Desperate peanut situation

As they gear up to plant this year's crop, for many peanut farmers in Gaines County it's time to cast the dice and hold their breath because the fate of the region's industry could depend on October's harvest.

Last year's so-called "perfect storm" left many of the area's peanut farmers on the verge of bankruptcy, and that was before the salmonella outbreak at the end of 2008 that killed at least nine people and winded much of the state's $1 billion industry.

Another bad year in 2009 could push those farmers over the edge, devastating the peanut agricultural industry and trickling down to local businesses that rely on local farmers' income.

And it seems many peanut farmers are reluctant to dance with the crop in the face of a potential collapse of the area's industry.

According to estimates from a USDA survey released in late March, 38 percent fewer acres than last year will be devoted to the 2009 peanut crop in Texas, compared to a similar drop of 27 percent nationwide.

"Record production in 2008, and concerns about future demand as a result of the salmonella outbreak have limited the number of contracts being offered to producers for the upcoming season," the USDA said.

The 2008 meltdown for West Texas growers resulted from a deadly mix of several factors - bad weather, unfavorable market speculation that pulled the rug out from underneath farmers' profits, drought and skyrocketing prices of fertilizers and diesel fuel. 

"All those things just made a perfect storm," said Jimbo Grissom, president of Seminole's Western Peanut Farmers Association and a third-generation peanut farmer with 30 years under his belt. "I've lived in West Texas since 1984, and this is the hardest time I've seen for the peanuts."

In 2008, Georgia's peanut industry had a record-breaking yield, he said. The crop in Texas, however, suffered freezes, high winds, hail and drought. Despite the setbacks, he said, area farmers managed to see "I'd say an average crop, but we've got a lot of peanuts in our warehouses."

Despite the yield, Grissom said, farmers saw little or no profits because of ever-increasing production costs and high market speculation that detracted from farmers' profits. 

These factors, however, were only the first blow, he said. Nobody expected what came next: a salmonella outbreak that sent demand plummeting and ultimately decimated consumer confidence.

"It's just unreal how much it can devastate an industry," Grissom said about a situation caused by one company responsible for less than 2 percent of the nation's output. "It's unreal." 

Now, as a badly wounded industry prepares to plant another crop this year, he said, the decreased demand has kept much of last year's crop in warehouses where they earn nothing for farmers.

"Some farmers didn't sustain it this time," he said with a long shrug. "They're broke."

Food producers - companies such as the international candy producer Mars - have not been nibbling much at the surplus, which has caused the peanut shellers to withhold contracts, Grissom said. Such contracts usually help peanut farmers with the high cost of growing a peanut crop, but they haven't come around much this year, leaving farmers with the choice of whether or not to produce a crop they may not be able to sell.

"Demand will pick back up," Texas Peanut Producers Board spokeswoman Lindsay West said. "That's something we hope will turn around, but right now shellers just aren't seeing that demand from food producers."

Max Grice, vice president and general manager of the Brownfield sheller Birdsong Peanuts said times are tough for shellers, too. His company would like to offer more contracts, but decreased demand hasn't permitted it to do so.

"There just seem to be a lot of unknowns out there," he said. "We come off and made a reasonably good crop last year. We're coming off a year where we had some surplus, then the salmonella hit. We really just don't know where the markets are going to go, so it's hard to go out and offer a contract when you have so many unknowns."

On top of everything else, Grissom lamented, a lack of contracts for peanut farmers - not to mention the onset of what some journalists have dubbed "The Great Recession" - has suffocated another of the farming industry's lifelines: bank loans.

For peanut farmers like himself who have been in the industry for years and have managed to establish decades worth of equity, loans are still possible to come by.

Younger farmers, like Grissom's son, on the other hand, are finding it much more difficult to secure the money they need to plant this year's crop.

Even for industry veterans like Grissom, the financial clock is ticking. He said he doesn't know how much longer his credit will hold out. Another year or two on this path, and it could spell the end of the Grissom family's peanut-farming dynasty.

"If things continue like they are, it'll break a lot of farmers," he said. "I just don't know what will happen then. I just don't know."

Peanuts

 >> The peanut is not a nut, but a legume related to beans and lentils.

>> Peanuts are naturally cholesterol-free.

>> Peanuts account for two-thirds of all snack nuts consumed in the USA.

>> There are four types of peanuts grown in the USA - Runner, Virginia, Spanish and Valencia.

>> Four of the top 10 candy bars manufactured in the USA contain peanuts or peanut butter.

>> The average American consumes more than six pounds of peanuts and peanut butter products each year.

>> Dr. George Washington Carver researched and developed more than 300 uses for peanuts in the early 1900s; Dr. Carver is considered "The Father of the Peanut Industry" because of his extensive research and selfless dedication to promoting peanut production and products.

>> Astronaut Allen B. Sheppard brought a peanut with him to the moon.

>> The peanut plant originated in South America.

>> Peanuts contribute more than $4 billion to the USA economy each year.

>> Americans eat more than 600 million pounds of peanuts (and 700 million pounds of peanut butter) each year.

>> Two peanut farmers have been elected president of the USA - Thomas Jefferson and Jimmy Carter.

>> Ever wonder where the term "Peanut Gallery" comes from? The term became popular in the late 19th century and referred to the rear or uppermost seats in a theater, which were also the cheapest seats. People seated in such a gallery were able to throw peanuts, a common food at theaters, at those seated below them. It also applied to the first row of seats in a movie theater, for the occupants of those seats could throw peanuts at the stage, stating their displeasure with the performance.

 Peanut Butter

>> Peanut butter is the leading use of peanuts in the USA.

>> It takes about 540 peanuts to make a 12-ounce jar of peanut butter.

>> There are enough peanuts in one acre to make 30,000 peanut butter sandwiches.

>> Peanut butter was first introduced to the USA in 1904 at the Universal Exposition in St. Louis by C.H. Sumner, who sold $705.11 of the "new treat" at his concession stand.

>> Peanut butter is consumed in 89 percent of USA households.

>> The world's largest peanut butter factory churns out 250,000 jars of the tasty treat every day.

>> Women and children prefer creamy, while most men opt for chunky.

>> People living on the East Coast prefer creamy peanut butter, while those on the West Coast prefer the crunchy style.

>> Arachibutyrophobia is the fear of getting peanut butter stuck to the roof of your mouth.

>> The average child will eat 1,500 peanut butter and jelly sandwiches before he/she graduates high school.

>> Sixty percent of consumers prefer creamy peanut butter over crunchy.

>> The patent for peanut butter was awarded to Dr. John Harvey Kellogg in 1895.

>> The amount of peanut butter eaten in a year could wrap the earth in a ribbon of 18-ounce peanut butter jars one and one-third times.

>> Americans spend almost $800 million a year on peanut butter.

>> Americans eat enough peanut butter in a year to make more than 10 billion peanut butter and jelly sandwiches.