New peanut law ends quota system

While minor differences remain over the House and Senate versions of a new farm bill, one thing is for certain — the 60-year-old peanut quota system soon will be a relic.

The Senate's peanut program contains several improvements over the House version, according to Don Koehler, executive director of the Georgia Peanut Commission. Both versions take a similar approach to peanuts by replacing the current system of guaranteed prices and production controls with a more market-oriented program. Both versions compensate quota holders for their loss.

The transition makes the peanut program much like other major crop programs, including corn, cotton and wheat.

The primary difference in the two peanut proposals is that the five-year Senate bill provides more money for producers than the 10-year Farm Security Act of 2001 passed by the House in October.

“The Senate version increases the income protection price for peanuts to $520 per ton on 85 percent of base acres. The target price in the House version was $480 per ton,” says Koehler.

The Senate bill also sets a loan rate of $400 per ton compared to the House bill's target price of $450 per ton, he adds.

“Both bills have a quota buyout of 10 cents per pound for five years, and that will not change,” says Koehler.

The Senate bill entitles producers to receive payments and counter-cyclical payments on eligible cropland for the 2002 through 2006 crop years. Producers will have the options of update bases and yields for all covered commodities on the farm or retaining existing base acres and program yields and adding oilseed acres.

The bill gives $3.9 billion to the peanut program over the next five years. That's about $400 million more than the amount approved by the House.

Koehler feels certain that a farm bill will be presented to President Bush for his signature before Christmas. “I don't think the President will veto the bill that comes out of the conference committee. A lot of agricultural states voted for him in the last election, and that constituency is important to him,” he says.

Economic impact statements prepared by the University of Georgia show that the Senate's peanut program will have a farm-level impact of $150 million more than the current peanut program, says Koehler.

“I think it's a pretty good bill that will be good for our producers. It's a bill that'll allow us to continue growing peanuts in the Southeast.”

Koehler acknowledges that not all current peanut quota holders are happy with the new program. But, he adds, political realities dictated that peanuts move to a more market-oriented program approach.

“This bill offers the potential for our growers to continue selling into the export market. It offers a marketing loan rate of $400 per ton, and we've never seen it that high.”

Koehler expects the new farm bill to trigger a temporary hike in Georgia peanut acres next spring. “I think we could see as many as 750,000 acres of peanuts in Georgia. Then, it eventually should settle back down to about 700,000 acres. I don't think we can sustain 750,000 acres of peanuts due to rotation requirements. We have about 2 to 2.5 million acres of land in Georgia that is suitable for peanuts. With a three-year rotation, we won't be able to maintain more than 700,000 acres.”

This past year, Georgia peanut producers harvested about 477,000 acres.

Included in the Senate Agriculture Committee's version of the farm bill are regulations covering peanut country of origin labeling. The bill requires a retailer to inform consumers of the country of origin of a covered product. For a peanut product to have a United States label, it must be produced exclusively in this country.

The House farm bill contained country of origin labeling legislation but did not list peanuts as one of the covered commodities.

“I am pleased that the Senate Agriculture Committee found that labeling peanuts is important enough to include in its version of the new farm bill,” says U.S. Sen. Max Cleland (D-Ga.) “Consumers are demanding more information and assurance of the quality of food products, including peanuts. This measure will be a tool to assure a safe food supply, and I will work to keep this provision in the final farm bill.”

With nearly 40 percent of U.S. peanuts produced in Georgia, the bill should be good news for the state's producers and agricultural economy, says Cleland.

“The peanut labeling language is a product of the Georgia Peanut Commission's efforts throughout the Southern Peanut Farmers Federation Leadership Program,” says Koehler. “Young peanut farmers placed their highest priority on seeing this become law. We have worked on this for some time and are excited that it is nearing reality.”

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