Outlook Briefs
Peanuts 2000 in Review. Before the 2000 crop was planted, peanut producers were faced with an increase in their marketing assessment by $46 per ton to cover a $71 million loss experienced in marketing the 1999 crop. Thanks in part to the federal government budget surplus, Congress authorized suspending the increased marketing assessment and paying for the 1999 loss with previous marketing assessments ($28.3 million) and future marketing assessments to be collected through 2002. This leaves little room for future marketing losses in the peanut program.
The 2000 national peanut quota allocation was unchanged from the 1999 level. The national quota support price is $610 per ton fixed through the 2002 crop year. The loan rate for 2000 additional peanuts was dropped from $175 to $132 per ton. Producers reversed a recent trend this past spring by planting fewer acres than in 1999. Planted acreage had been slowly increasing since from the 18-year low of 1.4 million in 1996. Peanut producers planted 1.5 million acres in 2000 and nearly 1.4 million were harvested. Heading into December, the U.S. average yield was projected at 2500 pounds, down 167 pounds from 1999. U.S. peanut production looks to total 3.513 billion pounds (1.757 million tons) in 2000 which would be roughly equal to the 1997 crop in total production, yield, and harvested acres. For Georgia producers, the 2000 crop ended up better than thought possible. The November USDA estimated Georgia's yield at 2800 pounds which may turn out to be too high, but the final estimate will be better than expected before harvest. An estimated 507,000 acres were harvested in Georgia which was down 37,000 from 1999. The 2000 crop will be an expensive crop, however, due to higher fuel prices and increased irrigations.
Domestic consumption of edible peanuts was up 3% over 1999. Peanut exports were up 30% over 1999 and crushing nearly doubled as loan quota peanuts were crushed leading to the CCC marketing loss. Cash receipts in Georgia from peanuts totaled $381 million in 1999. This was the first time cash receipts dropped below $400 million since 1983.
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Outlook
Peanuts 2001 Outlook. The outlook for peanut growers is likely a continuation of recent trends given the current government program and world conditions. U.S. peanut consumption will be watched. Domestic consumption started the marketing year lagging behind last year by 5%. Without a surprise increase in consumption, peanut quotas will likely remain at current levels or even decline if the lag continues. Export trends in the recent years show the US losing market share. India and Argentina have captured part of the export market from the US and China. Export volume is projected to drop 19% for the 2000/01 marketing year. Improvements in exports will be slow to materialize while the US dollar remains strong.
Instead of starting 2001 with an increased assessment hanging over their heads, peanut producers should be happier with returns from additional peanuts marketed through the CCC loan pool. Greater use of buybacks to make up for quota shortfalls in drought areas of the Southeast will return a pool profit for additionals. With the poor finish to the Southwest crop, potential for additional export and quota from the loan exist which would increase the pool profit outlook.
The outlook beyond 2001 is uncertain. NAFTA changed the game for the peanut industry by setting in motion the lowering of tariffs on import peanuts from Mexico. The Free Trade Agreement of the Americas could extend such a policy to countries such as Argentina and Nicaragua. The peanut program is likely to come under attack in the next round of farm bill deliberations. Current price support levels and trade policy appear at odds and supply control programs are not "in favor" in Washington D.C. Despite the coming challenges, peanuts will continue to play an important role in the Georgia agricultural economy. How the "peanut dollars" will be distributed geographically and among Georgia producers remains uncertain with the potential changes to peanut policy and marketing. (Nathan Smith)
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Outlook
Farming
Will Cost More in 2001. The recent surge in energy prices will spill
into the farm sector next year - probably more than for the year 2000.
Crude oil prices are nearly
three times the level of late 1998, and have affected natural gas prices
which have essentially doubled during the past twelve months. Natural gas
accounts for a high percentage of nitrogen production costs. And interest
rates will be slightly higher in some lending institutions. All fuels and
fertilizers and lime composes 10% of total Georgia farm expenses in 1999.
Interest for operating loans constitutes an estimated 5% pf production
costs.
The major crop enterprises in the state were recently updated for 2001, using these higher input costs. Crops using large amounts of fuel and nitrogen are projected to have the highest increase in costs; from 6-9%. Others are projected to show minimal cost increases as fuel and nitrogen fertilizers are not major cost components of several crops.
While these are costs of production estimates, they can provide a planning tool for enterprise comparison and projections for cash needed for the operation. They have recently been sent to County Extension Offices. (Bill Givan)
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