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.