Peanut Market News – Feb. 12, 2016

BOYD WANTS WORKING TOGETHER ON THE NEXT FARM BILL

Former U.S. Representative Allen Boyd, representing the Cannae Policy Group from Florida, recently appeared before the Georgia Peanut Commission asking that  peanut farmers work together to develop a farm policy that will work for all our farmers so that we can product peanuts profitably and sell them into a healthy, vibrant, market.”

Boyd said the present program is not a sustainable model.  He asked, “Does Generic Base affect all states and all producers?  The short answer is NO.”  He added that not all historic peanut producers have generic base and not all historic cotton producing areas have peanut producers.  He noted that Georgia and Texas stand out above the rest of the peanut production areas because both have an abundance of generic base, infrastructure and sheller support.  Boyd showed that in 2015, Georgia and Texas increased acres 31% and all other states only 7 percent. 

Boyd concluded that “I and the farmers I represent stand ready to work with you and your team to accomplish this goal of a sustainable model.”

 

CERTIFICATES APPROVED, EVEN FOR 2015 CROP

USDA announced this week that producers who have crops pledged as collateral for a marketing assistance loan can now purchase a commodity certificate that may be exchanged for the outstanding loan collateral. The authority is provided by the 2016 Consolidated Appropriations Act, legislation enacted by Congress in December. Commodity certificates are available beginning with the 2015 crop in situations where the applicable marketing assistance loan rate exceeds the exchange rate. Currently, the only eligible commodity is cotton.

USDA’s Farm Service Agency (FSA) routinely provides agricultural producers with marketing assistance loans that provide interim cash flow without having to sell the commodities when market prices are at harvest time lows. The loans allow the producer to store and delay the sale of the commodity until more favorable market conditions emerge, while also providing for a more orderly marketing of commodities throughout the marketing year.

These loans are considered “nonrecourse” because the loan can be redeemed by delivering the commodity pledged as collateral to the government as full payment for the loan upon maturity. Commodity certificates are available to loan holders having outstanding nonrecourse loans for wheat, upland cotton, rice, feed grains, pulse crops (dry peas, lentils, large and small chickpeas),peanuts, wool, soybeans and designated minor oilseeds. These certificates can be purchased at the posted county price (or adjusted world price or national posted price) for the quantity of commodity under loan, and must be immediately exchanged for the collateral, satisfying the loan.  Not certain if certificates on peanuts start in 2005 or 2016!

Producers may contact their FSA office that maintains their loan or their loan service agent for additional information. Producers who do business with Cooperative Marketing Associations (CMA) or Designated Marketing Associations (DMA) may contact their respective associations for additional information. To learn more about commodity certificates, visit www.fsa.usda.gov/pricesupport or contact your local FSA office. To find your local FSA office, visit http://offices.usda.gov.

 

PEANUT CROP INSURANCE PROGRAM

Contract prices are not available for revenue protection policies. If the contract price is used,  the price will be a weighted average projected price.

If no contract, insurance program peanut prices will be determined utilizing a formula that relates to in-shell peanut prices to that of other commodities.  The price discovery will be relating shelled peanut prices to other prices: December wheat, cotton, soybean oil and soybean meal contracts and other factors (weighted).  Also considered is the shelled prices to in-shell farmer stock prices using the loan rate and the NASS survey prices.  All these factors will be developed into a formula to determine the price for the four peanut types.  The current Harvest Price (Oct 1-Oct 31)  Runner – $416.15, Virginia – $482.735, Spanish — $553.481, Valencia – $482.735. 

Projected prices will be determined in the spring prior to planting and harvest prices will be determined in the late fall.  Peanut growers who elected one of the revenue insurance options may receive an insurance payment if the combination of price losses calculated by the program’s methodology and/or yield losses experienced by the grower’s operation, results in financial losses in excess of the deductible on their insurance policy.

Here are some other options:

  • A grower can opt to insure on an Enterprise Unit resulting in lower premiums (over half)
  • If an insured grower has to replant, there is a fixed value of $95 per acre
  • Quality adjustment will start after 10% of value has been lost as a result of quality problems.
  • Types will include:  Runner, Southeast and Southwest Spanish, Valencia and Virginia
  • Practices will include:  Irrigated or non-irrigated/ Spring, Fall or Not-Specific/ Conventional or Organic
  • Coverage levels will be 50% to 85% in 5% increments.

 

via Peanut Farm Market News, a peanut hotline service of The Spearman Agency, Tyron Spearman, editor