Sky-High Peanut Prices a ‘Lucky Deal' for Arkansas Planters

by Kate Knable  on Monday, Nov. 19, 2012 12:00 am  

In 2010, peanut buyers courted Arkansas farmers as prospective peanut planters and then bought at steep prices all the peanuts Arkansans planted.

The following year, more Arkansans planted peanuts and their crops sold at prices “in reach of the highest they’d ever been,” Phillips County farmer Michael Taylor said. Prices sprang up to around $1,200 per ton in 2011, and farmers harvested roughly two tons per acre.

Travis Faske, who worked with peanuts in Texas and is now a plant pathologist with the University of Arkansas Cooperative Extension Service, said he had never seen such high peanut prices nationally.

“That was just a one time, lucky deal,” Taylor said.

Taylor was an eager participant, buying four used peanut harvesters at $50,000 a pop and nearly doubling his peanut acreage to 900 acres in 2012. The prices from 2011 already made the equipment purchases worthwhile, he said.

Peanut processors Birdsong Peanuts of Suffolk, Va., Golden Peanut Co. of Alpharetta, Ga., and Clint Williams Co. of Madill, Okla., got interested in Arkansas’ areas of sandy soil and contracted with farmers because growers in major peanut-producing states like Georgia and Texas were struggling to combat peanut diseases and water shortages.

At the time, the companies were scrambling to diversify their peanut sources, and they succeeded. Peanut acreage in Arkansas jumped from 2,000 in 2010 to about 18,000 acres this year, mainly in Randolph and Lawrence counties.

Meanwhile, crops improved in Georgia and Texas. A combination of higher yields and increased peanut acreage nationwide have pushed prices down enough that the Arkansas peanut honeymoon is waning.

Contract prices dropped to $750 per ton earlier this year, and companies only contracted to buy about half of Arkansas farmers’ crops, Taylor said, so the other half might sell within the next few weeks at just break-even prices. “Nobody expects it to be a great price,” he said.

And while $750 was still a good price, with up to a 45 percent profit, if the rest of the crop sells for $350, then peanuts will be comparable in net income to corn — but with more labor required for harvesting, Taylor said. Harvesting is a two-step process, requiring digging and threshing, he said.

And, unlike with corn and soybeans, farmers selling peanuts are reliant on only a handful of companies to set the prices, buy the crops and determine when they do both.

“It’s going to be just like any other crop. It’ll have its higher acreage and its lower acreage,” Taylor said. “The ‘new’ has worn off of it.”

 

 

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