U.S. peanut farmers in 2012 produced a bumper crop. The pipeline is full and threatens to drastically suppress farmers' prices for next year's crop. The peanut industry needs to sell this excess crop overseas, and things are lining up to get it done.
Over the last few years, U.S. farmers haven't produced enough peanuts to really push overseas sells, and domestic prices have not let the crop compete with other countries, which have moved in to claim more of the peanut export market. Still, the U.S. is a leading peanut exporter and in a typical year ships out $350 million in peanuts, or around 300,000 tons.
U.S. peanut farmers are expected to haul in 3 million tons this year, which coupled with carryover and the few imports, will end up being a 3.5 million tons supply. The U.S. has plenty of peanuts to offer foreign buyers in the next year. In fact, as of now, there will be enough 2012 peanuts still in storage by next summer to supply half of what is needed for domestic and export usage in a normal year.
But things are changing. The U.S. peanut is more competitively priced this year to get back some export markets.
"If there ever was a year for peanut exports it is this year," said Patrick Archer, president of the American Peanut Council, which is charged with the international promotion of U.S. peanuts. APC gets $3.5 million annually from USDA's Market Access Program and the Foreign Market Development Program to champion U.S. peanut exports.
The export factors
The large U.S. crop, according to some industry people, is top quality this year, maybe the best ever. This is a key to increasing exports in the coming year, said Louise McKerchar, APC vice-president and its European marketing director based in London.
"This year is looking fantastic. And where we plan to focus is with those (European) customers who look at quality, taste and food safety. If they look only at price we don't really want to get into a long-term relationship with them," she said.
Scandinavian countries are U.S. peanut's best European customers, buying roughly 27,000 tons in 2011. Italy is the next best, buying 5,000 tons. But there is growing interest for U.S. peanuts in Poland and maybe even Russia, she said, which now has a normal trade agreement in place.
Argentina, China, Brazil and Nicaragua are the U.S. top competitors on the global peanut market. But China's exports have dwindled in recent years. The country is starting to keep more of their production, another factor to help U.S. peanuts gain market share, said Stephanie Grunenfelder, APC vice-president, North American and Asia marketing director, based in Virginia.
Canada imports the most U.S. peanuts, or 80,000 to 85,000 tons per year. But there is room for growth in that country and in Mexico, Grunenfelder said. And the world in general is demanding more peanuts. Peanut exports around the world have increased by 10% each year for last several.