A $70 million investment in the peanut industry in Arkansas is expected to usher in a new era for farmers.
A newly formed and farmer-owned cooperative called Delta Peanut LLC of Jonesboro is building a $60 million shelling facility on more than 70 acres in Jonesboro’s industrial park, said Delta Peanut’s CEO Tommy Jumper.
Construction started last month on the project, which will feature the first peanut-shelling plant in Arkansas and create between 125 and 130 jobs. The multiple buildings at the site will allow farmers to weigh, grade, clean, dry and store peanuts, which will be shelled and shipped by truck or rail to customers like Unilever United States Inc., which manufactures Skippy peanut butter at Unilever’s Little Rock facility.
Another customer could be Jif, which has a plant in Memphis, Jumper said.
Another $10 million facility is being built in Marianna to store, clean and dry peanuts before they are delivered to Jonesboro to be shelled.
The Jonesboro plant is expected to open in mid-September, and the shelling portion is on schedule to open in March, he said.
The company plans to open more locations like the one in Marianna as it grows.
“We anticipate that by the time we get to capacity, we will have invested $100 million over the next three to four years,” Jumper said.
Arkansas’ peanut farmers have already seen great impact from the operation, said Travis Faske, an extension plant pathologist at the University of Arkansas System Division of Agriculture.
“Almost every state … that produces peanuts this year has probably dropped a little bit in acres,” Faske said. “We’re the only one that really increased, and increased substantially.”
Arkansas went from 25,000 acres of peanuts planted last year to about 35,000 this year, he said. “That’s a significant increase compared to some of the other commodities,” Faske said.
Still, Arkansas has a long way to go to reach Georgia’s level of peanut production; that state has 700,000 acres planted.
With peanut production down in Georgia and other states, this year might be “a good year to have a surplus of peanuts for a state like Arkansas or this startup sheller,” he said.
Faske said that if Delta Peanut can sell all the peanuts it receives, “that will be the driving force for increasing the number of acres.” If Delta Peanut can’t sell the peanuts, however, then farmers might have to reduce the number of acres they plant.
“So it will take a couple of years to see the big impact,” Faske said. “To sustain production in the state, we need to be smart.”
Other watchers project that having a shelling plant will have a “tremendous” impact on peanut farming in the state, said Branon Thiesse, the staff chair of the Craighead County Cooperative Extension Service.
“Having an onsite sheller will help as far as [farmers] being able to process their peanuts and then being able to sell a processed product instead of having to go through some other people,” Thiesse said. “They’re essentially cutting out some of the middle people.”
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The shelling plant is also expected to attract other industries, such as food producers.
Jumper said he is meeting this week with a group that supplies logistics to the peanut industry in the Southeast and that is considering investing in a logistics terminal in the Jonesboro area.
And Jumper said another meeting is set for later this month with a company that is building refrigerated storage for the peanut industry in the Jonesboro area. Jumper said he couldn’t comment further on the talks.
“I don’t even know how to anticipate how many different kinds of stakeholders are interested in coming to the area because of what we’re doing.”
Founded in 2018, Delta Peanut raised $28.1 million this year by selling shares at $280 a unit, according to its filing with the U.S. Securities & Exchange Commission.
About 60 farmers invested in the company.
“We just didn’t raise that equity by selling shares on the street,” Jumper said.
“The farmers who purchased [the shares] are the very ones committed to farming peanuts and bringing them to this facility.”
Lewis M. Carter Manufacturing LLC of Donalsonville, Georgia, is supplying the equipment for the plant, and Nabholz Corp. of Conway is the contractor.
The UA’s Faske said he first thought “that’s a lot of money” when he learned that farmers had invested $28 million. But, he said, it indicates that “those farmers that are buying into this believe in the crop.”
Loans provided funding for the rest of the project.
Delta Peanut hopes that after the loan payment is made, money will be distributed to the farmers “even in the early years,” said David Wildy, the chairman of the board of Delta Peanut.
He expects that eventually farmers who are members of Delta Peanut will be able to earn an extra $100-$150 per ton on their peanuts.
The price of peanuts, like other commodities, fluctuates, but some shellers offer about $400 per ton, Wildy said. It costs the farmer about $390 to produce one acre of peanuts, he said. The average yield for Arkansas peanuts in 2016 was about 2.4 tons per acre, according to a 2017 news release from the University of Arkansas System Division of Agriculture.
Wildy said he farms about 1,850 acres of peanuts; he’s in his fifth year farming peanuts.
Jumper said this first crop of peanuts will result in about 90,000 tons this fall for Delta Peanut.
At full capacity, the shelling plant will be able to process 180,000-200,000 tons a year.
Farmers have turned to peanuts because it’s been difficult lately to find a crop that makes money, Wildy said.
“With it being so wet and everything, … it’s been one of the weirdest, hardest springs I’ve seen,” Craighead County’s Thiesse said.
“But they did get their peanuts in.”
And putting peanuts in the crop rotation improves the soil, which increases the yield for other crops, such as cotton, Wildy said.
The early 1940s was the golden age of peanut farming in Arkansas, with more than 80,000 acres of peanuts planted in the state.
But that number started to drop in the 1950s and 1960s.
“It almost went away completely in the ’80s,” the UA’s Faske said. “There were still a few people planting peanuts, but it wasn’t a lot of production, … not more than maybe 1,000 acres.”
Around 2010, the peanut processor Clint Willimas Co. of Madill, Oklahoma, entered Arkansas, Faske said. At that time, “shellers needed peanuts, and the prices were high,” he said. “So they added a few thousand acres.”
By 2012, there were more than 10,000 acres of peanuts in Arkansas. In 2014, Arkansas was producing more than 10,000 tons, which passed the tonnage produced in the early 1940s, Faske said. And last year, Arkansas’ 25,000 acres of peanuts surpassed Mississippi’s 23,000 acres, Faske said.
“I heard a farmer tell me at a meeting recently that he’s been growing peanuts for the last five years and he’s never lost money growing peanuts,” Faske said.