By Brad Haire
University of Georgia

U.S. citizens this year will eat more peanuts than last year.
But they won’t come close to consuming the massive amount
farmers will produce this year, says a University of Georgia
expert.

“The biggest issue facing the peanut industry is the oversupply
this year’s crop will create,” said Nathan Smith, a peanut
economist with the UGA Extension Service.

U.S. farmers are expected to produce a record 2.6 million tons
of peanuts this year, Smith said, about 900,000 tons more than
last year.

Georgia farmers are on track to have a state record of 1.2
million tons, he said, about 250,000 tons more than last year.

Farmers have had problems with some peanut pests this year, said
John Beasley, an agronomist with the UGA Extension Service. But
a wet summer has hit Eastern peanut-producing states in all the
right places, contributing to the crop’s good growth.

“Unless something really bizarre happens in the next month or
two, the peanut crop will certainly be a good one,” Beasley
said.

U.S. peanut farmers planted about 1.6 million acres of peanuts
this year, 13 percent more than last year. Georgia farmers
planted about 770,000 acres, 22 percent more than last year.

Farmers planted more peanuts this year because prices were good
last year, Smith said, and prices for other crops like cotton
and soybeans are low.

U.S. peanut consumption has increased by 17 percent in the past
two years. “This has certainly helped the industry,” he said.
But exports have been down in recent years.

The United States could have a peanut surplus of up to 1 million
tons to carry over into next year, he said, about twice as much
as it usually carries.

The oversupply has affected prices this year. Direct contracts
between peanut shellers and farmers are few and priced low.
Contracts last year were around $400 per ton. Most of the peanut
crop will have to go into the government-funded U.S. peanut
program this year. It guarantees farmers $355 per ton.

This year’s oversupply could cause even bigger problems next
year, Smith said.

“It’s going to create a storage problem for next year when
warehouses are full and there is a need to store the ’06 crop,”
he said. “Unless we can move these peanuts in the export market,
peanut prices could be even lower next year.”