Peanuts (Arachis hypogaea) are thought to have originated in South America, where they thrive in tropical and subtropical climates (American Peanut Council, 2014). The name “peanut” is misleading, because it is not botanically a nut, but rather a legume (a member of the pea and bean family). The edible seeds of a peanut plant start above ground but mature underground; thus peanuts are also known as groundnuts (National Peanut Board, 2015).
In the United States, peanuts were considered a regional food of the South until after the Civil War, when technological advancements resulted in an increased demand for peanut oil, peanut butter, roasted and salted peanuts, and confections. In addition, the noted scientist George Washington Carver identified numerous manufactured nonfood uses for the peanut and plant parts and encouraged plantings of peanuts as a rotational crop for cotton production, which expanded acreage in the early 1900s (American Peanut Council, 2014).
Peanuts are planted after the last frost, usually in April or May. Harvesting takes place roughly 120-160 days after planting, thus the marketing season for fresh “green” (not dried) peanuts is often during September and October. Peanuts that have been dried or processed have a much longer shelf life, thus a longer marketing season (Wright et al, 2014) (National Peanut Board, 2015).
The majority of peanut crops get processed in some manner before reaching customers; however, there is a market for fresh peanuts (also known as boiling peanuts, as this is how they are commonly processed after purchase). Due to their high moisture content, fresh peanuts cannot be stored long-term (10-14 days); therefore they are usually sold within their growing region at supermarkets, roadside stands, and/or farmers’ markets. Less often fresh peanuts are sold through online retailers who usually require two-day shipping due to their perishability (Boiled Peanut World, 2013). Customers purchasing fresh peanuts have a preference for bright hulls with little to no damage, thus the crop needs to be hand harvested (Wright et al, 2014).
Extensive and thorough pre-planning is required if farmers decide to market their peanut crop as “fresh.” They must find an intended market before establishing their crop. Production for fresh market peanuts is virtually the same as other peanut crops, with the exception of harvesting and post-harvesting practices and varieties used. Customers tend to prefer Valencia and Virginia varieties when purchasing fresh peanuts due to their taste and size respectively (Wright et al, 2014).
Boiled peanuts are a common snack throughout much of the South (the predominant growing region for peanuts). However, Southerners now living outside of the region and new consumers want to have and are curious to try boiled peanuts; therefore selling fresh peanuts online as a specialty product to outside regions can add value to your crop (Orchant, 2014).
Processing peanuts is another way value can be added to your crop. Peanuts can be processed into multiple products:
Roasted peanuts are not only a favorite snack enjoyed at baseball games, they can used in nut mixes, coated with honey, chili or smoked, as well as used to create candies (peanut brittles) and other confections (cookies, ice creams) (Hampton Farms, 2016).
Prepared from roasted peanuts, peanut butter can be eaten as is or added to a variety of recipes. Whether fresh or processed, peanuts are nutritious and are associated with health benefits: they are high in protein, contain healthy oils that can lower the risk of heart disease, and have a low glycemic index which can help decrease the risk for Type 2 diabetes (The Peanut Institute, 2016).
Because refined peanut oil does not absorb food flavors and has a high smoke point, it is the frying oil preferred by many restaurants. Unrefined peanut oil is a popular choice for salad dressings, roasting vegetables and other uses where healthy, but flavorful, oil is desired (The Peanut Institute, 2016).
Defatted roasted peanut flour is a gluten-free source of protein. The flour can be used to thicken soups, fortify breads and pastries, and coat meats and fish (The Peanut Institute, 2016).
Peanuts have a high oil content (45 percent to 52 percent) compared to several other oilseed crops. With a yield of 3,000 pounds per acre, a 70 grade (70 percent of the weight of the peanut in shell) and 50 percent oil content, peanuts could potentially produce 120 to 150 gallons of biodiesel per acre. However, growers using good management practices can achieve a yield of 3,500-4,500 pounds of peanuts per acre, therefore the potential to produce even more biodiesel per acre is possible (University of Florida, 2010). The yield of oil from peanuts is much higher than that of soybeans at 48 gallons per acre but lower than that of rapeseed, which yields between 127-160 gallons per acre (Herkes, 2014).
Peanut production is concentrated in three major geographic areas of the United States: the Southeast (Alabama, Florida, Georgia, Mississippi, South Carolina), the Southwest (New Mexico, Oklahoma, Texas) and Virginia and North Carolina (NASS, 2015).
The four types of peanuts grown commercially in the United States are the runner, Virginia, Spanish and Valencia. The runner type, which is used mainly for peanut butter, is the primary commercial peanut raised. This type makes up 80 percent of the country’s planted acreage, mostly in the Southeast. The Virginia type, grown mainly in Virginia and North Carolina for gourmet snacks, provides 15 percent of the U.S. crop. Spanish peanuts, which are commonly grown in Oklahoma and Texas, are said to have the most pronounced nutty flavor of the commercial peanuts due to higher oil content, and provide 4 percent of the national crop. Valencia peanuts, raised almost exclusively in New Mexico, provide 1 percent of the crop. These peanuts are usually roasted and sold in their shells as well as used for all-natural peanut butter (National Peanut Board, 2014).
Total U.S. peanut production has varied, ranging from a high of nearly 6.8 billion pounds in 2012 to a low of 3.3 billion pounds in 2002. U.S. production of peanuts was 5.2 billion pounds in 2014, up from 4.2 billion pounds the previous year (NASS, 2015).
Georgia remained the leading peanut-producing state by far, reporting a crop of more than 2.4 billion pounds, followed by Florida, which produced 668 million pounds; Alabama, which produced almost 554 million pounds; and Texas, which produced almost 489 million pounds. North Carolina, South Carolina and Mississippi are also significant producers of peanuts (NASS, 2015).
In 2014, peanut yields were 3,932 pounds per acre, down slightly from the previous year. Virginia recorded the highest average yield of 4,350 pounds per acre, an increase of 10 percent from the previous year. North Carolina recorded the second highest average yield of 4,300 pounds of peanuts per acre, also a 10 percent increase from the previous year (NASS, 2015).
In 2013, the United States was ranked fourth in terms of world production of peanuts. China is the largest producer of peanuts, followed by India and Nigeria (FAOSTAT, 2013).
Exports/Imports/United States Consumption
The United States is a net exporter of peanuts. In 2014 peanut exports totaled more than $551.7 million in value, roughly a 22 percent decline from the previous year, but an increase of 57 percent from 2012 (FAS, 2015).
In 2014, the largest export market for shelled peanuts in 2012 was Canada (valued at more than $93.1 million), followed by Mexico (valued at nearly $69.1 million). The largest export market for in-shell peanuts was Germany (valued at $31.2 million), followed by the Netherlands (valued at nearly $20.3 million) (FAS, 2015).
The United States also exported peanut oil valued at $62 million in 2014. The largest buyers were the Netherlands, Mexico, and the United Kingdom (FAS, 2015).
In 2014, the United States imported $64.3 million worth of peanuts, down 7 percent from 2013. The peanuts were purchased mainly from Mexico (valued at almost $31.9 million), Argentina (valued at $15.6 million), and China (valued at $8 million) (FAS, 2015).
Per person consumption of combined peanut products has slightly fluctuated over the past four decades with the highest consumption being 7 pounds per person in 1989, and the lowest being 5 pounds in 1980. In 2013, per person consumption of combined peanut products was 5.9 pounds (ERS, 2015).
Peanut butter has been and still is the largest source of peanut product consumption on a per pound basis. Peanut butter consumption has stayed relatively stable over the past four decades; with the lowest consumption being nearly 2.68 pounds in 2000 and the highest consumption being 3.93 pounds in 2010. The most recent year reported for peanut butter consumption is 2012, showing 3.92 pounds per person (ERS, 2015).
According to Jay Chapin from Clemson University, there are five key elements for producing a successful commercial size crop of peanuts:
1. The land must have well drained soil.
2. Suitable rotation crops must be used.
3. Timely watering must be given during pod fill.
4. There must be good harvest weather.
5. Proper time management of the crop is crucial (especially when and how the peanuts are dug/harvested).
“More money is made or lost with digging decisions than any other aspect of peanut production,” Chapin says Farmers should never dig their peanut crop solely based off of the days-after-planted (DAP) timeline, he says. However, the DAP can be used as a guideline for mapping out spot checks to determine crop maturity. (Chapin, 2015).
Government Subsidies and the Agricultural Act of 2014 (also know as 2014 U.S. Farm Bill)
Changes made from the 2008 Farm Bill programs to the current enacted Agricultural Act of 2014 included the elimination of:
- The direct payment (DP) program (annual set payment amounts given to producers and landowners of covered commodities during the years 1996 to 2013. Farm program support is now in the form of variable payments).
- The counter-cyclical payment (CCP) program [similar to the PLC program (see below)]; and
- The Average Crop Revenue Election (ACRE) program [similar to the ARC program (see below)] (Shields, 2014).
The Agricultural Act of 2014 provides many crop producers (including peanut producers) with varied financial support for the crop years 2014-2018. The support is received using the farm commodity program provisions in Title I of the Agricultural Act of 2014 and include:
- Price Loss Coverage (PLC) payments, which are generated when the national average farm price for peanuts goes below the “reference price” agreed upon by law (reference price for peanuts under the 2014 U.S. Farm Bill is $535 per ton).
- Agriculture Risk Coverage (ARC) payments, which act as an alternative to PLC and are generated when crop revenue is below the approved level based on a multi-year moving average of historical crop revenue; and
- Marketing Assistance Loans (MALs), which offer provisional financing for the established loan commodities (which includes peanuts). If prices fall below the loan rates set in regulation, additional low-price protection [sometimes paid as loan deficiency payments (LDPs)] is deployed (Shields, 2014).
In addition to the new provisions under the Agricultural Act of 2014, many producers may benefit from subsidized crop and revenue insurance available under previous legislation, as well as from new permanent disaster assistance (Shields, 2014).
Like the 2008 Farm Bill, the Agricultural Act of 2014 allows for all current peanut production to be eligible for nonrecourse commodity loans with marketing loan provisions. The current loans are eligible for the for crop years 2014 through 2018. The loan program provides short-term financing and assists producers when market prices are low. Because the loans are nonrecourse, producers may forfeit the crop rather than pay back the loan if prices fall below the loan rate plus interest. National price support levels fluctuate by peanut type and by year (FSA, 2015).
For more information on the Agricultural Act of 2014 visit the source listed directly below:
Helpful enterprise budgets for peanuts:
Chapin, J.W., Peanut Money-Maker Production Guide – 2015, Clemson University, 2015. (Editor’s note: if this is slow loading in Chrome, try a different browser.)
Crop Production Annual Summary, National Ag Statistics Service (NASS), USDA, 2015.
Food and Agriculture Organization of the United Nations Statistics Division (FAOSTAT), 2013. Click Item as Groundnuts with shell, Area as United States, and From Year 2013 To Year 2013.
Food Availability (Per Capita) - Peanuts and tree nuts, Economic Research Service (ERS), USDA, 2015.
Global Ag Trade System, Foreign Ag Service (FAS), USDA, 2015.
Green Peanuts and Dried Peanuts, Boiled Peanut World, 2013.
Herkes, J., Rapeseed and Canola for Biodiesel Production, Extension.org, 2014.
How Peanuts Grow, National Peanut Board, 2015.
Orchant, R., Boiled Peanuts: The Southern Snack We Adore, The Huffington Post, 2014.
Our Products, Hampton Farms, 2016.
Peanut Marketing Assistance Loans and Loan Deficiency Payments, USDA – Farm Service Agency (FSA), 2015.
Peanut Products, The Peanut Institute, 2016.
Peanut Types, National Peanut Board, 2014.
Production of Biofuel Crops in Florida: Peanut, Florida Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida, 2010.
The Peanut Industry – Peanuts: a Brief History, American Peanut Council, 2014.
Wright et al, Producing Peanuts for the Fresh (Green/Boiling) Market, University of Florida, 2014.
Links checked January 2016.