US Peanut Producers: A Multi-Economic Analysis of Their Competitive Position in the Domestic and Global Markets

NCPC maintains 22 U.S. representative peanut farms that stretch from Virginia to New Mexico covering the entire peanut belt. Using August 2013 macroeconomic data in tandem with the representative farms' cost structure, the economic viability of these representative farms can be evaluated. Overall, 36% of the 22 representative peanut farms are in the poor to moderate economic viability when simulated over the time period of 2013-2017 while 64% of the representative farms were in good economic viability. The Southwest peanut region representative farms' are still in the worse economic conditions when compared to the other peanut regions. During January to March of 2013, NCPC updated the representative peanut farms cost structure. To compare the 2012 per acre cost to 2002' s per acre cost when the peanut program changed, one would need to look at the Southeast cost of production numbers since those farms were developed in 2002. For Southeast irrigated peanut production, the variable cost of production has increased 75% from 2002 to 2012. For Southeast non-irrigated peanut production, the variable cost of production has increased 70% from 2002 to 2012. A significant component of the variable cost of production is the land rental rates. The average rental rates for irrigated land for 2012 in Georgia was $216 per acre which was a 55% increase over the 2002 land rental rate. For non-irrigated land, the average 2012 Georgia land rental rate was $88 per acre which was a 76% increase over the 2002 land rental rate. Given the 2014 commodity crop prices and the forecasted 2015 crop prices, land rental rates will need to decrease if the farmers hope to cover their production costs. With costs not decreasing relative to prices received decline, one will see a significant shift in the overall economic viability of peanut farms to a poorer economic viability.