CRS Completes Program Review
The Congressional Research Service has issued an updated review of the peanut program and explains how the new program favors peanut production on generic base acres. Almost all peanut growers selected the Price Loss Coverage (PLC) program because they expected it to provide higher payments and greater risk protection than would be available under Agricultural Risk Coverage (ARC).
A payment from the PLC is not available to the grower until nearly a full year after harvest or Oct. 1 following the end of the marketing year when full information on farm prices is available. The 2014 Farm Bill created “generic” base acres from former cotton base acres from the 2008 Farm Bill. Generic base is added to a producer’s total base for potential payments, but only if a covered crop is planted on the generic base. PLC payments on generic base are coupled to actual plantings.
Estimates on the peanut program outlays vary. USDA estimates it for FY2016 at $379 million. The Food and Ag Policy Research Institute has projected a cost of $432 million for peanuts. The Congressional Budget Office’s cost projection is $232 million.
Proponents of the program argue that an income safety net is needed to help producers deal with the substantial price volatility associated with commodity markets. The marketing assistance program provides greater marketing options for producers who are at a distinct market-power disadvantage when dealing with a small number of buyers. Further, proponents argue that Farm Bill support is needed to help offset the substantial market volatility that has emerged since the elimination of the peanut quota system.
Industry Endorses Agreement
The American Peanut Council, representing all segments of the peanut industry, has endorsed the establishment of the Trans-Pacific Partnership (TPP), which links the United States, Japan and ten other Asian Pacific nations. The TPP brings unprecedented progress in opening the markets of the TPP.
Japan has been one of the top export destinations for the U.S. peanut industry, surpassing $20 million in sales annually. Japan’s current 10-percent tariff on shelled peanuts inside the 75,000 MT Tariff Rate Quota will be eliminated immediately upon implementation. The quota will be phased out over eight years. The 12-percent tariff on U.S. peanut butter will be phased out in six years.
The snack food market in Japan is huge, and Japanese tariffs on U.S. processed peanuts, now as high as 23.8 percent, will be reduced and eliminated in eight years or less for U.S. products such as honey roasted peanuts.
Vietnam, with a young population of more than 90 million people, has a rapidly growing economy, and its current tariffs, which range up to 30 percent on U.S. peanuts, will be eliminated within eight years. Other TPP countries such as Malaysia and New Zealand will immediately eliminate all of their tariffs on U.S. peanuts and peanut products.
Formal approval of the TPP agreement by Congress is required before any provisions are implemented. Industry leaders urge Congress to move forward with approval quickly.
IN BRIEF
- Program outlays estimated at $200 million to more than $400 million.
- Trade agreement to eliminate tariffs and quotas to Japan and other Asian markets.
- Delegation visits Japan in anticipation of trade agreement.
- Blanching plant expands possibilities at Tifton Quality Peanut.
- Ag Secretary announced Peanut Standards Board appointees.
- Production meetings scheduled; see the Calendar of Events.
Blancher Added At TQP
Tifton Quality Peanut, LLC, based in Tifton, Ga., has added a blanching operation to their farmer-owned peanut shelling plant. Bill Park, president and CEO, said the time was right to make the move. The peanut industry has not had adequate blanching capacity for the last four or five years, and that limits sales.
“Our European customer base has increased and they prefer blanched peanuts,” Park says. “Because of larger peanut crops as a result of the current Farm Bill, we have more peanuts, and we’re getting a better price for them as a blanched product. We also ship to Mexico and Canada, but our primary customer base is in the United States.
“About five years ago, we started dealing predominantly with the Georgia-06G variety, which has higher yields and produces a larger peanut,” Park says. “With bigger kernels, there’s more of a chance of aflatoxin, especially under dry weather conditions. Blanching typically takes care of that.”
The volume of peanuts that TQP handles in its $20-million shelling plant fits in nicely with the vision for the blanching operation, Park says. The cost of the new facility was around $8 million but the company had been paying $2 million a year to have their peanuts blanched by other companies.
The blancher is operating 24 hours a day, four days a week. They only blanch peanuts that come through their sheller, and Park estimates they will blanch around 30,000 tons this year. The sheller handles from 120,000 to 150,000 tons per year and generates 160 to 200 million pounds of edible shelled goods.
Tifton Quality Peanut has about 140 grower-members who guarantee one ton of peanuts for each unit of stock owned.
Standards Board Approved
Agriculture Secretary Tom Vilsack recently appointed three producers and three industry representatives to serve on the Peanut Standards Board. All six members will serve on the board through June 30, 2018. Their appointments are effective immediately.
Selected to the board was producer Carl Sanders, Brundidge, Ala., and industry representative Ann D. King, Douglas, Ga., representing the Southeast; producer Jimbo Grissom, Seminole, Texas, and industry representative Shelly Nutt, Lubbock, Texas, to represent the Southwest region; producer Lee Swinson, Warsaw, N.C., and industry representative Carl Gray, Courtland, Va., representing the Virginia-Carolina region.
The Peanut Standards Board is made up of eighteen members representing the Southeast Region, which covers Alabama, Georgia and Florida; the Southwest Region, covering Texas, Oklahoma and New Mexico; and the Virginia-North Carolina Region.
Delegation Visits Japan
The American peanut industry recently sent a delegation to visit Japan and to meet with peanut importers.
The trip included a visit to the U.S. embassy in Tokyo and a joint meeting with the Japan Peanut Importers Association and the Japan Peanut Manufacturers Association. The Japanese importers presented information to the American Peanut Council team about the market in Japan for peanuts. The U.S. team presented information to the Japanese about the current peanut harvest and some of the latest on peanut nutrition.
Through September of 2015, exports to Japan have increased four percent compared to the same period in 2014. Representing the U.S. peanut industry were Jean Paul Bodourian, Golden Peanut and Tree Nut Company; Karl Zimmer, Premium Peanut; Aseem Khanna, Olam International; Miriam Crosby, The Peanut Institute; Don Koehler, Georgia Peanut Commission; Jim Grueff, consultant to the American Peanut Council and Stephanie Grunenfelder, American Peanut Council staff.
Peanut Farm Show Planned
The 40th Annual Georgia Peanut Farm Show and Conference is set for Thursday, Jan. 21, 2016, at the University of Georgia Conference Center in Tifton. More than 2,000 farmers and over 100 exhibitors are expected to register and attend the show.
The show opens at 8:30 a.m. and includes a complimentary luncheon. The Georgia Peanut Commission will present annual awards including the Distinguished Service Award and Research and Education Award, among others, during the program following lunch.
The University of Georgia will coordinate the production and seed seminar. The Grand Door Prize drawing will be at 2:00 p.m. and the show closes at 2:30 p.m.
Information on attending or exhibiting at the show is available online at www.gapeanuts.com.
Buying Point Meeting Scheduled
The National Peanut Buying Points Association invites everyone to attend the NPBPA Annual Meeting and Conference on Feb. 12-15 at The Peabody Hotel in Memphis, Tenn. The theme will be “Peanut Changes – Farm Bill and Markets.” Registration is only $350 per couple or $225 per person. The conference opens on Friday evening with the President’s Reception.
Plenty of great speakers and fun activities are planned for the conference, including the always lively Great Cash Giveaway in support of the Peanut PAC, plus more than $5,000 worth of door prizes.
Table top exhibits are available for $150. Registration packets are available online at www.peanutbuyingpoints.org or call 229-386-1716.
Funds To Expand Export Markets
USDA’s Foreign Agricultural Service (FAS) has awarded fiscal year 2016 funding to more than 60 agricultural organizations, including the American Peanut Council, to help expand commercial export markets.
For the Market Access Program (MAP), the APC has received $1,906,255 for FY 2016 to focus on consumer promotion, including brand promotion for small companies and cooperatives, and is used extensively by organizations promoting fruits, vegetables, nuts, processed products, and bulk and intermediate commodities.
For the Foreign Market Development (FMD) Program, the APC has received $347,142 for FY2016 to help create, expand and maintain long-term export markets for U.S. agricultural products.
