Peanut program losses increased during the 1970s. A large part of these losses resulted by design of the USDA during the Butz era, but the problem was compounded by farmers' rapid adoption of the high-yielding Florunner peanut.
Adoption of Florunner seed throughout the Southeast by 1975 played a major role in the 200 percent increases in the national peanut yield from 1960 to 1975. Reductions in the national poundage quota mandated in the 1977 law from 1.68 million in 1978 to 1.44 million tons in 1981 did not offset increased production for that period.
From 19701979 CCC losses totaled $577 million, compared to $298 million for the preceding decade.
As negotiations began on the 1981 farm bill, legislators exerted tremendous pressure to reduce the high program losses of the 1970s. They also had to fight philosophical objections to any program involving a quota system.
The peanut program was in deeper trouble than most realized when 1981 farm bill negotiations began. The National Peanut Growers Group, NPGG, presented its legislative proposals to House Agriculture Subcommittee Chairman Charlie Rose and to U. S. Senator Jesse Helms, chairman of the House Agriculture Committee, in February 1981.
The House and Senate committees used the NPGG legislative draft in March hearings.
The Peanut title was scheduled for floor debate in the Senate on Sept. 16. Early in the proceedings, Sen. Richard Lugar, R-Ind., presented an amendment to the Helms (NPGG) bill. The amendment, which calledfor an end to peanut quotas in 1982, passed.
Helms requested and was granted a brief recess in the deliberations, during which Sens. John Warner and Howell Heflin quickly assembled producers and producer leaders who had come to Washington for the floor debate to determine how to proceed. A compromise package was agreed upon with major emphasis on suspension of acreage allotments, which would create the opportunity for unlimited production of additional peanuts, by both quota and non-quota producers.
The compromise positions were described on a yellow tablet, which Heflin and Warner took back to the Senate floor and passed a new peanut program.
The battle in the Senate was only part of the story in 1981. One month later, on Oct. 15, the House, by a vote of 250159, adopted an amendment by Representative Stanley Lundine of New York to abolish peanut allotments and quotas, thereby permitting unlimited production of peanuts at a price to be established annually be the secretary of agriculture.
The fate of the 1981 peanut title of the farm bill was then up to the HouseSenate Conference Committee on Agriculture. With the strong support of Sens. Heflin and Helms and Congressmen Kika de la Garza, D-Texas, and Charlie Rose, D-North Carolina, the peanut program for 19821985 was saved — but not without sharp reductions in farm poundage quotas.
The substantial program losses occurring in the mid and late 1970s had focused attention on the need to reduce the quota peanuts surplus produced under the previous farm bill. For the 1982 crop, the national peanut quota was cut 240,000 tons, down 17 percent from a year earlier.
Further quota cuts were mandated throughout the life of the law, down to 1.1million tons in 1985. The 1985 quota level was actually below domestic edible and seed demand, requiring shellers to purchase additional peanuts at the quota price to fill the supply void.
On Nov. 10, 1981, the conference committee adopted the peanut title to the farm bill, including a 1.2 million pound national quota for 1982, $580 per ton quota support, unlimited production of additional peanuts, and various other changes.
Earlier the same day, the conference committee had rejected amendments by Congressmen Lundine and Paul Findley that would have phased out the program. But negotiations were still not over.
On Nov. 20, a last-minute effort by Congressman Rose and others prevented Congressman Findley from introducing a resolution on the House floor to instruct House conferees to return to the position of the Lundine Amendment (same amendment adopted by the House on Oct. 15 to eliminate peanut quota in 1982).
At midday Rose and Findley had completed an agreement calling for a reduction of national poundage quota to 1.1million tons by 1985 and a reduction in the quota support rate from $580 per ton to $550 per ton for 1982.
After Rose and Findley reached the agreement, the conference committee adopted the changes. On Dec. 8, the conference committee adopted the farm bill, including the peanut title.
On Dec. 16, the House adopted the farm bill. It should be noted, however, that during a long debate on the House floor that lasted until almost midnight, some legislators registered numerous complaints regarding the peanut program. Typical of the remarks were those of then Congressman James Jeffords of Vermont, as recorded in the Congressional Record Dec. 16, 1981:
“But the one that is really something is the one on peanuts. I mean, if you see what we did to peanuts. Take the House vote on doing away with the program, overwhelming. We came back with the program. That is bad enough. But do you know what they get in the first three years? Thirtythree percent increase; 33 percent.
“You know, I would love to be an opponent of you that are going to vote for this thing, having first voted to do away with it. Ask your consumers, your housewives, what they think about the price of peanut butter and say: “Well, I voted to increase that Program by 33 percent.
“I will tell you, I saw all those peanuts in the lobby. There are bags of them out there. They should have been gold peanuts; but let me tell you, these are unroasted peanuts. I understand they are hard to digest; but if you think these are hard to digest, wait until you try to ask your consumers to digest that peanut provision.”
“The House voted to reject the peanut support program by a vote of 250 to 159. The peanut support program is in the conference report, however, and has received an increase of 33 percent over three years. In 1982 alone, they will get an increase of 21 percent over the 1981 level.”
Following debate on the overall farm bill, the House approved the bill by a razor thin margin of 205203.
We devote so much space to the 1981 Farm bill to reflect the tremendous anti-peanut program sentiment that existed in both the House and Senate and how supporters of the program were able to turn initial defeats in both the Senate and House into victory in the final farm bill.
There is no question that the 1981 farm bill presented the greatest challenge ever for peanut producers and their allies. Producers in leadership roles learned that the opposition was very real and very strong.
They also learned that for the most part the loyalty and leadership of a small number of agriculturally oriented congressmen and senators was the prime factor in saving the program. Following the 1981 experience, Texas and Oklahoma peanut producers joined in the effort to organize and launch a Political Action Committee to bring about broader participation in the political process.
Effects of 1981 farm bill
Not surprisingly, the most adverse effect of the new law for quota growers resulted from the sharp reductions in quota poundage. An immediate reduction of 240,000 pounds from 1981 to 1982 was followed by successive cuts each year, so the 1985 national quota was down to 1.1 million pounds.
Reductions in the quota produced desired results in lowering program losses, which were essentially eliminated for crop years 1982, 1983 and 1984, totaling less than $15 million for the three crops.
The 1985 crop, however, created a substantial program loss of almost $45 million, directly attributable to an administrative decision in the USDA. In 1984 shellers contracted for more additional peanuts than the export market could utilize.
Shellers then requested that the USDA permit cancellation of export contracts and allow shellers to market those peanuts in the domestic edible market in order to reduce their losses. The USDA complied with the request.
A huge carryover of commercial stocks into the 1985 marketing year resulted in large quantities of 1985-crop quota peanuts going into loan and subsequently sold for crushing at losses to the CCC. That development, like the massive cost buildup on the 2001 crop, was not the producers' fault.
The 1981 farm bill peanut provisions effected a dramatic reduction in program cost and also brought a significant change in entry of new farms into the quota program. Under the provision providing for unlimited production of additional peanuts, new growers were able to accumulate planting history on more than 6,000 farms, which then became eligible for quota allocation.
Dr. Howard Hjort, the USDA Budget director at that time, predicted in a meeting with the NPGG leaders that producers would vote the program out in an official referendum because of the heavy quota reductions called for in the 1981 law.
That prediction proved wrong as the nation's quota producers voted in January 1982 by a majority of 93.9 percent of those voting to accept marketing quotas for the ensuing four years.
In all referenda prior to and following the 1982 vote, a total of sixteen during the 61-year program, producers voted convincingly to retain marketing quotas and price support.
Ross Wilson is the retired executive director of the Southwest Peanut Growers Association, Gorman. Texas. He prepared this series of articles on the history of the USDA peanut program at the request of Southwest Farm Press.