In the early 1800's Thomas Malthus predicted that world population would outgrow the world supply of food.
Little did Malthus know that in 1862 the model for progressive agricultural research would be established by the United States Congress and lead to the establishment of the Land Grant system. The University of Georgia, Auburn University, The University of Florida are all products of that legislation.
Agricultural research has continued to move the needle on what is possible in crop and livestock production.
For peanuts, farmers found themselves amazed at the production potential of the Georgia 06G variety, eve under the worst of weather conditions.
This variety is a product of production research at the University of Georgia and sponsored in large part by the Georgia Peanut Commission. Think about it.
Thursday, December 1, 2011
Sunday, November 13, 2011
When and What Contracts
I think conventional wisdom is that the industry might have learned last year to come with contracts a bit earlier. The big question is what kind of contracts will they come with?
It is not our job to tell a farmer what to do but I want to be sure he has all his options. Because many farmers don't look at this blog I hope you will tell your neighbors to gather information as much as possible. The Peanut Commission is a good place to get that information. We have funded work through the National Center for Peanut Competitiveness and they have a host of representative farms which can be a guide to use to compare cotton and corn and peanuts, in terms of cost of producing versus price.
It has been my observation that the first price offered has never been the best price offered. There are also other considerations that must be weighed as you make your planting and marketing decisions.
Weather forecasters have said this Winter and Spring will be a continuation of the current weather pattern and will be warmer and drier than normal.
Look around and you can see the ponds are very low and streams are far from being out of the banks. Reports are that the aquifer is lower than normal after two years of heavy pumping with less than adequate recharge in the Winter.
Reports from the Southwest are not any better, in fact they may possibly be even worse.
If we don't recharge and get water to use for irrigation then another dry year could be a disaster. This said it is a consideration but I don't think it is sound to make all your decisions on what ifs.
So then how does an acre of peanuts stack up on cost versus return and other considerations?
Corn, for instance may reduce a farmer's risk because the growing season is shorter and by August it is harvested and in storage.
These are just a few considerations and we will be looking at more of these at the Peanut Commission as we progress toward Spring.
It is not our job to tell a farmer what to do but I want to be sure he has all his options. Because many farmers don't look at this blog I hope you will tell your neighbors to gather information as much as possible. The Peanut Commission is a good place to get that information. We have funded work through the National Center for Peanut Competitiveness and they have a host of representative farms which can be a guide to use to compare cotton and corn and peanuts, in terms of cost of producing versus price.
It has been my observation that the first price offered has never been the best price offered. There are also other considerations that must be weighed as you make your planting and marketing decisions.
Weather forecasters have said this Winter and Spring will be a continuation of the current weather pattern and will be warmer and drier than normal.
Look around and you can see the ponds are very low and streams are far from being out of the banks. Reports are that the aquifer is lower than normal after two years of heavy pumping with less than adequate recharge in the Winter.
Reports from the Southwest are not any better, in fact they may possibly be even worse.
If we don't recharge and get water to use for irrigation then another dry year could be a disaster. This said it is a consideration but I don't think it is sound to make all your decisions on what ifs.
So then how does an acre of peanuts stack up on cost versus return and other considerations?
Corn, for instance may reduce a farmer's risk because the growing season is shorter and by August it is harvested and in storage.
These are just a few considerations and we will be looking at more of these at the Peanut Commission as we progress toward Spring.
Monday, October 24, 2011
Hotter and Dryer Winter
What does this mean for peanuts?
The weather man says we will continue in a hotter and drier weather pattern at least through the Winter. Well we don't grow peanuts in the winter so who cares at this point?
We should all care. Winter is typically the time we charge ponds for irrigtion and recharge subsoil moisture. Many of the ponds are empty and for sure the subsoil moisture is depleated in many areas of the peanut growing belt.
My best advice to farmers is be making plans as soon as you see a price on commodities which can make you money. If the peanut industry fails to get a decent contract out early and I do mean something good before Christmas then do the prudent thing and try to lock in some profit opportunities.
I hope 2011 taught the rest of the industry a lesson but I am concerned they still have not figured it out.
It might be a good time to remember pigs get fed but hogs go to slaughter. Don't get greedy but be sure to look at the market fundamentals of everything.
The weather man says we will continue in a hotter and drier weather pattern at least through the Winter. Well we don't grow peanuts in the winter so who cares at this point?
We should all care. Winter is typically the time we charge ponds for irrigtion and recharge subsoil moisture. Many of the ponds are empty and for sure the subsoil moisture is depleated in many areas of the peanut growing belt.
My best advice to farmers is be making plans as soon as you see a price on commodities which can make you money. If the peanut industry fails to get a decent contract out early and I do mean something good before Christmas then do the prudent thing and try to lock in some profit opportunities.
I hope 2011 taught the rest of the industry a lesson but I am concerned they still have not figured it out.
It might be a good time to remember pigs get fed but hogs go to slaughter. Don't get greedy but be sure to look at the market fundamentals of everything.
Friday, October 14, 2011
Food for Thought
I learned fairly early in my professional life that when I pointed a finger at
someone else my remaining three fingers were pointed back at me. I write this
not to point a finger but to give food for thought.
For several years we have worked with the National Center for Peanut
Competitiveness to build representative farms which would help us direct
farmers in making planting and marketing decisions. Last year at the American
Peanut Council December meeting, Dr. Fletcher presented a prognosis of what it
would take to have enough peanuts planted to meet demand. They look at cost
structures and then at commodities which may compete for acres. Some of the
folks at the table with me sort of scoffed at Dr. Fletcher’s numbers.
We let farmers contract cotton and to some extent corn early and well before
peanut contracts were ever offered. Because those contracts have to be filled
farmers put their most productive land in those commodities. We saw this by the
sharp decline in irrigated peanut acres in Georgia.
You may argue, just make peanut contracts a mandated delivery, but it is not quite
that simple. Cotton and Corn have a futures market and there is a source to
correct an error in contracting. It may be costly but it is at the least
doable. For peanuts there is no futures market and therefore if production is
not there you have no place to go to fix the situation.
Add to this the bad taste some farmers have toward peanuts right now and the
situation becomes more tenuous. Farmers who had extra production because they
irrigated or those who decided not to contract because the price was not high
enough found themselves in the unfortunate situation of indemnifying the poor
quality of some of the peanuts delivered under contract. For the first time in
history peanuts at the farmers stock level didn’t reflect a $200 shelling
margin but instead reflected at least a $400 margin. These farmers were less
than happy with this redistribution of cash.
Now, for 2012 some experts in the livestock feeding business are studying the
prospect of corn prices as high as $10 per bushel. I discussed this prospect
with one broker and with several farmers and the broker seemed concerned but
not alarmed. The farmers see this as an opportunity.
Corn, cotton, and peanuts have a relatively similar cost structure. Farmers are also
struggling with resistant weeds which a corn rotation would allow some very
good management for those weeds. Corn is planted in March and harvested by
August which certainly reduces the producers risk in terms of the calendar.
Irrigated producers in Georgia can anticipate corn yields in excess of 200
bushels per acre.
Farmers, just as any businessman, have to make good economic decisions now more than
ever. The banks are demanding it.
Nothing would make me happier than for Georgia to produce a million tons of peanuts in
2012 and we can do that on 650,000 acres and not bust our rotation under normal
conditions. Still, I can’t fault farmers for choosing their best options. Maybe
we need Dr. Fletcher to come back and tell us what the numbers are to buy back
some of those irrigated acres we have lost.
someone else my remaining three fingers were pointed back at me. I write this
not to point a finger but to give food for thought.
For several years we have worked with the National Center for Peanut
Competitiveness to build representative farms which would help us direct
farmers in making planting and marketing decisions. Last year at the American
Peanut Council December meeting, Dr. Fletcher presented a prognosis of what it
would take to have enough peanuts planted to meet demand. They look at cost
structures and then at commodities which may compete for acres. Some of the
folks at the table with me sort of scoffed at Dr. Fletcher’s numbers.
We let farmers contract cotton and to some extent corn early and well before
peanut contracts were ever offered. Because those contracts have to be filled
farmers put their most productive land in those commodities. We saw this by the
sharp decline in irrigated peanut acres in Georgia.
You may argue, just make peanut contracts a mandated delivery, but it is not quite
that simple. Cotton and Corn have a futures market and there is a source to
correct an error in contracting. It may be costly but it is at the least
doable. For peanuts there is no futures market and therefore if production is
not there you have no place to go to fix the situation.
Add to this the bad taste some farmers have toward peanuts right now and the
situation becomes more tenuous. Farmers who had extra production because they
irrigated or those who decided not to contract because the price was not high
enough found themselves in the unfortunate situation of indemnifying the poor
quality of some of the peanuts delivered under contract. For the first time in
history peanuts at the farmers stock level didn’t reflect a $200 shelling
margin but instead reflected at least a $400 margin. These farmers were less
than happy with this redistribution of cash.
Now, for 2012 some experts in the livestock feeding business are studying the
prospect of corn prices as high as $10 per bushel. I discussed this prospect
with one broker and with several farmers and the broker seemed concerned but
not alarmed. The farmers see this as an opportunity.
Corn, cotton, and peanuts have a relatively similar cost structure. Farmers are also
struggling with resistant weeds which a corn rotation would allow some very
good management for those weeds. Corn is planted in March and harvested by
August which certainly reduces the producers risk in terms of the calendar.
Irrigated producers in Georgia can anticipate corn yields in excess of 200
bushels per acre.
Farmers, just as any businessman, have to make good economic decisions now more than
ever. The banks are demanding it.
Nothing would make me happier than for Georgia to produce a million tons of peanuts in
2012 and we can do that on 650,000 acres and not bust our rotation under normal
conditions. Still, I can’t fault farmers for choosing their best options. Maybe
we need Dr. Fletcher to come back and tell us what the numbers are to buy back
some of those irrigated acres we have lost.
Monday, October 10, 2011
Looking to 2012
I am pretty well convinced the peanut industry has not yet learned the complete lesson of supply and demand.
There are good options for farmers at this time so there is absoutely no need sign a cheap contract for 2012. Why plant peanuts for $1500 per acre when you can make $2200 per acre on corn? That may well be the question for 2012.
Of recent, shelled goods have traded at $1.20 and yet all the farmer is being offered is $1000. It has always been a rule of thumb that the farmer should get about $100 for every ten cents of shelled good price. USDA's posted price would have normally been pretty accurate but the farmer is not receiving what has long been an industry norm.
It might be that for 2012 farmers should consider cutting acres ten percent and not contracting and they might find their bottom line in better shape because of it.
Sadly, just as the rest of the industry has not totally learned the lesson many farmers will sign contracts which are far too low. I guess we all need a primer on supply and demand.
There are good options for farmers at this time so there is absoutely no need sign a cheap contract for 2012. Why plant peanuts for $1500 per acre when you can make $2200 per acre on corn? That may well be the question for 2012.
Of recent, shelled goods have traded at $1.20 and yet all the farmer is being offered is $1000. It has always been a rule of thumb that the farmer should get about $100 for every ten cents of shelled good price. USDA's posted price would have normally been pretty accurate but the farmer is not receiving what has long been an industry norm.
It might be that for 2012 farmers should consider cutting acres ten percent and not contracting and they might find their bottom line in better shape because of it.
Sadly, just as the rest of the industry has not totally learned the lesson many farmers will sign contracts which are far too low. I guess we all need a primer on supply and demand.
Wednesday, October 5, 2011
Why Aren't Shellers Paying The Market
Shelled goods hit $1.20 and if by any strange chance you have any 2010 price later peanuts they are worth $1300 give or take a little per ton.
So why was the market at $800 to $850 and suddenly jumped to $1000. $1000 is $300 below the market and if the tariff at the buying point is not too bad it might behoove a farmer to seek a toll sheller and maximize his value. I am still convinced we see a situation not unlike 1990 when prices went to a high of $1436 and I really believe when somebody has to shut the factory down next year farmers stock could well be $500 higher than the current offer of $1000.
Farmers need to be patient. The lack of competition in the shelling industry can only be managed by a strong resolve, a willingness to be creative, and using the calendar to your advantage.
Right now the sellers are reeling from quality issues and because PAC is gone and there is no indemnification fund sheller would almost seem to be indemnifying crop quality issues by offering farmers prices below the market.
So why was the market at $800 to $850 and suddenly jumped to $1000. $1000 is $300 below the market and if the tariff at the buying point is not too bad it might behoove a farmer to seek a toll sheller and maximize his value. I am still convinced we see a situation not unlike 1990 when prices went to a high of $1436 and I really believe when somebody has to shut the factory down next year farmers stock could well be $500 higher than the current offer of $1000.
Farmers need to be patient. The lack of competition in the shelling industry can only be managed by a strong resolve, a willingness to be creative, and using the calendar to your advantage.
Right now the sellers are reeling from quality issues and because PAC is gone and there is no indemnification fund sheller would almost seem to be indemnifying crop quality issues by offering farmers prices below the market.
Friday, September 30, 2011
The Peanut Market
Recently I have been again looking at the Rotterdam price of peanuts which is the only shelled good indicator left since we lost the Thomasville report.
Shellers seem to be paying about $200 less than they would normally have paid in the past. Does this mean the shelling margin has gone from $200 give or take to now $400? Does it reflect the quality issues with last year's crop? USDA's posted price is correct the way things used to be but now for some reason the shellers are not paying farmers at the same rate as they used to on shelled goods.
Now I don't know their business but doubt this is all because of the quality issues last year. I suppose the cost squeeze could also be impacting the shellers and they need more money. Sadly, it has reduced farmers stock prices by $200 from where they would have been had this been in 1990.
I have to hope at this point the peanut industry including farmers, who never should have contracted at $550 for the 2011 crop, are learning to look at all the factors of which peanut supply and demand is only a small part. What should it cost to buy peanut acres next year?
I often listen to the poultry guys to see what they think corn prices will be. I have heard pretty solid agreement that the recent downward blip was a harvest blip and the price is going back up. There is fair agreement that corn even goes higher and at least one case I have heard suggestions of $10 corn.
Let me explain the logistics of corn. I had a peanut broker who told me we could not store it all. Actually, we can use it all in a matter of weeks. We are a positive basis state and poultry will gobble it up. Also, there are bins which with little work could be put back in use and I have certainly seen corn stored on peanut wagons. I am not sure how many bushels of peanut wagon space we have but it is a lot ad that could be first marketed to free them up for peanut harvest two months later.
Now for the practicality of corn...the cost is about the same as peanut and cotton, just that some of the inputs are different. And, corn offers some benefit in rotation and in the area of pigweed management because you can use 2-4 D. With corn the crop is made by July and harvest by sometime in August, thereby limiting the risk from weather, insect, and disease pressures. Corn has you on the lake by Labor Day weekend.
And, the economics? I said the cost is not so different from well managed peanuts or cotton. So if I can make 220 bushels which is a pretty average number I am likely about a 4400 pound peanut producer. At 250 bushel corn I am more like a 5000 pound producer. Remember this is under adequate irrigation. At ten dollar corn I need thousand dollar peanuts. Eight dollar corn translates to $880 peanuts.
Cotton may be a bit softer but still close to the dollar a pound range and some experts would say much higher. Dollar cotton means for a similar type of producer about $1500 per acre. this is still $700 peanuts and under this scenario acres of both peanut and cotton would yield way to corn.
Looks like an interesting year but I hope farmers will put their own pencil to it and don't sell cheap.
Shellers seem to be paying about $200 less than they would normally have paid in the past. Does this mean the shelling margin has gone from $200 give or take to now $400? Does it reflect the quality issues with last year's crop? USDA's posted price is correct the way things used to be but now for some reason the shellers are not paying farmers at the same rate as they used to on shelled goods.
Now I don't know their business but doubt this is all because of the quality issues last year. I suppose the cost squeeze could also be impacting the shellers and they need more money. Sadly, it has reduced farmers stock prices by $200 from where they would have been had this been in 1990.
I have to hope at this point the peanut industry including farmers, who never should have contracted at $550 for the 2011 crop, are learning to look at all the factors of which peanut supply and demand is only a small part. What should it cost to buy peanut acres next year?
I often listen to the poultry guys to see what they think corn prices will be. I have heard pretty solid agreement that the recent downward blip was a harvest blip and the price is going back up. There is fair agreement that corn even goes higher and at least one case I have heard suggestions of $10 corn.
Let me explain the logistics of corn. I had a peanut broker who told me we could not store it all. Actually, we can use it all in a matter of weeks. We are a positive basis state and poultry will gobble it up. Also, there are bins which with little work could be put back in use and I have certainly seen corn stored on peanut wagons. I am not sure how many bushels of peanut wagon space we have but it is a lot ad that could be first marketed to free them up for peanut harvest two months later.
Now for the practicality of corn...the cost is about the same as peanut and cotton, just that some of the inputs are different. And, corn offers some benefit in rotation and in the area of pigweed management because you can use 2-4 D. With corn the crop is made by July and harvest by sometime in August, thereby limiting the risk from weather, insect, and disease pressures. Corn has you on the lake by Labor Day weekend.
And, the economics? I said the cost is not so different from well managed peanuts or cotton. So if I can make 220 bushels which is a pretty average number I am likely about a 4400 pound peanut producer. At 250 bushel corn I am more like a 5000 pound producer. Remember this is under adequate irrigation. At ten dollar corn I need thousand dollar peanuts. Eight dollar corn translates to $880 peanuts.
Cotton may be a bit softer but still close to the dollar a pound range and some experts would say much higher. Dollar cotton means for a similar type of producer about $1500 per acre. this is still $700 peanuts and under this scenario acres of both peanut and cotton would yield way to corn.
Looks like an interesting year but I hope farmers will put their own pencil to it and don't sell cheap.
Monday, September 19, 2011
Downhill Slide Toward an Uphill Climb
The peanut crop continues on a downhill slide.
We are cooler but still dry and the rainfall predicted this week, if it does any good, will be more beneficial for digging than any other thing.
It is too late for anything to happen very good at this date.
So what about un-contracted peanuts for this year's crop. They will have to have them some time and they are going to pay if farmers are patient. Best marketing advice is to put in the loan after January first and then you have until October of 12 to market. All predictions are we run out of peanuts before the '12 harvest so some body will have to have peanuts at a premium price. Remember in 1990 peanuts went to $1436. Hold out for $1500 and sell when you can't stand to hold any longer.
So then what about next Spring?
Unless contracts get to somewhere between $850 and $900 we will not plant enough peanuts.
Compare two and a half bale cotton to two ton peanuts to 220 bu. corn. Those are comparable production prospects for a producer. Now look at the fact you have ended your risk on corn by July and Cotton and Peanut continue the risk to November. Cost of production is not terribly dissimilar.
Corn needs to be planted to irrigated acres to make the yield.
Considering basis on corn we could contract and receive about $8 per bushel for corn. at 220 bushels this is $1760 per acre. Two ton peanuts would have to be $880 per ton to compare. Cotton at two and a half bales is 1750 pounds of lint at a shade over a dollar a pound. Again to compare peanuts has to be $875 to compete with cotton.
A farmer is better off if there are not competitive pre-plant contracts for peanuts to load up irrigated acres with corn if the price holds near $8. Early marketing commitments are going to be critical this coming year on all commodities.
We are cooler but still dry and the rainfall predicted this week, if it does any good, will be more beneficial for digging than any other thing.
It is too late for anything to happen very good at this date.
So what about un-contracted peanuts for this year's crop. They will have to have them some time and they are going to pay if farmers are patient. Best marketing advice is to put in the loan after January first and then you have until October of 12 to market. All predictions are we run out of peanuts before the '12 harvest so some body will have to have peanuts at a premium price. Remember in 1990 peanuts went to $1436. Hold out for $1500 and sell when you can't stand to hold any longer.
So then what about next Spring?
Unless contracts get to somewhere between $850 and $900 we will not plant enough peanuts.
Compare two and a half bale cotton to two ton peanuts to 220 bu. corn. Those are comparable production prospects for a producer. Now look at the fact you have ended your risk on corn by July and Cotton and Peanut continue the risk to November. Cost of production is not terribly dissimilar.
Corn needs to be planted to irrigated acres to make the yield.
Considering basis on corn we could contract and receive about $8 per bushel for corn. at 220 bushels this is $1760 per acre. Two ton peanuts would have to be $880 per ton to compare. Cotton at two and a half bales is 1750 pounds of lint at a shade over a dollar a pound. Again to compare peanuts has to be $875 to compete with cotton.
A farmer is better off if there are not competitive pre-plant contracts for peanuts to load up irrigated acres with corn if the price holds near $8. Early marketing commitments are going to be critical this coming year on all commodities.
Tuesday, September 6, 2011
Rain, Rain, Where the Heck Did You Go?
Well TS Lee was supposed to be a rain event for the southeastern peanut belt and to some extent it was. Still, in the Georgia belt there were few significant accumulations beltwide. That said many locations got about an inch which was well received and appreciated.
Temperatures are moderating and if they don't get too cool so as to shut down plant development and if we could get a bit more rain pretty soon then that would be a help.
One concern is the approach of Katia and the northward turn. This could give us a a repeat of Irene sucking all the moisture out of the atmosphere which would not be good.
We are still hoping for a miracle but if something does not happen really soon this crop is really in trouble and it will be worse than previously predicted.
Temperatures are moderating and if they don't get too cool so as to shut down plant development and if we could get a bit more rain pretty soon then that would be a help.
One concern is the approach of Katia and the northward turn. This could give us a a repeat of Irene sucking all the moisture out of the atmosphere which would not be good.
We are still hoping for a miracle but if something does not happen really soon this crop is really in trouble and it will be worse than previously predicted.
Monday, August 29, 2011
The Irene Disaster
The part of the disaster from Hurricane Irene we see from the rain and flooding and trees blown over are certainly evident. What is less evident is the impact Irene has had on our crops in south Georgia.
Irene caused the big sucking sound which was accompanied by a strong west wind to rob the atmosphere of any humidity. When you don't sweat at 99 degrees the atmosphere is really dry. This is not good and the next real chance of rain is still essentially a week away. We needed the rain from Irene.
The crop has really deteriorated quite a bit the last couple weeks.
Not good for an already tight supply.
Farmers, if you are not contracted don't be surprised to see peanuts at $1500 before the 12 harvest. They got to $1436 in '90.
Irene caused the big sucking sound which was accompanied by a strong west wind to rob the atmosphere of any humidity. When you don't sweat at 99 degrees the atmosphere is really dry. This is not good and the next real chance of rain is still essentially a week away. We needed the rain from Irene.
The crop has really deteriorated quite a bit the last couple weeks.
Not good for an already tight supply.
Farmers, if you are not contracted don't be surprised to see peanuts at $1500 before the 12 harvest. They got to $1436 in '90.
Tuesday, August 23, 2011
You Picked a Fine Time to Leave me Irene
The hopes for finally getting the "rain with a name" seem to have been dashed.
Farmers are telling me we are about out of time to get that general rain. Some farmers are thinking harvest is pretty close now and that they will have to get what they have. We had hoped Irene might come in at the Big Bend of Florida and become a rain event for us with not a lot of wind. Had she taken that path which was projected early, we would have had general rainfall across the peanut belt in Georgia.
Now she is going east and tat is by far the worst thing she can do because she will suck all the moisture out of the air for most of the southeastern peanut belt.
I was in Brooklet over the weekend and peanuts in the flat country near the coast should be lapped and green and lush this time of year but alas I could still see the row of the twins. I am not sure, save a warm Fall and late frost that there is much many of those peanuts can do this year.
I suppose I am back to praying for a miracle for our farmers and so now I am expecting it.
Farmers are telling me we are about out of time to get that general rain. Some farmers are thinking harvest is pretty close now and that they will have to get what they have. We had hoped Irene might come in at the Big Bend of Florida and become a rain event for us with not a lot of wind. Had she taken that path which was projected early, we would have had general rainfall across the peanut belt in Georgia.
Now she is going east and tat is by far the worst thing she can do because she will suck all the moisture out of the air for most of the southeastern peanut belt.
I was in Brooklet over the weekend and peanuts in the flat country near the coast should be lapped and green and lush this time of year but alas I could still see the row of the twins. I am not sure, save a warm Fall and late frost that there is much many of those peanuts can do this year.
I suppose I am back to praying for a miracle for our farmers and so now I am expecting it.
Wednesday, August 3, 2011
A Busy Week
This has been a busy week for the Peanut Commission.
We celebrated our fiftieth anniversary helping farmers. We had a groundbreaking for a new headquarters. I personally celebrated twenty-five years as the Commission's Executive Director. And, it all happened Monday.
I had a reporter ask me why the new building and why at this time?
Why the new building? The Commission for many years has discussed a location on I-75 but the cost was always out of reach. Then came Tift County and the old State Patrol Post. We negotiated with the County and bought a piece of land which we could afford. You might ask why I-75? 100,000 vehicles a day go past the site of the new headquarters.
The building is going to be traditional in building cost but much more efficient to operate, including the fact that it will be a net zero energy building.
So, Why now? This has been four years in the making to get to this point and if you consider that building costs are actually down because of the current recession the time couldn't be much better.
We will pay for the building with the sale of our current office in town and with grants, sponsorships and a commemorative brick program.
KMC, the makers of peanut harvest equipment was the first to approach the Commission for a sponsorship opportunity. Lanier Carson, Benny Branch, and the whole group at KMC are way more than a corporation, they are community supporters and that certainly includes the peanut community.
We celebrated our fiftieth anniversary helping farmers. We had a groundbreaking for a new headquarters. I personally celebrated twenty-five years as the Commission's Executive Director. And, it all happened Monday.
I had a reporter ask me why the new building and why at this time?
Why the new building? The Commission for many years has discussed a location on I-75 but the cost was always out of reach. Then came Tift County and the old State Patrol Post. We negotiated with the County and bought a piece of land which we could afford. You might ask why I-75? 100,000 vehicles a day go past the site of the new headquarters.
The building is going to be traditional in building cost but much more efficient to operate, including the fact that it will be a net zero energy building.
So, Why now? This has been four years in the making to get to this point and if you consider that building costs are actually down because of the current recession the time couldn't be much better.
We will pay for the building with the sale of our current office in town and with grants, sponsorships and a commemorative brick program.
KMC, the makers of peanut harvest equipment was the first to approach the Commission for a sponsorship opportunity. Lanier Carson, Benny Branch, and the whole group at KMC are way more than a corporation, they are community supporters and that certainly includes the peanut community.
Sunday, July 17, 2011
Rain Rain
This Friday and Saturday have offered the most widespread rainfall event in the Georgia peanut belt since the drought began.
The weather forecast is now for rain chance to diminish and temps to rise again this week.
Because we have not yet had a tropical event we will need rainfall on a regular basis and temperatures need to moderate at night if we are to reach potential on what we do have planted.
It is my observation that cotton may only have a 60 to 70 percent stand on average across the belt and peanuts maybe as high as 90 percent. There are few perfect stands anywhere.
The weather forecast is now for rain chance to diminish and temps to rise again this week.
Because we have not yet had a tropical event we will need rainfall on a regular basis and temperatures need to moderate at night if we are to reach potential on what we do have planted.
It is my observation that cotton may only have a 60 to 70 percent stand on average across the belt and peanuts maybe as high as 90 percent. There are few perfect stands anywhere.
Wednesday, July 6, 2011
Peanut Pegging
It is a bit interesting that every state, save Virginia, is barely at or obviously lagging behind the five year pegging average as of the most recent crop progress report.
I am not totally sure what this means and depending on the weather it could be good or bad. What is surprising is that as hot as it has been usually we would expect to be ahead of normal. The drought has had an impact on progress for sure but some effect may be planting date effect.
I would still contend this is the most difficult start to a crop in my 25 years as the Commission's Executive Director.
I am not totally sure what this means and depending on the weather it could be good or bad. What is surprising is that as hot as it has been usually we would expect to be ahead of normal. The drought has had an impact on progress for sure but some effect may be planting date effect.
I would still contend this is the most difficult start to a crop in my 25 years as the Commission's Executive Director.
Tuesday, July 5, 2011
Rain Rain Come Today
I am not sure I ever remember 6 inch cotton blooming out the top but I saw some Sunday in Crisp County.
While we have had some scattered showers and some locally heavy rains, the vast majority of South Georgia acres are under the Exceptional drought classification.
Our only hope is daily rainfall which has slowed again.
So, rain, rain come today.
While we have had some scattered showers and some locally heavy rains, the vast majority of South Georgia acres are under the Exceptional drought classification.
Our only hope is daily rainfall which has slowed again.
So, rain, rain come today.
Wednesday, June 29, 2011
Rain
Thunderstorms have become more prevalent in the past week. Not all areas have gotten rain. Those which have will continue to need them.
Acres are down and Texas is still extremely dry.
Farmers report difficulty keeping some peanuts out of wilt and they don't have any peanuts on them yet.
Stands are less than perfect in most places.
We need the rain to continue because it is too late now to plant peanuts.
Acres are down and Texas is still extremely dry.
Farmers report difficulty keeping some peanuts out of wilt and they don't have any peanuts on them yet.
Stands are less than perfect in most places.
We need the rain to continue because it is too late now to plant peanuts.
Friday, June 24, 2011
$900 Virginias and $1000 Valencas
Growers out west were offered $900 contracts for Virginia type peanuts and $1000 for Valencia type peanuts. Sign up was light.
Question is why not make the same offers in the Southeast? At least give farmers the opportunity to say no her. And, if they say yes then they might get over being mad at the shellers.
Farmers have often expressed frustration to me that the shellers treat folks in other parts of the country better than they do here. It was a big part of the acre cutback and yet I am not sure the peanut industry past the grower ranks understands this.
If something doesn't change pretty soon next year's plantings could be as low as this year's.
Tuesday, June 21, 2011
Hot an Dry Again
After last weeks welcome rains, it has gotten hot and dry and we again need rain if we are to make any crop at all.
We need a tropical storm to recharge soil moisture or else we live from shower to shower and suffer every time we get the least bit dry.
Couple that with acres being cut significantly and $1000 peanuts are a reality and when we run out of peanuts before the 2012 harvest peanuts could reach $2000 with very limited peanuts to sell at that level.
Monday, June 20, 2011
Last Week's Rain
Last week most parts of the Georgia peanut belt got some measurable rain. For most areas it was enough to finally get a stand. Also for most areas it was not nearly enough to make the moisture meet. We will either need a general rain like a tropical storm or will need weekly rainfall to make the crop.
Stands are not that great on dryland that had some of the peanuts come up and the rest of the seed cook in the field.
We are still challenged with the 11 crop.
Tuesday, June 14, 2011
August in June
Last week prices were reported as high as 93 cents for kernel sales for processing. Those peanuts were headed to Nicaragua which means less supply for domestic manufacturers.
This week highs continued in the 100's with records being shattered. Windy conditions continued to help the heat send evaporation through the roof.
Wells are having to be lowered and some fields abandoned. Lowering wells also increases energy cost and in some situations means a higher horsepower pumping unit.
Planting is at a standstill and tomorrow is the final deadline for planting if you are to have any coverage under the crop insurance program.
Normally we would expect to see the crop conditions and temperatures we are seeing now in August.
The peanut industry better brace up. Farmers need to hold on to uncommitted peanuts. Save some miraculous circumstance we will run out of peanuts before the 2012 harvest.
I have never seen $2000 per ton peanuts but the way it is shaping up now I might just get to see that next year. At 93 cents, farmers stock should be at $1000 per ton right now.
This week highs continued in the 100's with records being shattered. Windy conditions continued to help the heat send evaporation through the roof.
Wells are having to be lowered and some fields abandoned. Lowering wells also increases energy cost and in some situations means a higher horsepower pumping unit.
Planting is at a standstill and tomorrow is the final deadline for planting if you are to have any coverage under the crop insurance program.
Normally we would expect to see the crop conditions and temperatures we are seeing now in August.
The peanut industry better brace up. Farmers need to hold on to uncommitted peanuts. Save some miraculous circumstance we will run out of peanuts before the 2012 harvest.
I have never seen $2000 per ton peanuts but the way it is shaping up now I might just get to see that next year. At 93 cents, farmers stock should be at $1000 per ton right now.
Wednesday, June 8, 2011
New Drought Classification
Even though we have had some showers scattered around lately, the weatherman said today we are likely going to see our drought classification move to exceptional. This is the worst classification for drought..."it just don't get no worse."
For peanuts the last time a drought caused a real price spike of significance was in 1990. That year it happened late season and hurt yields. This year the impact has been early to already reduced planting intentions. Now farmers are concerned about making enough cotton to cover their contracts so many acres which might have still seen peanuts are being diverted to further cotton acres.
I think we are in a critical situation and not sure but if things don't change we might need life support.
For peanuts the last time a drought caused a real price spike of significance was in 1990. That year it happened late season and hurt yields. This year the impact has been early to already reduced planting intentions. Now farmers are concerned about making enough cotton to cover their contracts so many acres which might have still seen peanuts are being diverted to further cotton acres.
I think we are in a critical situation and not sure but if things don't change we might need life support.
Monday, May 30, 2011
Memorial Day Extreme Dought
Today is Memorial Day 2011. We are in an "extreme drought" by definition. You don't have to have any definitions to realize the situation is bad.
They had predicted rain for the end of last week but what rain we got was light or non-existent and the drought continues at a time when we need to be planting our crops.
The major task farmers found themselves doing during the holiday weekend was irrigating where systems are in place. Corn and cotton are occupying the majority of irrigated acres. An ag chemical salesman suggested to me peanut acres will be just slightly over 400,000 acres in Georgia if the weather does not break. If this comes to pass we will most definitely see 1990 highs for peanut prices. Farmers who have not contracted may find the loan a very viable option. It has actually worked for farmers who waited to put peanuts in the loan after January 1, the past two years.
They had predicted rain for the end of last week but what rain we got was light or non-existent and the drought continues at a time when we need to be planting our crops.
The major task farmers found themselves doing during the holiday weekend was irrigating where systems are in place. Corn and cotton are occupying the majority of irrigated acres. An ag chemical salesman suggested to me peanut acres will be just slightly over 400,000 acres in Georgia if the weather does not break. If this comes to pass we will most definitely see 1990 highs for peanut prices. Farmers who have not contracted may find the loan a very viable option. It has actually worked for farmers who waited to put peanuts in the loan after January 1, the past two years.
Wednesday, May 25, 2011
Heat and Drought Continue
This is sort of a good news bad news story.
I was speaking to a farmer who had dusted in some cotton and got about two tenths of rain. That was enough to sprout it but not to get it all up to a stand. So, he had to re-plant. Now the weather forecast is for rain but only a tenth of an inch. If that happens he may be in the same situation.
I was in a prayer breakfast this morning at the local Farm Service Center in Tift County. Farmers are upbeat in public as they usually are. Still there was a lot of discussion of being testy and hard to get along with. There was discussion of wells running dry.
Another farmer from about 90 miles as the crow flies from Tifton told me he has a pond he is pumping water in to and out of to irrigate and he can't keep up. He is about 6 inches from the pond being too low to pump from.
Still, I have faith the Lord will send us what we need. In 2007 it happened on June 2nd.
I was speaking to a farmer who had dusted in some cotton and got about two tenths of rain. That was enough to sprout it but not to get it all up to a stand. So, he had to re-plant. Now the weather forecast is for rain but only a tenth of an inch. If that happens he may be in the same situation.
I was in a prayer breakfast this morning at the local Farm Service Center in Tift County. Farmers are upbeat in public as they usually are. Still there was a lot of discussion of being testy and hard to get along with. There was discussion of wells running dry.
Another farmer from about 90 miles as the crow flies from Tifton told me he has a pond he is pumping water in to and out of to irrigate and he can't keep up. He is about 6 inches from the pond being too low to pump from.
Still, I have faith the Lord will send us what we need. In 2007 it happened on June 2nd.
Monday, May 23, 2011
A Record Which Can't Be Broken
I was listening to the weatherman on WALB in Albany this morning and he says the rainfall in the gauge in Albany is currently at zero for May and with no rainfall expected the balance of the month we could set a new record for the driest May on record.
There is only one good thing I can see out of this situation and that is the record can never be broken, only tied.
We are in a serious rainfall deficit and the economic ramifications are going to be serious if something does not change.
In Sunday School yesterday we discussed the difference in the flooding in Louisiana and the drought here. The flooding is swift and very obvious. A prolonged drought is different. It happens a little bit at a time and never seems to get much media.
We decided we needed to name this so we are calling it the "frog in the kettle" disaster. You see if you put a frog in cold water in a pot and then gradually heat the pot up you can cook the frog without him ever jumping out of the pot. It happens a little at a time.
Nothing else seems to be working so we had better pray for rain.
There is only one good thing I can see out of this situation and that is the record can never be broken, only tied.
We are in a serious rainfall deficit and the economic ramifications are going to be serious if something does not change.
In Sunday School yesterday we discussed the difference in the flooding in Louisiana and the drought here. The flooding is swift and very obvious. A prolonged drought is different. It happens a little bit at a time and never seems to get much media.
We decided we needed to name this so we are calling it the "frog in the kettle" disaster. You see if you put a frog in cold water in a pot and then gradually heat the pot up you can cook the frog without him ever jumping out of the pot. It happens a little at a time.
Nothing else seems to be working so we had better pray for rain.
Wednesday, May 18, 2011
Wells Running Dry
I heard my first report this morning of irrigation wells running dry.
Wait, that happens in August or September, right?
Nope it is May and we are dry. Soil moisture below 10% and no rain forecast and on top of that this cool weather should have been before Easter. This morning Crestview FL was cooler than Anchorage AK.
Wait, that happens in August or September, right?
Nope it is May and we are dry. Soil moisture below 10% and no rain forecast and on top of that this cool weather should have been before Easter. This morning Crestview FL was cooler than Anchorage AK.
Monday, May 16, 2011
What Rain?
60 percent chance this last Saturday and yet most areas got little to none. At my house once there was a red cell which went right over the house. It never rained from that cell and the radar lied.
Later in the day the breeze picked up and a black cloud was bearing down on us. It never rained.
In a total of four showers we got less than one one hundredth of an inch of rain.
The Albany weatherman this morning said they missed it and though some areas got some rain they also got hail. Albany has a soil moisture below 10% and the rainfall deficit marches on, now past 6 inches.
Peanut situation is now critical for much of the Georgia Peanut Belt.
Later in the day the breeze picked up and a black cloud was bearing down on us. It never rained.
In a total of four showers we got less than one one hundredth of an inch of rain.
The Albany weatherman this morning said they missed it and though some areas got some rain they also got hail. Albany has a soil moisture below 10% and the rainfall deficit marches on, now past 6 inches.
Peanut situation is now critical for much of the Georgia Peanut Belt.
Friday, May 13, 2011
Market Uncertainty
Weather uncertainty coupled with the failure of the peanut industry to offer competitive prices for peanuts compared to cotton and corn are setting the peanut market up for a pretty serious roller coaster ride.
There is really no reason at this point for farmers to take a $650 offer for their uncommitted 2010 crop peanuts because they are going to only go up in value from this point.
2011 plantings are being hampered by dry weather and will only cause intentions to go down and not up. While cotton seed can be dusted in and wait for rain peanuts must have moisture or they should not be planted.
Predictions for a couple days of rain for the weekend are now down to a day of showers which may not provide much relief to the drought.
The annual rainfall deficit passed six inches and the drought has now been upgraded to Severe to even Extreme in the entire Georgia Peanut Belt.
I have said before and will say again...somebody is going to do without peanuts before the 2012 harvest and they might do with out even before then.
There is really no reason at this point for farmers to take a $650 offer for their uncommitted 2010 crop peanuts because they are going to only go up in value from this point.
2011 plantings are being hampered by dry weather and will only cause intentions to go down and not up. While cotton seed can be dusted in and wait for rain peanuts must have moisture or they should not be planted.
Predictions for a couple days of rain for the weekend are now down to a day of showers which may not provide much relief to the drought.
The annual rainfall deficit passed six inches and the drought has now been upgraded to Severe to even Extreme in the entire Georgia Peanut Belt.
I have said before and will say again...somebody is going to do without peanuts before the 2012 harvest and they might do with out even before then.
Wednesday, May 11, 2011
Hot and Dry
It is hot and dry and considering the fact farmers were already pointed toward non-irrigated acres to plant peanuts this year is only getting more interested.
It might be better for a producer to take prevented planted credit on his crop insurance and just leave the land idle if this pattern persists.
The rainfall deficit now exceeds 6 inches on the year and there is no moisture without irrigation in which to plant right now.
The State Climatologist says this weather pattern will remail in place at least until August.
I spoke with one farmer who has uncommitted 10 crop peanuts in the loan and I told him to be patient. If it doesn't rain soon they might be worth $1000 by October.
It might be better for a producer to take prevented planted credit on his crop insurance and just leave the land idle if this pattern persists.
The rainfall deficit now exceeds 6 inches on the year and there is no moisture without irrigation in which to plant right now.
The State Climatologist says this weather pattern will remail in place at least until August.
I spoke with one farmer who has uncommitted 10 crop peanuts in the loan and I told him to be patient. If it doesn't rain soon they might be worth $1000 by October.
Wednesday, April 20, 2011
90 Degrees
No I am not talking about a right angle but the predicted high temp for today. April 20 and 90 degrees. That is not normal. Also, we are in a rainfall deficit of about four inches and that gets worse daily.
There were hopes that the approaching front would be the one to bring good rainfall but not to be, apparently. We have had all these fronts and they have given us a little, and that is the operative word, rain and so we are not in great shape at this time.
We are at the time when we can start peanut planting but some areas are iffy on soil moisture and need rain to be ready to plant.
I can only hope the current weather pattern moderates and we can get rain during the growing season to carry the crop along. It is pretty sure there is no subsoil moisture to carry us.
There were hopes that the approaching front would be the one to bring good rainfall but not to be, apparently. We have had all these fronts and they have given us a little, and that is the operative word, rain and so we are not in great shape at this time.
We are at the time when we can start peanut planting but some areas are iffy on soil moisture and need rain to be ready to plant.
I can only hope the current weather pattern moderates and we can get rain during the growing season to carry the crop along. It is pretty sure there is no subsoil moisture to carry us.
Wednesday, April 6, 2011
Planting Intentions???
I reviewed the planting intentions report and have a few observations on the stated intention of only a 4% reduction in Georgia: 1. Farmers do not believe this and think it will be a much larger reduction. There is some talk of conspiracy to suppress prices at the farm gate by padding the numbers. 2. It would appear we must be going to create some more land to increase other crops at the level they intend and still only reduce peanuts by 4%. 3. In conversations I have had with others in the industry many of them do not believe the report...but for some reason this has not caused them to offer competitive prices. 4. The industry better get ready to get off their pocket book for 2012 because many farmers have a bad taste in their mouth toward peanuts and cotton prices appear to be strong for next year, at least at this point. 5. This will be a good year to look at the FSA certified acres than speculative reports based on small sample surveys. 6. The anticipated reduction in irrigated acres and the loss of Temik will have some impact on yields...the question is how much?
Wednesday, March 30, 2011
Peanut Prices
Well the peanut market is certainly in flux at the moment based on a lot of things but there seems to be at least some imbalance to me when I look at the price being offered to farmers and the price being charged for seed. I put our staff to work and sought out information on peanut prices and medium runners are currently being traded around 80 cents and one report was as high as 83 cents. Well now if you look at tradition seed has typically been 10 cents over medium runner price but for the sake of discussion lets even say 12 cents is within normal. That would be reasonable justification for seed prices being 91 to 94 cents per pound. Well if that is the case then lets look at the other end of the spectrum and see what we find. 80 cent mediums should yield a farmers stock price with at the least an 8 as the first number. So then we took in to account that the 10 crop had some quality concerns so we did a few calculations. Considering blanching cost of 5 to 6 cents and adding 10% more to our normal shrink considerations the price should still have a 7 in front for any uncommitted farmers stock from the 10 crop. I can understand how shelled good prices have escalated because of quality concerns and the concern we could see acres for 2011 in a very tight situation. What is not understandable is how it is farmers stock offerings for uncommitted 10 crop peanuts has held at $550 while the medium price has escalated. Farmers know this, too and in the meeting the other night in Coffee County GA I had a lot of farmers who are really mad at the shellers right now. I have heard the same across the state but it was very vocal in Coffee County. Be they the culprit or not shellers are not currently on the list for growers to send an Easter Basket. I know the best way to change farmer attitudes is with money. If that doesn't happen then I am pretty certain shellers may need to hire a good PR firm.
Friday, March 18, 2011
Shocking Revelation
At our board meeting this week the preliminary budget was set based on 450,000 acres for Georgia. This is the lowest acreage since 1980 and the rest of the country seems to be following this trend in cutting acres and planting other crops like cotton.
The board also agreed to a projected yield of 3150 which looked at the yield potential of the new varieties but also the belief that irrigated acres would be dedicated to cotton because cotton contracts have to be delivered with no accounting for any act of God.
If all this comes to pass and given the serious quality problems in the 2010 crop causing the crop to sustain heavy blanching loses to clean it up and this will be an interesting year in the peanut market.
I have always thought seriously that contracting some of your peanuts was a good idea but this year I wonder if that is true. I think the most recent contracts of $600 is really not even a floor given the market fundamentals.
I am pretty bearish on price for farmers who have uncontracted peanuts for the 11 crop and even the 10 crop may move up if a farmer has them in the loan and can wait until later in the year.
I think it is becoming a more safe bet that the 10 crop will all be needed to satisfy current demand given the significant kernel loss suffered in the blanching plants.
One early season concern is that many areas are dry and temperatures seem to be warming in a hurry. The current weather pattern is much similar to I believe the 2008 crop when it seemed that the rain angled in from the northwest and played out before it got to very much of the peanut belt.
One hope is that the ENSO currents will move to more neutral as the year progresses but as of yet no one has made that prediction.
The board also agreed to a projected yield of 3150 which looked at the yield potential of the new varieties but also the belief that irrigated acres would be dedicated to cotton because cotton contracts have to be delivered with no accounting for any act of God.
If all this comes to pass and given the serious quality problems in the 2010 crop causing the crop to sustain heavy blanching loses to clean it up and this will be an interesting year in the peanut market.
I have always thought seriously that contracting some of your peanuts was a good idea but this year I wonder if that is true. I think the most recent contracts of $600 is really not even a floor given the market fundamentals.
I am pretty bearish on price for farmers who have uncontracted peanuts for the 11 crop and even the 10 crop may move up if a farmer has them in the loan and can wait until later in the year.
I think it is becoming a more safe bet that the 10 crop will all be needed to satisfy current demand given the significant kernel loss suffered in the blanching plants.
One early season concern is that many areas are dry and temperatures seem to be warming in a hurry. The current weather pattern is much similar to I believe the 2008 crop when it seemed that the rain angled in from the northwest and played out before it got to very much of the peanut belt.
One hope is that the ENSO currents will move to more neutral as the year progresses but as of yet no one has made that prediction.
Tuesday, March 1, 2011
Do You Hate Earmarks?
I am gravely concerned that there is a mood in America today that government is bad and we would do better with no government. There is a mood to cut to the bone in Washington in many areas. One of these areas is Agriculture.
There also seems to be a great deal of pride that they have killed earmarks in Washington. You know the bridge to nowhere was an earmark.
So then lets ask the question are all earmarks a bridge to nowhere?
I asked my Chairman today as we went up the Interstate toward Atlanta what we did without cell phones. We both conducted business as we went on our way. Sunday, week, our pastor emeritus gave the sermon and he talked about finding our way and told of his Garmin recalculating when faced with an errant turn. And on our TV there is discussion of the Da Vinci robotic surgeon. Where in the world did all this technology come from?
The better question is from where out of this world did all this come. Thanks to earmarks and the space program our lives are laced with technological advances which have added to the quality of our lives.
In Agriculture we find much the same story. Cuts were sustained in our Ag research over time and the only way to get critical research funded was to seek earmarks. Today fewer farmers than ever before feed America and the world for less than in our history even given current spikes in commodity markets.
Think about this, in 2040 we will need to feed almost twice the population of what we feed today. There is no more land and no more water, fertilizer, fuel, or any of the other inputs. So we will have to do more for less. It takes twelve years to bring a new peanut variety to commercial use. This mood to stick a long jagged dagger in the heart of Ag Research will at some point and it will be in our lifetimes come back to bite us. With a growing world population and a burgeoning middle class in China just imagine our children going without food because we cannot afford to pay what others can.
Just one last thought; I hope when we dismantle government my share of the infrastructure can be on I-75 where I can put up a toll booth.
There also seems to be a great deal of pride that they have killed earmarks in Washington. You know the bridge to nowhere was an earmark.
So then lets ask the question are all earmarks a bridge to nowhere?
I asked my Chairman today as we went up the Interstate toward Atlanta what we did without cell phones. We both conducted business as we went on our way. Sunday, week, our pastor emeritus gave the sermon and he talked about finding our way and told of his Garmin recalculating when faced with an errant turn. And on our TV there is discussion of the Da Vinci robotic surgeon. Where in the world did all this technology come from?
The better question is from where out of this world did all this come. Thanks to earmarks and the space program our lives are laced with technological advances which have added to the quality of our lives.
In Agriculture we find much the same story. Cuts were sustained in our Ag research over time and the only way to get critical research funded was to seek earmarks. Today fewer farmers than ever before feed America and the world for less than in our history even given current spikes in commodity markets.
Think about this, in 2040 we will need to feed almost twice the population of what we feed today. There is no more land and no more water, fertilizer, fuel, or any of the other inputs. So we will have to do more for less. It takes twelve years to bring a new peanut variety to commercial use. This mood to stick a long jagged dagger in the heart of Ag Research will at some point and it will be in our lifetimes come back to bite us. With a growing world population and a burgeoning middle class in China just imagine our children going without food because we cannot afford to pay what others can.
Just one last thought; I hope when we dismantle government my share of the infrastructure can be on I-75 where I can put up a toll booth.
Wednesday, February 23, 2011
Ag Weatherman Murdered
Weather is by far the most influential factor Mother Nature has to throw at Ag producers. It impacts planting date and harvest. It influences diseases and the management of them. Chill hours or lack of can make or break a peach crop. Heat and drought can both affect peanut quality.
The list goes on and on.
The University of Georgia had an ag weather network which is used widely by farmers. It is also used as an indicator for golf course condition. Even Georgia Power uses it to determine peak usage.
The information found at the weather web site is not available in a usable form with prediction models and so forth at any other place.
So then why is it the University of Georgia would make the decision to kill this beneficial initiative? It cost far less than the benefit it has demonstrated.
All I can say is this is a heck of a way to spur the economy by destroying a valuable tool farmers use to maintain productivity and profitability.
The list goes on and on.
The University of Georgia had an ag weather network which is used widely by farmers. It is also used as an indicator for golf course condition. Even Georgia Power uses it to determine peak usage.
The information found at the weather web site is not available in a usable form with prediction models and so forth at any other place.
So then why is it the University of Georgia would make the decision to kill this beneficial initiative? It cost far less than the benefit it has demonstrated.
All I can say is this is a heck of a way to spur the economy by destroying a valuable tool farmers use to maintain productivity and profitability.
Tuesday, February 22, 2011
$600 Contract Receives Mixed Reviews
Last week peanut contracts were offered at $600 and the response by farmers was mixed.
It seems that it may have gotten some peanuts in the SW part of the state which were already likely to be planted locked down by shellers. In East and Southeast Georgia it really didn't move the needle much. This area seems to have an advantage of cotton over peanuts and so it was going to take more than that to compete with cotton.
In Coffee County the County Agent did an informal survey of the growers in a local meeting and found that the $600 had no impact and that those growers are still leaning cotton. As the Agent told me $1.22 cotton is much better to my growers than $600 peanuts so they are going where the opportunity exists.
On a largely related note the local weatherman says our moisture situation right now is worse than it was this time in 2007. We are going in to this crop with a pretty serious rainfall deficit and with our ponds at low levels. Considering the requirement that cotton when contracted must be delivered cotton will compete greatly for irrigated acres and we could see dryland peanuts increase in percentage.
At this point we all know 2011 is going to be an interesting year but I am about to think that we can now anticipate the same of 2012, especially if cotton prices hold for another year.
It seems that it may have gotten some peanuts in the SW part of the state which were already likely to be planted locked down by shellers. In East and Southeast Georgia it really didn't move the needle much. This area seems to have an advantage of cotton over peanuts and so it was going to take more than that to compete with cotton.
In Coffee County the County Agent did an informal survey of the growers in a local meeting and found that the $600 had no impact and that those growers are still leaning cotton. As the Agent told me $1.22 cotton is much better to my growers than $600 peanuts so they are going where the opportunity exists.
On a largely related note the local weatherman says our moisture situation right now is worse than it was this time in 2007. We are going in to this crop with a pretty serious rainfall deficit and with our ponds at low levels. Considering the requirement that cotton when contracted must be delivered cotton will compete greatly for irrigated acres and we could see dryland peanuts increase in percentage.
At this point we all know 2011 is going to be an interesting year but I am about to think that we can now anticipate the same of 2012, especially if cotton prices hold for another year.
Tuesday, February 15, 2011
A Little Fishing for Understanding
In this blog recently I have been asking a lot of what ifs and I wonder whys.
It is kind of like a fishing trip of sorts because it has offered dialogue with several in the industry.
Fact is there is more uncertainty in the peanut industry at a time when the rest of Agriculture seems to be doing fairly well. Not to say all is bad in peanut world. Last year's yield in Georgia set a record. Peanut consumption is at an all time high. Yet Mother Nature has proven to us she is still in control of things.
If anyone in Congress is listening you need only to look at what is happening in the peanut world right now and you will realize the vagaries of weather and the environment require maintaining some sort of stabilization program for a civilized society to assure an adequate supply of food for their citizenry.
Let's look at what happened last year.
We had the hottest and one of the driest Summer on record. Still consumption of peanut butter and now even snack nuts and candy continued to climb. Candy makers and snack nut roasters even brought new items to the market...take for instance the Snickers PB Squared and Planters new Five Alarm Chili Dry Roasted Peanuts. Both are big hits and even may be considered market movers.
The northern part of the Georgia Peanut Belt suffered from drought and heat and it was evident. If you saw un-irrigated peanuts around Plains at harvest they never got more than a hand wide and were never harvested.
Remember also the string of nights we had for about a month when the temps never dipped below 80 in many areas. Research many years back at the National Peanut Lab told us night time temps have a direct bearing on Aflatoxin contamination. This was predictable already before harvest and it is not just in un-irrigated peanuts. Mother Nature left her mark on the quality of the crop.
So now we have an adequate crop and maybe even a surplus if things were normal but they are not.
Complicate this whole issue with the reemergence of the Burrower Bug as a prominent pest in many areas and the damage it causes to quality and the situation just seems a bit more grim.
The only real way to deal with Aflatoxin of this magnitude and deliver a product that is safe and wholesome and meets both Government and even stricter industry standards is to run it through the blanching plant. This both costs to do in just the charge of the blanchers and also comes at a cost from lost pounds of usable kernels.
Because of the fact that Shellers bought from farmers and forward sold to manufacturers it is now their cross to bear. And, it is coming with a great deal of cost that there is no way to recoup.
Peanut blanchers don't build their business on bad crops but do normal blanching practices in normal years. This year is different. The burden put on blanchers is really being felt. Reports have the current blanching capacity stretched to the limit through some time in 2012.
Shellers cannot afford more risk at this time and as of now manufacturers are concerned but not in the mood to accept that risk in the future. Therein lies the lack of attractive peanut contracts to wrestle acres away from cotton.
I am worried that this is not a particularly good situation for the peanut market for the future. We could well run out of peanuts at some time during the year and factories will have to shutter their doors until the supply resumes. It is hard to continue a growth in consumption under that scenario.
Also, based on value of the commodities I feel certain we will see some shift from irrigation on peanuts to irrigation on cotton. This may or may not prolong the issue of Aflatoxin depending on the 2011 growing season. If you go outside the water rich areas of Southwest GA and look at the Southeastern Peanut Belt in general it is all feasible that irrigated acres of peanuts this year could be at a modern low of 25%. This may be further complicated by CRC insurance coverage on cotton which makes a crop disaster in cotton an easier loss than it does for peanuts which lacks a CRC type program.
So whose fault is all this? I guess you will have to blame Mother Nature for a lot of it. She has shown us our vulnerabilities as an industry under the current peanut program. With all the consternation over farm programs in Washington right now we have some challenges ahead so perhaps we need to have some pretty serious dialogue in the industry going forward. We certainly know where many of the pitfalls are.
It is kind of like a fishing trip of sorts because it has offered dialogue with several in the industry.
Fact is there is more uncertainty in the peanut industry at a time when the rest of Agriculture seems to be doing fairly well. Not to say all is bad in peanut world. Last year's yield in Georgia set a record. Peanut consumption is at an all time high. Yet Mother Nature has proven to us she is still in control of things.
If anyone in Congress is listening you need only to look at what is happening in the peanut world right now and you will realize the vagaries of weather and the environment require maintaining some sort of stabilization program for a civilized society to assure an adequate supply of food for their citizenry.
Let's look at what happened last year.
We had the hottest and one of the driest Summer on record. Still consumption of peanut butter and now even snack nuts and candy continued to climb. Candy makers and snack nut roasters even brought new items to the market...take for instance the Snickers PB Squared and Planters new Five Alarm Chili Dry Roasted Peanuts. Both are big hits and even may be considered market movers.
The northern part of the Georgia Peanut Belt suffered from drought and heat and it was evident. If you saw un-irrigated peanuts around Plains at harvest they never got more than a hand wide and were never harvested.
Remember also the string of nights we had for about a month when the temps never dipped below 80 in many areas. Research many years back at the National Peanut Lab told us night time temps have a direct bearing on Aflatoxin contamination. This was predictable already before harvest and it is not just in un-irrigated peanuts. Mother Nature left her mark on the quality of the crop.
So now we have an adequate crop and maybe even a surplus if things were normal but they are not.
Complicate this whole issue with the reemergence of the Burrower Bug as a prominent pest in many areas and the damage it causes to quality and the situation just seems a bit more grim.
The only real way to deal with Aflatoxin of this magnitude and deliver a product that is safe and wholesome and meets both Government and even stricter industry standards is to run it through the blanching plant. This both costs to do in just the charge of the blanchers and also comes at a cost from lost pounds of usable kernels.
Because of the fact that Shellers bought from farmers and forward sold to manufacturers it is now their cross to bear. And, it is coming with a great deal of cost that there is no way to recoup.
Peanut blanchers don't build their business on bad crops but do normal blanching practices in normal years. This year is different. The burden put on blanchers is really being felt. Reports have the current blanching capacity stretched to the limit through some time in 2012.
Shellers cannot afford more risk at this time and as of now manufacturers are concerned but not in the mood to accept that risk in the future. Therein lies the lack of attractive peanut contracts to wrestle acres away from cotton.
I am worried that this is not a particularly good situation for the peanut market for the future. We could well run out of peanuts at some time during the year and factories will have to shutter their doors until the supply resumes. It is hard to continue a growth in consumption under that scenario.
Also, based on value of the commodities I feel certain we will see some shift from irrigation on peanuts to irrigation on cotton. This may or may not prolong the issue of Aflatoxin depending on the 2011 growing season. If you go outside the water rich areas of Southwest GA and look at the Southeastern Peanut Belt in general it is all feasible that irrigated acres of peanuts this year could be at a modern low of 25%. This may be further complicated by CRC insurance coverage on cotton which makes a crop disaster in cotton an easier loss than it does for peanuts which lacks a CRC type program.
So whose fault is all this? I guess you will have to blame Mother Nature for a lot of it. She has shown us our vulnerabilities as an industry under the current peanut program. With all the consternation over farm programs in Washington right now we have some challenges ahead so perhaps we need to have some pretty serious dialogue in the industry going forward. We certainly know where many of the pitfalls are.
Wednesday, February 9, 2011
Nero Fiddles as Rome Burns
Like Nero fiddling while Rome burned, peanut buyers seem asleep at the switch this year and are about to run the train off the track.
Shellers blame it on the manufacturers and if that is true I wouldn't take the risk this year either so I cannot point a finger at the shellers too much on this issue.
I write this as I am sitting listening to reports on the research the Commission has funded this year on peanut production. What was most enlightening was what I heard before the meeting. The numerous farmers present say peanut acre are about to plummet. The economist who does comparative numbers of competition of peanuts, cotton, corn and so forth says acres will be at 2009 levels or lower which would mean a cut of 30 percent in acres, give or take.
The 2010 crop has serious quality problems with reports of shockingly dismal out-turns of usable kernels from peanuts which have had to go to the blancher for clean up. Blanching plants are running at capacity and reports are peanuts are even being trucked from the Southeast to Texas for blanching.
Cotton this week passed another barrier at $1.18 which nets to the farmer at about $1.15. Some cotton brokers say $1.35 cotton is a real prospect now. Note $1.15 cotton to the farmer needs a $685 peanut to be competitive.
What does all this mean. Many acres have been committed to cotton. Georgia cotton acres is already slated to be up over 200,000 acres from last year and that is coming from peanuts. Peanut acres will be down and the industry has done this to itself. Carry out of peanuts in to the 2012 crop year could well be far below the 1990 levels. For farmers if you are going to plant it don't get excited about these cheap $1436 for his peanuts.
For consumers...you better buy your peanut butter now.
For the shellers and especially the manufacturers be ready to watch the train run off the cliff because you were asleep at the switch.
Shellers blame it on the manufacturers and if that is true I wouldn't take the risk this year either so I cannot point a finger at the shellers too much on this issue.
I write this as I am sitting listening to reports on the research the Commission has funded this year on peanut production. What was most enlightening was what I heard before the meeting. The numerous farmers present say peanut acre are about to plummet. The economist who does comparative numbers of competition of peanuts, cotton, corn and so forth says acres will be at 2009 levels or lower which would mean a cut of 30 percent in acres, give or take.
The 2010 crop has serious quality problems with reports of shockingly dismal out-turns of usable kernels from peanuts which have had to go to the blancher for clean up. Blanching plants are running at capacity and reports are peanuts are even being trucked from the Southeast to Texas for blanching.
Cotton this week passed another barrier at $1.18 which nets to the farmer at about $1.15. Some cotton brokers say $1.35 cotton is a real prospect now. Note $1.15 cotton to the farmer needs a $685 peanut to be competitive.
What does all this mean. Many acres have been committed to cotton. Georgia cotton acres is already slated to be up over 200,000 acres from last year and that is coming from peanuts. Peanut acres will be down and the industry has done this to itself. Carry out of peanuts in to the 2012 crop year could well be far below the 1990 levels. For farmers if you are going to plant it don't get excited about these cheap $1436 for his peanuts.
For consumers...you better buy your peanut butter now.
For the shellers and especially the manufacturers be ready to watch the train run off the cliff because you were asleep at the switch.
Wednesday, February 2, 2011
When Time Runs Out
The real question right now is when does time run out to get peanuts planted in 2011.
I was riding with a farmer today who told me he just booked another 400 bales of cotton and 4000 bushels of corn which for him represents about 250 acres of corn. He still has no enthusiasm for peanuts and was offered a $600 contract. He says the price has to be at least $650 to compete with cotton and corn.
Another farmer made the comment the increase in cotton acres is a significant shift from peanuts.
Shellers tell me they can't make competitive offers because the manufacturers don't believe the 2010 crop is as bad as is being reported and much of the trading is still on 2009 crop.
One County FSA office reported shellers wanting to redeem all the peanuts out of the loan immediately. This is odd when you consider the government fronts storage and handling monies to be paid at redemption so the incentive to do this is not normal at this time.
Finally, a farmer from the Southwest part of the state told me at one time he believed $600 would get all the peanuts we need planted. Now he questions if there is any number which could cause that to happen but it certainly is not at $600.
Hold on because this is going to be a rough ride and you might need an oxygen mask to get past the highs in the market at year's end.
I was riding with a farmer today who told me he just booked another 400 bales of cotton and 4000 bushels of corn which for him represents about 250 acres of corn. He still has no enthusiasm for peanuts and was offered a $600 contract. He says the price has to be at least $650 to compete with cotton and corn.
Another farmer made the comment the increase in cotton acres is a significant shift from peanuts.
Shellers tell me they can't make competitive offers because the manufacturers don't believe the 2010 crop is as bad as is being reported and much of the trading is still on 2009 crop.
One County FSA office reported shellers wanting to redeem all the peanuts out of the loan immediately. This is odd when you consider the government fronts storage and handling monies to be paid at redemption so the incentive to do this is not normal at this time.
Finally, a farmer from the Southwest part of the state told me at one time he believed $600 would get all the peanuts we need planted. Now he questions if there is any number which could cause that to happen but it certainly is not at $600.
Hold on because this is going to be a rough ride and you might need an oxygen mask to get past the highs in the market at year's end.
Tuesday, January 25, 2011
Cotton Cotton Everywhere
Well my November 30 post said farmers are content with planting cotton.
I have been doing grower meetings and it seems farmers are still happy to plant cotton and forgo planting peanuts.
Cotton prices reached 113.74 yesterday and were a bit lower today so farmers had a decision to make and some went ahead and booked more cotton.
Except for a pitiful offer of $550 for southeastern producers back late in the Fall, there has been no activity in the peanut market so farmers are pretty much getting tired of waiting. There is a desire to continue rotations pretty much at previous levels but not at all cost.
In a meeting with two buying points yesterday the comment was made by one operator and agreed to by another that they don't know right now if acres will be off by 25 percent or 50 percent.
In a meeting 100 miles removed from yesterday's meeting farmers told me today that in the absence of a $660 contract they will plant no peanuts. Still another factor which is an indicator was a County Agent who worked through the numbers with one producer who had a cotton yield of 1100 pounds and a peanut yield of 3500 pounds and for that producer cotton and peanuts do not meet mutual profitability until peanuts got to $748 with cotton at $1.10.
Also, the carry out of peanuts in to the 2011 crop will be among the lowest in decades and perhaps as low or lower than the 1990 carryout. In 1990 market fundamentals pushed farmers stock prices to levels up to $1400 per ton with more common offerings being in excess of $1000 per ton.
So what does all this mean?
For farmers uncontracted peanuts, provided something doesn't change and we plant acres, seem very attractive. For shellers who contracted some peanuts, perhaps a up to a fourth of their needs, a $550 farmers stock peanut is increasing in value every day. I would hate to be a peanut product manufacturer this year because the calendar has about run out and decisions on the farm have in all too many cases been made.
My only regret is for the market itself and if we have $1200 peanuts based on the strictest fundamentals of supply and demand then we will likely see a repeat of the loss of market we realized after the 1990 crop.
I am quite optimistic for farmers in the short run because they have other choices and they are exercising their right to make those choices.
I have been doing grower meetings and it seems farmers are still happy to plant cotton and forgo planting peanuts.
Cotton prices reached 113.74 yesterday and were a bit lower today so farmers had a decision to make and some went ahead and booked more cotton.
Except for a pitiful offer of $550 for southeastern producers back late in the Fall, there has been no activity in the peanut market so farmers are pretty much getting tired of waiting. There is a desire to continue rotations pretty much at previous levels but not at all cost.
In a meeting with two buying points yesterday the comment was made by one operator and agreed to by another that they don't know right now if acres will be off by 25 percent or 50 percent.
In a meeting 100 miles removed from yesterday's meeting farmers told me today that in the absence of a $660 contract they will plant no peanuts. Still another factor which is an indicator was a County Agent who worked through the numbers with one producer who had a cotton yield of 1100 pounds and a peanut yield of 3500 pounds and for that producer cotton and peanuts do not meet mutual profitability until peanuts got to $748 with cotton at $1.10.
Also, the carry out of peanuts in to the 2011 crop will be among the lowest in decades and perhaps as low or lower than the 1990 carryout. In 1990 market fundamentals pushed farmers stock prices to levels up to $1400 per ton with more common offerings being in excess of $1000 per ton.
So what does all this mean?
For farmers uncontracted peanuts, provided something doesn't change and we plant acres, seem very attractive. For shellers who contracted some peanuts, perhaps a up to a fourth of their needs, a $550 farmers stock peanut is increasing in value every day. I would hate to be a peanut product manufacturer this year because the calendar has about run out and decisions on the farm have in all too many cases been made.
My only regret is for the market itself and if we have $1200 peanuts based on the strictest fundamentals of supply and demand then we will likely see a repeat of the loss of market we realized after the 1990 crop.
I am quite optimistic for farmers in the short run because they have other choices and they are exercising their right to make those choices.
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