By Hayley Boriss and Marcia Kreith, Agricultural Issues Center, University of California.

Revised March 2012.

Introduction
Peanuts (Arachis hypogaea) are thought to have originated in South America where they thrive in tropical and subtropical climates. Because the edible seeds of this annual legume (a member of the pea and bean family) plant start above ground but mature underground, peanuts are also known as groundpeas or groundnuts.

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, Virginia-Carolina Peanut Promotions).

Demand
Peanuts have been marketed as a cheap source of protein compared to cheese and red meat and as a good source of essential vitamins and minerals. With decreasing prices and increasing production of peanuts, U.S. demand for peanuts has remained strong over the last decade and a half. Per person consumption of all peanut products was 6.4 pounds in 2008 (ERS). This is lower than the 1989 high of 7 pounds per person, although per person consumption has remained relatively stable since the mid-1990s.

The majority of consumption in the United States is attributed to peanuts used as a food source, as opposed to oil or meal, and peanut butter has been and remains the largest source of consumption on a per pound basis. Per capita consumption of peanut butter has remained stable since the mid-1990s, following a peak in consumption at 3.6 pounds per person in 1989. In 2007, peanut butter consumption was estimated to be 3.3 pounds per capita, or just over half of total peanut consumption. Peanuts consumed as snacks and in candy are also popular forms of consumption, with consumption per capita in 2008 at 1.4 and 1.1 pounds, respectively. (ERS)

Value-Added Products
Peanut Butter
Prepared from roasted peanuts, peanut butter can be eaten as is or added to a variety of food items.

Peanut Oil
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 a healthy but flavorful oil is desired.

Peanut Flour
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.

Biodiesel
Peanuts have a high oil content (45%-52%) compared to many other oilseed crops. With a yield of 3,000 pounds per acre (see below) and a 70 grade (70% 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. The yield from peanuts is much higher than that of soybeans at 46 gallons per acres and corn at 18 gallons but lower than that of rapeseed, which yields 122 gallons per acre and of sunflowers, which yield 98 gallons. (University of Florida)

Other
Some types of peanut plants are raised for hay and sold as bales, pellets or cubes. Peanut hay has also been used as ornamental material for turf. Peanut plants are also being used as a cover crop in citrus groves.

Production
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.

The four types of peanuts grown commercially in the United States are the runner, Virginia, Spanish and Valencia. The runner type, 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, commonly grown in Oklahoma and Texas for a variety of cuisines, provide 5 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.

Total U.S. peanut production has varied, ranging from a high of nearly 5.2 billion in 2008 to a low of around 3.3 billion in 2002. U.S. production of peanuts climbed to 4.2 billion pounds in 2010, up 13 percent from the previous year's crop. Georgia remained the leading peanut-producing state by far, recording a crop of nearly 2.0 billion pounds, followed by Texas, which produced 586.8 million pounds. The excellent yields in Georgia can be attributed to intensive irrigation and new drought-resistant varieties.  (NASS 2011)

Peanut production in the Southeast is estimated at 3.2 billion pounds, up 13 percent from 2009. Average yield in the region is estimated at 3,340 pounds per acre, 88 pounds lower than the 2009 average yield.

Production in Virginia and North Carolina is estimated at 273 million pounds, down 5 percent from 2009. The average yield is estimated at 2,627 pounds per acre, down 1,073 pounds from 2009. Hot, dry weather conditions during the growing season stressed the crop in the region and resulted in poor yields.

Southwest peanut production is estimated at 686 million pounds, up 20 percent from 2009. The average yield for the region is estimated at 3,536 pounds per acre, up 271 pounds from the previous crop year.

Peanut yields continued to decline, falling to 3,311 pounds per acre, down 110 pounds from 2009. Texas recorded the highest average yield per acre of 3,600 pounds, an increase from the previous year. Georgia recorded the second highest average yield of 3,560 pounds of peanuts per acre, identical to 2009's yields. (NASS 2011)

According to USDA’s Foreign Agricultural Service (FAS), the United States is ranked third in terms of world production of peanuts. China is the largest producer of peanuts, with about double the production of India, the world’s second largest peanut producer.

Exports
Less than 6 percent of world peanut, peanut oil and peanut meal production is traded internationally. The United States is a net exporter of peanuts. In 2010 exports totaled more than $244.5 million, surpassing imports by roughly $212.1 million.  (FAS)

The largest export market for peanuts in 2010 was Canada, which purchased peanuts valued at more than $80 million, followed by Mexico, which purchased peanuts valued at more than $54 million (FAS). The U.S. reputation for high-quality products has facilitated exports to countries in the European Union and others, but phytosanitary requirements and aflotoxin contamination have become increasingly contentious issues in world peanut trade.

Imports
In 2010, the United States imported $32.4 million worth of peanuts, primarily from Mexico ($15.6 million), followed by Argentina ($7.7 million).  (FAS)

Government Subsidies and the 2008 Farm Act
The Food, Conservation, and Energy Act of 2008 (2008 Farm Act) provides peanut producers with access to marketing loan benefits, direct payments (DPs), counter-cyclical payments (CCPs) and average crop revenue election (ACRE) payments. In addition, many producers may benefit from subsidized crop and revenue insurance available under previous legislation, as well as from new permanent disaster assistance. Moreover, producers are affected by conservation and trade programs.

Under the 2008 Farm Act, all current peanut production is eligible for nonrecourse commodity loans with marketing loan provisions for crop years 2008 through 2012. 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 loan rates for peanuts are $3.55 per ton until 2012.

Direct payments and CCPs are available to eligible peanut landowners and producers who enter into an annual agreement with USDA's Farm Services Agency (FSA). For crop years 2008 through 2012, peanut DPs are made at the fixed rate of $36 per ton. For producers with eligible historical peanut acreage, CCPs are paid whenever a commodity's target price is greater than the calculated effective price for that commodity. For peanut producers, the target price is $495 per ton and the maximum CCP is $104 per ton.   

The ACRE program is a new program in the 2008 Farm Act, and like DPs and CCPs, is administered by FSA. Beginning in 2009, peanut producers can elect this revenue-based, counter-cyclical program, which is an alternative to receiving CCPs. Once in ACRE, producers must remain in the program through 2012 and need to enroll annually to receive payments. Producers who choose to participate in ACRE also face reduced DPs and lower marketing assistance loan rates.  (ERS)
 

Sources
American Peanut Council.

Crop Production Annual Summary, National Ag Statistics Service (NASS), USDA.

Crop Values Annual Summary, NASS, USDA.

Food Consumption (per capita) Data System, Economic Research Service (ERS), USDA.

Global Ag Trade System, Foreign Ag Service (FAS), USDA.

Oil Crops Yearbook, ERS, USDA.

Production of Biofuel Crops in Florida: Peanut, Florida Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida, 2008.

A Short Peanut History, Virginia-Carolina Peanut Promotions.



Created February 2006 and revised March 2012.