Peanut manufacturers committed to support of marketing loan concept

Peanut product makers are committed to supporting a marketing loan in the peanut program, as well as a buyout of quota, says a representative of the American Peanut Products Manufacturers, Inc.

The comments, made at the Southern Peanut Growers Conference in Panama City Beach, Fla., are historic for their content because it marks the first time in recent history that all three segments of the peanut industry have been behind one proposal to reform the peanut program. Peanut shellers also support the marketing loan.

“We in the manufacturing sector are committed to helping you (peanut farmers) attain whatever is appropriate in the form of federal government support to insure that a marketing loan program for peanuts is a success,” says Richard Pasco, of the manufacturers group.

“The opportunity is right for peanut producers to move quickly to a competitive program before its foreign competitors capture too large a share of the international peanut market.”

Under the marketing loan concept, peanut quota would be eliminated and replaced by a target price. A $500 per ton target price has been mentioned. In the talk about a quota buyout, congressmen have mentioned 10 cents per pound over five years. “Peanut farmers would no longer be treated differently than any other commodity, quota rent would be eliminated and U.S. manufacturers would sell more peanut products and create more jobs,” Pasco said.

Peanut product manufacturers are also supporting the idea of a quota buyout. “We understand that doing away with the quota system is no different than taking away a vested property right,” Pasco said. The group supports a decoupled payment to quota owners. “Any government compensation for the loss should not be subject to payment limitations.”

In his talk to peanut producers, Pasco said the change is necessary in order for U.S. peanut farmers to stay competitive in the global economy. Under the North American Free Trade Agreement, U.S. peanuts will have to compete with $400-a-ton peanuts in 2004. A new round of the World Trade Organization, as well as the Free Trade Area of the Americas are also pending.

“There are two case studies regarding how we should not respond,” Pasco said.

The first is how the U.S. automobile industry responded to competitive threats from Japan by “just changing the fenders rather than manufacturing smaller cars.”

The other case is peanut competition from Argentina. “U.S. policy on peanuts has encouraged more production in Argentina,” Pasco said. “If we only make marginal changes in the peanut program, if we only change the fenders on the program, we will have the same problem that the auto industry had in the 1970s,” Pasco said.

Government policy that restricts crop production eventually shifts production overseas, as in the case of Brazilian soybeans, Pasco said.

Calling the cotton industry the “model of success,” Pasco pointed to the unified efforts of the peanut industry in the last several months regarding how policy is accomplished in Congress.

“It was like a collective sigh of relief from the House Specialty Crops Subcommittee when they saw all three segments of the peanut industry behind one proposal,” Pasco said.

In its concept paper for the writing of the farm bill, the House Agriculture Committee set aside $3.4 billion for reform of the peanut program. “This was the key regarding the move from the quota system to the marketing loan program,” Pasco believes. “The money set aside is like getting an A on your report card. You should commend your representatives in Washington for having the foresight to develop a marketing loan program that members of Congress can really get behind.” He encouraged peanut farmers and organizations to work to keep the money intact.

“While there continues to be some naysayers and others who choose to sit on the fence, I sense that there is real commitment on the part of this industry to come together,” Pasco said. “It's truly historic that all segments are behind the marketing loan.”

Peanut product manufacturers are “encouraged that the current commodity policy for peanuts is inconsistent with the existing course of world agricultural trade,” Pasco said. “U.S. peanut growers can no longer rely on a quota system with limits on domestic production.”

“Other commodity groups have already realized that it is not in their best interests to manage supplies by limiting planted acreage,” Pasco said. “The key exception is the U.S. sugar growers who continue to support severe supply controls and we know what a disaster that sector is going through with no hope for relief on the horizon.”

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