Peanuts

A Brief History of the Peanut

Peanut butter seems like a quintessentially American food – what American school kid hasn’t packed a PB&J for lunch? (In fact, the average American child eats 1,500!) But peanuts have a global history. Originating in the Andes, peanuts played an important role in the cultures of South American civilizations. Spanish explorers brought them back to Europe, and they spread to Africa and Asia. They were not introduced to North America until the 1700’s, when Africans brought them across the Atlantic. They grew in popularity over the next two centuries, as technology for planting, harvesting, and shelling peanuts improved.

The Incas likely made an early version of peanut butter, which made its American debut at the 1904 World’s Fair. It was developed by series of physicians who refined peanut butter grinding machines and promoted it as a healthy alternative to animal protein. It was included in military rations during both World Wars, which boosted its popularity when troops returned home. (This phenomenon, of food and types of food processing popularized through use as rations, is not unique to peanuts.) Today, the US is the 3^rd largest peanut producer, lead by Georgia and Texas, and Americans eat almost 1.5 billions pounds of them every year.

Peanut Policy Today

In 2002, the Farm Bill - the huge piece of legislation that governs agriculture in the United States - was altered to remove the marketing quotas and geographic limits on peanut production. These, in addition to import restrictions, kept edible peanut prices at twice what they cost in the world market (peanuts could be sold for a lower price to be made into oil or animal feed). Previously, peanut farmers owned quotas that governed how much they were allowed to sell on the domestic market. They were guaranteed a certain price for this amount, which kept prices high. The USDA could raise or lower the quota as needed so that prices matched or exceeded an established minimum price for peanuts. These farmers received payments, known as “quota buyout payments” as the peanut price supports were eliminated, and producers are now eligible for same types of loans and direct payments as other crop producers. These include counter-cyclical payments, which means that they get payments if peanut prices fall below a certain level, as long as they have a history of growing peanuts, and decoupled direct payments, which guarantees them a set payment based on historical area and yield of peanuts, regardless of what they grow that year. They are also eligible for crop insurance, which guarantees them the price of a certain percentage of their expected harvest at market prices if they suffered damage from weather or other factors.

            These changes to the Farm Bill meant that restrictions on how much farmers could produce were removed, lowering market prices for peanuts. Initially this disrupted production, but led to greater competitiveness between producers. As a result, the number of producers dropped and average farm size and income increased. According to the USDA, the greater flexibility in planting and changes in the regions planting peanuts have led to more efficient production and higher yields. They explain:

“The marketing quota system for peanuts…kept prices artificially high, which undermined the competitiveness of U.S. producers relative to foreign producers and reduced incentives to lower costs and improve efficiency.”

As the graph below illustrates, this policy change resulted in a drop in peanut prices and an increase in demand for peanuts in the US. 

 

Why did this policy change happen? Policy changes for many reasons, often because groups who will benefit from the changes gain more political power, but not always. One of the reasons that policy changes were needed in the peanut sector is that, due to World Trade Organization and NAFTA agreements, the United States had to allow more peanuts to be imported. This increased the amount of peanuts available to buyers, lowering the price. In order to maintain a domestic peanut industry, more efficient production was needed. This policy change matters because it affects jobs in peanut farming and manufacturing, land use in peanut-producing states, and the price of foods that we eat every day, like peanut butter and many popular candy bars.

Weather is also of course an important factor, and droughts in 2011 in the Southeast resulted in a smaller crop and more expensive peanuts – by as much as 30%. Because prices were higher, more acres were planted to peanuts in 2012, and the large crop harvested brought prices back down. I’m glad about that! Peanut butter is one of my favorite foods, and lately I’ve been using it in an unusual way – soup!

African peanut soup

Ingredients

·      Two-inch piece ginger, minced

·      Four cloves garlic, minced

·      One chili pepper

·      One quart vegetable broth

·      One can chickpeas, drained

·      One 14 oz. can whole peeled tomatoes

·      ½ cup peanut butter

·      One large sweet potato, peeled and cut into ½ inch chunks

·      Olive oil

Directions

Heat two tablespoons olive oil in a large pot. Sauté garlic, ginger, and chili pepper until tender and fragrant. Add the tomatoes and juice, and mash with a potato masher into smaller pieces. Then add broth, chickpeas, and sweet potato. Simmer until the sweet potato is tender, then stir in peanut butter. Bring to boil and serve with good bread.

Note: you can add more peanut butter to make it thicker, and add any kind of vegetable you want. Bell peppers, zucchini, and squash would all be delicious!

Check out these websites for more information!

Indexmundi, a website with information on many types of commodities:

http://www.indexmundi.com/commodities/?commodity=peanuts&months=180

Two issues of Amber Waves, a USDA newsletter that reports on many issues related to agriculture and food policy:

http://www.ers.usda.gov/amber-waves/prior-issues-%28through-2003%29.aspx#Nov2004TOC

http://webarchives.cdlib.org/sw1vh5dg3r/http://ers.usda.gov/AmberWaves/December09/Features/PeanutTobacco.htm

A brief explanation of counter-cyclical payments: (USDA)

http://www.ers.usda.gov/topics/farm-economy/farm-commodity-policy/program-provisions/counter-cyclical-payments.aspx#.UqUZXI2qm9I

A brief explanation of direct payments: (USDA)

http://www.ers.usda.gov/topics/farm-economy/farm-commodity-policy/program-provisions/direct-payments.aspx#.UqUZ8I2qm9I