The 1997 U.S. peanut crop is expected to be 1.76 million tons-- down 4 percent from last year. Acreage planted was actually slightly above last year but yields have been less than desired. Since a farm bill-induced quota reduction of 18 percent in 1996, peanut acreage appears to be stabilizing and supply and demand are in much closer balance. This has lead to tight margins on quota supplies and increased use of "buyback" provisions by shellers to assure adequate supplies in the pipeline. Contract prices for quota peanuts have been approximately $625 to $650 per ton and "additionals" (production in excess of quota for the export market) have been $350-$375 per ton with possibly higher returns through use of the Buyback option. Increased use of buybacks by shellers and additionals growers could spell deflated prices and value for quota.

There is growing pressure on peanut growers to reduce the costs of production per ton. Without improved efficiency, higher returns can only come through improved peanut demand and increases in quota pounds per farm. For the 1996/97 crop year, use of shelled edible peanuts was up 1.7 percent from the previous year. Modest growth in candy and snacks use was offset by essentially no gain in the peanut butter market.

Under provisions of NAFTA and GATT, imports of peanuts and peanut butter could increase to an amount equal to at least 12 percent of the current U.S. peanut quota by the year 2000. Georgia farmers planted 520,000 acres of peanuts in 1997. A 1-2 percent increase in quota and acreage is expected in 1998. Future acreage will be determined largely by growth in net U.S. consumption (total food demand less edible imports). (November 11, 1997)

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