Peanut prices on the rise

According to the USDA, after unfortunate growing conditions of Runner peanuts, raw peanut prices went from $450 a ton in 2010 to costing almost $1200 a ton this year.

            Runner peanuts are used to make peanut butter so both consumers and producers will be affected by this change in price. Rick Whitacre, professor of agricultural economics, explained the reason behind the poor peanut harvest.

           “There are two things working here. First of all, in the southeastern portion of the United States, Georgia specificially, which is the largest peanut producing state, had a very difficult summer weather wise. Not enough rain fall and some very hot temperatures had a very dramatic impact on yields of peanuts. It resulted in a 2% increase in yields, but on top of that they had a reduction in acreage harvested of 11%,” Whitacre said.

            He concluded it was a combination of poor weather conditions and the 11% decrease in acres harvested than a year ago contributing to the low peanut yields.

Runner peanuts

            Tracy Widergren, marketing coordinator for Campus Dining Services, explained how this shortage will affect individuals from a consumer stand point.

            “In general, consumers will see changes in retail (grocery) stores in terms of packaging sizes, prices, or availability. For example, peanut butter companies may raise prices, or they may shrink packaging sizes but keep prices the same. You might also see higher prices in products that use peanuts as an ingredient, such as peanut M & Ms or Snicker bars. These products may become limited in availability, or the manufacturers may reduce the number of pieces/size of the products sold.  It will be interesting to see how manufacturers who produce peanut-related products will adjust to this shortage,” Widergren said.

            As far as a precautionary measure campus dining has taken, she said the executive chef keeps a close watch on the food industry in terms of crop and food production as well as manufacturing.

            “As soon as he [executive chef] became aware of the shortage, he immediately began making plans with our director to purchase a large enough peanut butter supply to keep our dining centers stocked with peanut butter through the end of the academic year (end of spring semester). The order was based on our average consumption in the dining centers, so we expect the supply to last through the spring semester. Any increase in student consumption could change these predictions and/or our supply, but we believe we have prepared sufficiently for the shortage,” Widergren said.

            Whitacre added this change in peanut yields/prices has left producers with mixed emotions.

            “They [producers] did have a decrease in production of 13%, but at the same time had an increase in prices of 100%. From a producer’s point of view, they may find themselves actually making more money this year than they did last year simply because of the higher prices they are receiving for their output,” Whitacre said.

            Both Whitacre and Widergren said there aren’t a lot of good substitutes for peanut butter.

            “There really aren't alternative options available to foodservice operations.  Many students may suggest a substitution such as Nutella. What students need to understand is that products like Nutella are available to retail customers (i.e. in grocery stores), not to foodservice operations like Campus Dining.  We buy peanut butter in such large quantities, so there is really no comparable product in terms of our usage/quantity needs,” Widergren added

Whitacre added that parents will continue to purchase peanut butter no matter the price since children consume such large amounts. 

Note: This is an article I wrote for ISU's newspaper, the Daily Vidette, but thought it was interesting to share.