| In this project, organized by the National Center for Peanut Competitiveness (NCPC) and partially funded by the National Peanut Board (NPB) through the Southeastern Peanut Research Initiative, eleven peanut farms representative of those in Georgia, Alabama, Florida and South Carolina were established in spring 2002. Information from these operations was used to analyze potential effects of adoption of alternative production technologies, environmental regulations, water usage and other possible changes in peanut production, which could enable peanut farmers to anticipate such effects on their operations and initiate a proactive response.
Each farm was developed to be representative of the area by a panel of producers of similar size, location and production practices. Eleven farms were necessary to adequately reflect the region’s diversity of sizes, potential crop mixes, and production and irrigation practices. The farms were updated at the beginning of 2003 to reflect farm policy changes brought about by passage of the Farm Security and Rural Investment Act of 2002.
One issue measured was the effect of potential water usage restrictions on the financial viability of the farms. Separate scenarios examined10 and 20 % reductions in irrigation yields, held constant from 2004 through 2007. Compared to benchmark analyses, the composite Net Cash Farm Income (NCFI) of the farms fell by 50.5 % with the 10 % reduction, and by 97 % with the 20 % reduction. The composite average Real Net Worth (RNW) of the farms, which represents the value of all assets less liabilities, fell by 8.8 % with the 10 % reduction and 18.4 % with the 20 % reduction. The farms’ debt-to-asset ratio of 16.97 % grew to 22.11 % with the 10 % reduction and to 28.48 % with the 20 % reduction.
The study also addressed the difficulty for Southeastern peanut farmers to decide on the most profitable per-acre crop mix while maintaining certain rotational constraints and facing fluctuating market prices and the uncertainties of the region’s weather patterns.
To address this concern, the NCPC compared the potential commodity prices of dryland and irrigated peanuts, corn and cotton. Both dryland and irrigated corn generated less return over variable cost than the corresponding peanuts, but elevating prices for irrigated cotton showed it becoming more competitive for acres versus irrigated peanuts. However, the NPCP stressed the difficulty of determining a monetary value of sustainable crop rotations, especially the benefits of corn in a peanuts/cotton rotational mix, and advises deciding on an individual farm basis. The study concludes that the key to a competitive crop mix is for peanut producers to understand their variable costs per acre for all crops and plan accordingly.
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