Agriculture's largest online commodity market, The Seam, launched trading of the USDA's Commodity Credit Corporation peanut inventories last week.
This arrangement establishes the first electronic exchange of any type for peanuts and marks the first time the U.S. Government has had the ability to market peanuts directly to buyers through a neutral third-party Internet-based company.
"I think that is good news but also think that it will be a transition that will take time as there are a few extenuating factors," Georgia Peanut Commission Executive Director Don Koehler says. For one, he says, manufacturers don't typically shell peanuts and they will be buying them in-shell.
"Also, farmers have never had to market peanuts in this fashion and it will take a bit of time for them to decide that it can work if there are willing buyers," Koehler says. The situation, he says, "is almost the chicken or the egg."
Bert Farrish, deputy vice president of CCC explained that marketing CCC-owned peanuts online improves efficiency by providing buyers with a convenient and safe electronic sales transaction.
"We have a great deal of confidence in The Seam's role in servicing sales of CCC-owned peanuts," Farrish explains. "Over the past two years, they have exhibited a very successful market oriented performance with the servicing of cotton sales for CCC. This arrangement may also benefit peanut growers and other sectors of the peanut industry in the areas of price discovery and price transparency, particularly if other sellers of in-shell peanuts choose to market through The Seam."
The problem, Georgia-Florida-Alabama Peanut President Jimmy Godwin says, is that peanuts aren't cotton.
"Peanuts are an edible commodity," Godwin says, noting that GFA ran such auctions for USDA prior to the 2002 Farm Bill under which the quota program ended. "Cotton is different. You bale it, you put it in the warehouse, the weight doesn't go down, and the quality doesn't go down. You go into the warehouse two years later and the weight is the same and the quality is the same. It doesn't work that way with peanuts."
Phillip C. Burnett, president and CEO of The Seam isn't worried.
"We are confident," Burnett says, "that The Seam's proven technology and successful online international trading model will create new opportunities for the entire peanut industry as it continues to transition into a new federally mandated market driven program."
Burnett promotes The Seam as a totally neutral Internet-based global marketplace for the buying and selling of cotton and other commodities. Users of The Seam, Burnett says, increase their profits through improved transaction process efficiencies, expanded exposure to potential customers and suppliers, constant access to real-time market information, and guaranteed domestic trades.
Godwin agrees that the advanced technology offered by The Seam is the right direction for the industry. "We've got to move ahead and technology is going to put us there," Godwin says. "We've got to move forward with technology, but we've got to make sure we do it right."
For instance, he says, "Say SEAM sells peanuts to somebody. Who looks after the peanut? If they sell for crushing, who's going to supervise the crushing to make sure they're not sold for edibles?"
For his part, Koehler urges caution. "I would hope that farmers would look at trying a bit before they jump in head first," Koehler says.
For more information and detailed explanation of The Seam technology visit the company's web site, www.theseam.com, or call 901.374.0374.