hasn't happened, and farmers who once grew the sweet Valencia peanut variety that kept the plant well supplied have cut back on peanut acres in favor of more cotton and other crops.

According to the latest estimates, peanut production across the region is expected to fall this year by 6 million pounds according to forecasts released last week by the U.S. Department of Agriculture. That's about a 30 percent drop.

New Mexico State University peanut expert Naveen Puppala says that represents a significant impact in terms of jobs lost and the negative aspects of lost income and tax revenues across the region that were generated by the plant during its years of peak production.

While area peanut farmers have adjusted well under the circumstances, the New Mexico Peanut Growers Association says many are still holding out hope Golden Boy Foods will re-open the plant, which would clear the way to grow more Valencia peanut acres and a local market for local growers.

Portales officials say the new plant owner has posted signs at the abandoned plant site, but so far company officials have failed to expand on their plans for the facility.

"They've got a new sign up but there's still no visible activity going on, so we don't really know what their future plans may include," said the New Mexico Peanut Association's Wayne Baker.

While speculation over what will happen with the plant in the future is still one of the primary topics at the local coffee shop, it didn't slow down Portales residents and visitors who crowded into the recent 41st annual Peanut Valley Festival. Spirits were running high over beneficial fall rains that helped lower the local drought intensity, and the changing of the season “is always a good reason for optimism,” say festival officials.

About 5,000 people participated in festival activities over the weekend, including live music and peanut-themed food events. This year's festival marks over 100 years of celebration peanut tradition in the region.