By Clint Thompson
For peanut prices to improve for farmers, acreage needs to decrease significantly in 2020, according to Adam Rabinowitz, University of Georgia (UGA) Cooperative Extension agronomist and assistant professor.
He said U.S. demand has become stagnant, relatively flat for four years. Production needs to decrease this year if prices are going to increase. This will happen either through reduced acres and/or lower yields.
A reduction in acreage would help prices improve from the $400-per-ton mark they’ve been stuck at for a few years.
“As we talk about peanuts, we really need to think back to 2017 and the record production that existed there on the combination of extremely high yields and enormous amount of acreage. As a result of that record production, we’ve really gotten to the point where even though production and acreage have fallen, it still has not fallen enough compared to where demand is,” Rabinowitz said. “There really has been no growth in demand for the last four years. As a result, we’re really sort of dwindling away from those large stocks from 2017. Production hasn’t dropped enough to make any significant change in terms of price. There’s still, historically speaking, a lot of peanuts in the supply chain.”
Not only would a reduction in peanut acreage boost prices, it would also help producers properly rotate their peanut crop. Peanuts need to be rotated with other row crops like cotton and corn to avoid the buildup of diseases, nematodes and other pest problems. UGA research has discovered that the more years farmers can separate planting peanuts in a certain field, the more it will reduce the incidence of nematodes.
“It’s really important that if there are any opportunities to get back to a more normal rotation, that will certainly help long-term production,” Rabinowitz said.
Another incentive for farmers to cut back peanut acreage is that cotton and corn prices are starting to increase. Since producers who grow peanuts commonly produce those other two crops as well, they should be encouraged to see cotton prices potentially increase to between 69 and 75 cents per pound, and corn prices could move up to $4.56 per bushel, Rabinowitz added.
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