Peanut Market News- July 5, 2017

SOUTHERN PEANUT FARMERS FEDERATION LAUNCHES WEBSITE 

DOTHAN, Ala. – The Southern Peanut Farmers Federation today launched a campaign website, www.PeanutProgramWorks.com, and video to showcase the benefits of the Price Loss Coverage (PLC) program in the 2014 Farm Bill and highlight its importance to farmers, their families and communities.

The website, through a series of farmer profiles, an informational video and fact points, demonstrates how so many peanut farmers rely on the stability brought to their market through the PLC program, which is known as the Peanut Program, and why it must be retained in the upcoming Farm Bill.

“The Peanut Program works,” said Armond Morris, chairman of the Georgia Peanut Commission and member of the Southern Peanut Farmers Federation. “It creates stability giving farmers the ability to secure loans, contract with shellers, buy from chemical and feed companies, and invest in farm capital equipment.”

The Peanut Program has given farmers like Michael Davis, a sixth-generation farmer from Graceville, Florida, the reassurance they need to continue farming. “The Peanut Program serves as an important backstop allowing us to plan for the long term. Without the Peanut Program, I believe that one-third of the farmers I know would go out of business, which would dramatically impact our communities.”

Through the website, SPFF aims to educate policymakers, farmers and the agriculture community about why the Peanut Program must be retained in the upcoming Farm Bill. The Peanut Program is a sound, market-based solution that offers farmers a necessary price floor to support continued stability and access to lending, regardless of what is happening in the larger market. The program also helps to meet the ever-increasing demand for peanuts both domestically and internationally. Peanuts have seen continued per capita consumption growth for years, jumping from 6.60 pounds per capita to 7.41 between 2012 and 2016.[i]

Caleb Bristow, executive director of the Alabama Peanut Producers Association, said: “In the supply chain for peanuts, what’s good for farmers is good for consumers. Changing the Peanut Program would have detrimental consequences for not only family-run farms like mine and rural communities across the southeast, but it would threaten the availability of a healthy and nutritious energy source for billions of peanut lovers around the world.”

Peanut Program Works’ main message directly combats the attempts by the Florida Peanut Federation to drastically lower reference prices and destabilize a program that works for peanut farmers, their families and their surrounding communities.

Don Koehler, executive director of the Georgia Peanut Commission and a member of the Southern Peanut Farmers Federation, said that the policy advocated by the FPF would benefit only a small number of their members at the expense of peanut farmers throughout the Southeast.

“The fact is the Florida Peanut Federation would undermine the market-based Peanut Program that works for peanut farmers, our families and our communities by pushing to dramatically lower the reference price and championing a self-serving effort on behalf of a few farmers who want to arbitrarily declare peanut base – a move that would put farmers in our community out of business and wreak chaos in the marketplace,” Koehler said.

“Peanuts aren’t publicly traded on the futures market so the price of peanuts isn’t set until well after the peanuts are planted, and we’ve sunk big money into our crop. In order to meet the growing global demand for peanuts, farmers need a system in place that provides stability over time. And fortunately, we have one,” said Mike Jordan, a Jackson County, Florida farmer.

The website, which was launched while the peanut industry was meeting at the 21st Annual USA Peanut Congress, urges and equips users to take initial steps towards understanding the Peanut Program and its sustained benefits, as well as the unreasoned claims made against it. Protect the Peanut Program that helps protect us—visit www.PeanutProgramWorks.com to learn more.

 

CHINA MARKET GROWING: RECORD CROP EXPECTED

 Li Ning, Peanut specialist with the China Chamber of Commerce, told USA Peanut Congress attendees that the 2017 China peanut crop is expected to reach a new record high, subject to no disastrous weather condition during the coming 3 and half months.

 She said that overall supply is abundant, especially oil stocks and China expects an abnormally large carry over from the 2016 crop.  Tight supplies are expected for high quality traditional Virginia and top quality Hsujis that meet specs for Japan and EU. On supply, she said that imports are expected to be reduced, especially the border trades.

 On Chinese demand, large crushers will continue to play the market driver.  Peanut oil consumption is expected to keep the growing trend.  China expects that family and restaurant uses should increase (a lot).  A decrease in price may help peanut use picking up in the manufacturing sector.  China said they hope to gain back some of the export market shares in other countries. 

 China became a major buyer of U.S. peanuts last season and shellers are already being approached about buys this year.

 

 

MEXICO TO REMAIN A MAJOR BUYER OF U.S. PEANUTS 

Jocelyn Galindo, Strategic Sourcing Manager of Galdisa Company in Mexico City, Mexico told attendees at the USA Peanut Congress that the Mexican market is expected to grow and is already second to Canada in use of USA peanuts.

Jocelyn noted that in 2016, Mexico imported 134,237 MT and produced about 50,000 MT for a total market of 184,237 tons.  The estimate for 2017 is over 200,000 MT as there is growing interest in healthy foods.  Presently, the market is about 80% snacks, 15% candies and chocolate and 5% Mexican foods, mainly sauces. 

In market share, U.S. had 72.6% last year with over 97,000 Mtons shipped.  Others shipping into the Mexico market include Nicaragua with 17.8%, Brazil with 4.4% and China with 3.2%.  This year, through April, U.S. has shipped almost 30,000 Mtons retaining 52% share. Plans are to bring back U.S. exports to normal levels.  However, uncertainty in Mexico includes price increases, inflation at 6.3%, oil prices up 10%, and an uncertain economy.  She also noted that Mexico has no government support and financing for farmers is mostly not available.

 

SOUTHERN PEANUT FARMERS FEDERATION PRAISES LISTENING SESSION 

The Southern Peanut Farmers Federation applauded U.S. House Agriculture Chairman Mike Conaway and the other members of the committee for the Listening Session held in Gainesville, FL on Saturday.

Armond Morris of the Georgia Peanut Commission said, “The Peanut Program works. It’s a market-based program that brings stability to peanut farmers, our families and our communities.”  Ken Barton of the Florida Peanut Producers Association, said the listening session was an ideal format for members of the Agriculture Committee to be in Florida and understand how the Peanut Program works to support farmers and communities. “I’m especially grateful to our Florida delegation, Congressmen Dunn and Yoho for hosting the event. It was a good opportunity to discuss how a fair reference price brings certainty to farming – both when demand is high, like it is currently, and during times of economic downturn.”

Larry Ford, a peanut farmer from Greenwood, FL said, “Congress needs to maintain the reference price in the 2018 Farm Bill.  The old adage: ‘if it ain’t broke, don’t fix it’ is true when it comes to the Peanut Program. When demand for peanuts is high, the program doesn’t cost the government pennies on the dollar, yet the program still delivers on the certainty we need to secure loans. And when the economy takes a downturn, the Peanut Program can serve as a lifeline to keep us from going bankrupt.”

Concerning the Price Loss Coverage (PLC) program, the group said, it works for farmers and consumers. It is a common-sense and market-based solution offering farmers a price floor that promotes constancy and access to lending amidst market uncertainty. Since peanut reference prices are set by the Farm Bill and applied for a full five years, the system in place ensures stability in times of both prosperity and times of economic downturn. This underscores why a realistic reference price is paramount. The market-based Peanut Program serves as an important backstop to secure loans. Without the certainty the peanut program brings to peanut farmers, banks would not extend loans – putting many peanut farmers out of business.

 

 

REP. CONAWAY ADDRESSES PEANUT INDUSTRY 

At the USA Peanut Congress, U.S. Rep. Mike Conaway of Texas, chairman of the House Agriculture Committee, urged the segments of the industry to “Tell your story, over and over.  Be self promoters and it is okay to brag on yourself.”  He encouraged ag groups to “be at the table.  Whether it is trade on NAFTA or TPP or the Farm Bill; be involved.  If you have a new idea, send it in now.  After mark-up, it is too late!”

He said that the Congress is working to get the Health Care Reform Bill through the Senate because there is $1 trillion savings that would lead to the Tax Reform Reconciliation and spending reductions.  He advised to “Keep Your Powder Dry!”  “We will have to wait until the CPA’s and others evaluate the Tax Reform Package considering a 20% tax or less.” 

 On the Farm Bill, he said, “Just leave us alone.  We are 102 million dollars under budget.”  On a one-year extension, “I plan to get it done on time.  We plan to lay down the bill early and there is no reason to delay!”  On the recommendation by the administration to cut agriculture 23%, mostly in SNAP (food stamps), crop insurance and ag research, Rep. Conaway said, “Stay tuned!”

He praised President Trump’s selection of Georgian Sonny Perdue as Secretary of Agriculture, “He could not have picked a better ag man.

 

 

COALITION HOPES TO SAVE EXPORT PROMOTIONS FUNDS 

The letter of support is signed by 100 farm founds and states, “As members of the Coalition to Promote U.S. Agricultural Exports, we are writing to urge your strong support for maintaining vital funding for USDA’s important export programs, including the Market Access Program (MAP) and Foreign Market Development (FMD) Program, when the House Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies considers the FY 18 Agriculture Appropriations bill. 

               We strongly urge that MAP and FMD be funded at no less than $200 million and $34.5 million respectively for FY 18, as authorized by the 2014 Farm Bill.  MAP has been funded annually at this level since 2006 and FMD at its level since 2002.  We greatly appreciate the strong support annually expressed by Congress in fully funding these vital export promotion and market development programs and urge that you strongly oppose any efforts that would either eliminate or reduce funding for them.”  The Trump Administration wants to cut the funding.

 

 

COMMENTS ON FARM BILL CHANGES 

Discussions and Listening Sessions are continuing across the U.S. on Farm Bill changes after 2018.  One was suggested recently from Senator John Thune of South Dakota.  He is suggesting a Mandatory Base Update.

Senator Thune says it is a fiscally responsible approach to update and modernize a key title of the Farm Bill.  He says it will save taxpayers money and more accurately target commodity assistance to those who need it the most.

  • After the 2014 farm bill sign-up, there were 260 million base acres in the United States, with 23 base acre crops. Corn, wheat, and soybeans amount to 83 percent of base acres. Base acres are used to calculate commodity title program payments.
  • Since current law allowed base acres to be calculated using planting history as far back as 1991, the 2014 farm bill bases are not an accurate reflection of the most recently planted acres of commodity crops.                                       
  • Although a farm may not have been planted to a commodity crop for years, if that farm has base acres, it may still be eligible to receive commodity title payments under current law.
  • Thune’s legislation would require a mandatory crop acreage base update that would be determined by planted and considered-planted acres on a farm for the years 2014-2017. The updated data would help target commodity payments more accurately.

 

 

BUYING POINT ASSOCIATION FAVORS RECOMMENDATION 

Joe Parker, President of the National Peanut Buying Points Association has filed a response favoring the increase in farmer stock damage.  He said, “This is just one idea bring considered that would impact peanuts.  Our Association supports the notice published in the Federal Register proposing to increase the level of damage allowed for a Segregation 1 peanut by 1% to a level not to exceed 3.49%

This recommendation came out of a meeting of the Peanut Standards Board, and we agree with the merits of the argument which led to the recommendation.  Changes to this regulation will have no impact upon peanuts meeting the outgoing quality standards established as the peanuts leave the shelling plant and go to a manufacturer on the way to retail trade. 

Therefore, this change will not affect quality to consumers to be compromised in any way.

We ask the Department to accept the recommendation of the Peanut Standards Board and increase the damage level allowed for Segregation 1 peanuts to the level of 3.49% to be effective for the 2017 crop.

 

 

 

ONE PEANUT FARMER LIKES THE PEANUT PROGRAM 

MY VIEW by Michael Davis of Florida.: As a sixth generation farmer whose family has farmed the same land since 1818, my family has experienced all the highs and lows of farming imaginable. When my grandparents and parents farmed peanuts throughout the 20th century, you sank or swam by what you grew. You didn’t know what you could sell your crop for – or even if you could sell it – until long after you had planted.

While peanut farming is still unpredictable, today’s Farm Bill’s Price Loss Coverage (PLC) program, which began in 2014 and is otherwise known as the Peanut Program, promotes certainty over the longer-term. The PLC supports a reasonable reference price for growers and needs to be preserved in the upcoming 2018 Farm Bill.

Unlike most other commodities, peanuts are not publicly traded, which means peanut pricing is determined post-planting for nearly all farmers – long after they’ve heavily invested in their crop.

As with any other commodity, peanut farmers don’t control the market, and the Peanut Program brings a level of stability that keeps many farmers in business. It gives farmers the ability to borrow from lenders, contract with shellers, buy from chemical and feed companies, and invest in farm capital equipment. The Peanut Program serves as an important backstop, allowing us to plan for the long term. Without the Peanut Program, I believe that one-third of the farmers I know would go out of business, which would dramatically impact our communities.

As important as the Peanut Program is to farmers in our area and throughout the nation, it does not drive planting decisions. The market drives price and, thus, planting decisions. Today, demand for peanuts is growing and exceeding supply as product development and interest in the health benefits of peanuts reaches new heights. This means that the market price to farmers should increase and Peanut Program support to farmers, and cost to the government, will be minimal.

Given the important role the Peanut Program has for farmers and our communities throughout peanut country, it is baffling that a small group claiming to represent the interest of peanut farmers, the Florida Peanut Federation, is proposing to dramatically reduce the reference price within the Peanut Program. This would wreak chaos on our community, throughout Florida and in other peanut growing states.

If FPF has its way by lowering the reference price, many farmers in Jackson County wouldn’t grow peanuts and most likely would go out of business. I realize that is exactly what FPF wants, but creating havoc on all peanut farmers to only improve the ability of a select few to grow more peanuts is short-sighted.

The Peanut Program impacts my family and my community as well peanut farm families across the U.S. That’s why all of us — farmers and local businesses — must stand together in support of a fair reference price in the Peanut Program, so we can continue to enjoy market-based economic stability in our rural communities.

 

FARMER RESPONDS TO FELLOW FLORIDA FARMER (ABOVE) 

 Response from Allen Boyd, Jr., Boyd Family Farms, 806 N. Quitman Highway, Greenville, FL 32331 – 850-997-6222

Like Michael Davis, my family has survived many difficult times during 5generations of farming the same land. The peanut program was started during the Depression in 1933 to stabilize the farm economy and is updated about every 5 years. Great improvements were made in 1996 and 2002 to bring it into the 21st century, responding to the changing world markets and trade policy.

Those changes moved us away from a subsidized, supply control system, and toward a market based industry where farmers could react to domestic and world market forces. This brought new, non-base growers into the industry, unleashing innovation and new technology into the market place. The provisions in the 2014 Farm Bill that created generic base and allows farmers to use that base to qualify for a very attractive peanut program payment, supported by Mr. Davis, moves us back toward 1933.

Mr. Davis knows that his peanut planting decisions are based on a favorable reference price and potential PLC payment when compared to projections for other crops. 

Florida Peanut Federation (FPF) was formed by a group of farmers who are mostly non-base growers. Those non-base growers, unlike Mr. Davis, receive no subsidy when the over-supplied market drops. After many attempts to work with FPPA and being told by Mr. Davis himself that our growers were unlikely to remain in business, we chose to form our own Association.  It was obvious that FPPA, using our money, was not representing our interests. The Florida Department of Agriculture and Consumer Services, upon request from some of our farmers, for the first time in Florida history granted those growers an exemption to the agricultural marketing order. 

Contrary to what Mr. Davis has written, FPF has no interest in trying to put any peanut farmer out of business. We only want to see our national farm policy create a level field for all peanut farmers when it comes to the market place.

 If the PLC is as important as Mr. Davis says it is, then it should be available to all peanut farmers. It is illogical for FPF to support a reference price from which non-base growers receive no benefit, rather only drives down the peanut market, which is the only source for those non-base growers to recoup their production costs. It would seem logical for Mr. Davis to support a policy that allows all producers to benefit from the safety net that he has so eloquently stated is vital to the survival of the  American peanut farmer.

To continue to be the world leader in agriculture production, we must keep moving toward a market based system which encourages innovation and allows our farmers to make decisions on market factors rather than on how much they can receive from the US Treasury. Even as a 5th generation farmer, I have no right to enjoy a competitive advantage over other farmers because of my birthright.

 

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