Shelling out for Peanuts

Peanuts
Photo by shattha pilabut from Pexels

This article was written by UC Davis ARE PhD students Madeline Turland and Devin Serfas. It is the first in a series of excellent articles written by students in my ARE 231 class this fall.

As global meat prices continue to rise, many consumers are finding it more attractive to consume vegetable protein as it is cheaper, and in some cases healthier than meat. Although not traditionally regarded as an important crop, the supply of peanuts (or groundnuts to the international community) has steadily risen over the past several decades.

Likely originating in South America, peanuts have become a popular ingredient in the cuisine of many different cultures, and a staple in lunchboxes across the USA. As of this year, per capita peanut consumption reached an all-time record level of 7.6 pounds in the United States. This is up 2.3 pounds from 2000. Aside from peanut butter sandwiches and Oh Henry chocolate bars, peanuts are popular in Asian cuisine and gourmet salads as a topping or dressing. 

Peanut production
Source:  FAOSTAT

 

China is the world’s largest producer of peanuts by far, followed by India, Nigeria, Sudan, the United States, and Myanmar. However, the United States has the highest yield among major producers. In the United States, annual peanut production often exceeds the production of beans and peas combined. Global production remained relatively stable from 1961-1983, and then increased steadily thereafter. Production in China followed a similar trend.

Peanut yield

 

United States production trends have been differed from global trends. Since 1961, there have three distinct phases. From 1961 to 1979 peanut production increased 139%. Then from 1979 to 2011 production was relatively constant. Since 2011 production has increased again.

Peanut production
Source: FAOSTAT

 

Production increases are largely due to increased yields rather than an increase in growing area. Seeded acres have remained relatively constant over time, except for a slight bump in the late 80’s and early 90’s. However, there does seem to be more volatility in the area harvested in recent years. 

Peanut yield and area
Source: FAOSTAT

 

Recent peanut yield gains in the United States align with the elimination of production quotas in 2002. Like many other crops, peanut producers received substantial government support through the 1980s and 1990s. Except for tobacco, peanuts were the last crop to be controlled with production quotas; tobacco quotas were eliminated in 2004.

The quota system was replaced by support programs similar to those available to producers of other program crops. Under the quota system peanut production was fixed within each county. After 2002, peanut producers were able to shift planting to more productive counties, and a yield boost followed.

Another reason for yield gains could be better harvest technology. Tractors that plant and invert peanuts are now equipped with autosteer, making it easier for farmers to expand production as well as leave fewer peanuts in the ground, saving farmers up to $37,000 per year

For producers, the transition to a free market has been marked by lower peanut prices, and more volatile planted acreage. For many producers, the transition has been cushioned by additional revenue from government payments and other sources of farm and off-farm income

Peanut prices
Source:  USDA ERS

 

What does the future look like for US peanut producers? In 2019, Georgia grew almost 50% of all peanuts in the US. Most of the production occurs in the southeastern United States. This region is prone to hurricanes and tropical storms. Due to climate change the severity of hurricanes and tropical storms is increasing, so peanut producers in the US can expect more supply side shocks in the coming years. For example, Hurricane Matthew in 2016 caused some peanut farmers in South Carolina to lose 1000 pounds of peanuts per acre

Peanut map
Source: USDA NASS

 

Despite volatile weather, increasing yields and strong demand should allow peanut farmers to stay profitable. After all, peanut farmers have made it this far without going nuts. 

 

The figures in this article were created using this R code.