Peanut farmers/shellers in Virginia working on differences

Two sectors of the peanut industry sit across the table from each other. One needs to grow peanuts; the other needs peanuts to shell. If a posture could tell the story before the meetings, it would be arms crossed at the chest.

The situation is much like two family members estranged through a change in dynamics. Through the work of a new commission, with a larger group in attendance, they're at the table, and they're talking.

Under a new dynamic, both sides have constraints that bottom line at the word “profit.” It all boils down to a contract.

Last year around this time folks were seriously discussing the demise of the peanut industry in southeast Virginia brought on by a new program. The talk still weighs heavy in the air. A guarantee of $610 per ton for quota peanuts declined to $355 per ton and opened peanuts up to the world of marketing with the signing of a new farm bill in May 2002. Mistrust and miscommunication were at a premium in the Virginia-Carolina region.

Today, growers and shellers are at least talking and working on solutions to keep Virginia in peanut production. Plenty of work remains.

For the growers, the solution would be a $500 contract. Shellers say they are working toward putting an acceptable contract together for growers. So far, in early 2004, that hasn't happened. “Just like in any negotiation, if you keep talking, there's always a chance,” says Joe Barlow, Sr., a farmer who sits on the Common Ground Commission for the Future of Agriculture.

“I'm not sure we're any closer to a solution,” Barlow Sr. says.

Through the work of the Commission, the two are at the table talking. The Commission is addressing a wide range of issues related to the future of agriculture, but peanuts are the priority at the moment.

Two seminars have already flowed out of the effort, the latest a risk management seminar in Franklin, Va. Shellers, lenders and Extension specialists on the program spoke to a crowd of about 300, the majority of whom were farmers. The Commission meets quarterly.

Many growers in the audience at that meeting came to hear news about contracts. They were still awaiting news of contracts at the end of January.

Among the positives coming from the Commission: Growers are looking closer at production costs and learning about growing and marketing peanuts in a new environment; there's productive talk of creating a value-added center, and promotion of a state program that would help rural banks finance growers and businesses.

“I honestly think that progress was made today,” said Mike Roberts, Virginia Tech farm management specialist, as he optimistically watched growers file out of an auditorium in Franklin, Va., in mid-January. “And I wouldn't be at all surprised to see our peanut acreage hold steady or go up a little when, as late as last week, producers were convinced they could not raise peanuts in southeast Virginia and, even if they did, the shellers would not pay for them.

“It was an epiphany that people were actually talking about working things out,” Roberts says.

From a farmer's perspective, a $500 contract would get a good amount of peanuts planted, Barlow Sr. says. “That's the goal for a contract. I'm not sure how much we can compromise on that.

“We're small producers, and grow 75 acres of peanuts,” Barlow Sr. says. “Depending on the contract, we'll grow between zero and 75 acres of peanuts this year.”

In late January, Golden Peanut Company was offering a $450 contract. Other shellers were waiting.

At the table grower and sheller representatives are working on the big picture of keeping peanuts and agriculture in general viable in southeast Virginia. “The most important thing that's happened from the Commission is the increased and improved communication between shellers and growers,” says Jim Pease, Virginia Tech Extension ag economist.

“It's clear that the shellers are actively participating,” Pease says.

“We're pretty open in the group and listen to each other,” says Barlow Sr., who farms with his son and his daughter-in-law on the edge of City of Suffolk and Isle of Wight counties in southeastern Virginia. “Past the group, I'm not sure producers are listening.”

Going into the meetings, there was a fundamental miscommunication and mistrust.

Animosity exists because of the dismantling of a program that worked for both growers and shellers — and, as one farmer put it, a reluctance to get on with life without a quota system.

“The shellers didn't understanding why we were losing acres in Virginia,” Roberts recalls, “and the growers didn't feel comfortable with contracts.

“We've moved quite a ways on that issue,” Roberts says. “Contracts being offered this year are a lot more representative of a well-functioning market.”

There's still an element of mistrust, Roberts says. “The shellers want to hold their cards close to the vest and not reveal contract offerings.

“Every day that goes by without a contract adds to the mistrust on the part of the farmer,” Roberts says.

“We're just waiting on a contract,” Barlow Sr. says. “Both sides are willing to keep talking, but that has to come to an end and offers have to be made relatively soon. Soybeans will be in competition for peanut acreage. I think shellers are making an effort to get a contract together.”

“The shellers want the growers to plant more — somebody's got to give,” Roberts says. “That's the biggest impediment.”

Roberts says a farmer can grow peanuts profitably under the new farm bill if they will manage cost of production. “The new peanut farm bill made cost of production one of the main elements to growing peanuts. That's the thing that consternates this area.”

Barlow Sr. believes those who can make big yields and keep production costs in line can make it in the new environment. Those growers who have “average” yields and high production costs won't be able to survive.

In North Carolina, the acreage shifted south to new growers. The same thing happened in South Carolina. “Virginia's acres had no place to transfer but out of state,” Roberts says.

When top growers started dropping plans to grow peanuts, it signaled a crisis, Roberts says.

Roberts and Virginia Extension ag economist Jim Pease created a stir last year when they issued a report that dubbed the situation “a farm crisis in southeast Virginia” brought on by a new peanut farm bill that took away quota as an anchor.

In some circles, the paper was cited as a reason for “scaring” peanut acreage out of Virginia. “Shellers said my budgets scared acres away,” Roberts says.

“It comes down to contracts not being enough to cover cost of production,” Roberts says. “Farmers look at the costs and returns in peanuts and realize that it's not enough.”

Citing the two-year decline in peanut acreage from more than 70,000 to around 33,000, Roberts issued a call-to-arms to stop the hemorrhaging. He and Pease won an award from the Virginia Association of Extension agents for the paper and were nominated for a top award at the annual American Peanut Research and Education Society meeting.

Essentially, the paper called for what has happened: Various sectors of the peanut industry meeting to talk about solutions.

At sessions last September and December, lenders, growers, shellers, manufacturers, legislators, Extension and research specialist and land-use experts met with Supreme Court-certified mediators. The groups selected four areas to focus on.

The groups whittled down the brainstorming and developed a strategic plan.

“One of the biggest things that came out of the second meeting was that everyone should be more educated,” Roberts says.

“The idea of a ‘train the trainers meeting, so to speak, (in December),’ came out of that,” Roberts says. “The whole group was on record being in support of more educational meetings.”

Roberts and Pease point out that the Commission is “self-directed. We just help facilitate the process.”

With a stamp of approval from Virginia's congressional delegation “for anything that will help rural Virginia,” the group has written letters in support of crop insurance for contract production. Already, Sen. George Allen, R-Va., and U.S. Rep. Randy Forbes, R-Va., have indicated they would support crop insurance for contract or cost of production.

The group also wrote letters asking for support from the Virginia Farm Bureau and Extension for a separate peanut specialist to focus on lowering the cost of production, and farm management agents who would work with scientists at research stations.

The Commission expressed its support for an idea introduced by Sharron Quisenberry, the new dean of the College of Agriculture at Virginia Tech. Quisenberry hatched the idea for a center for value-added innovative production that would build capacity among states.

Roberts and Pease see Quissenberry's vision as being something similar to the Texas A&M Ag Policy Center. “We could get all of these production budgets on a Web site and it could eventually evolve into an East Coast data base that would work through the Value-Added Center,” Roberts says.

“If you want to keep the land open, keep the farmer on the land,” Roberts says. “I don't mean subsidies. I mean access to capital in rural areas.”

Roberts has suggested the idea of a sheller fronting the grower under contract $100 a ton so he can plant the crop or work out a deal where he can get started at the beginning of the season. “In other words, help him get started at the first of the year,” Roberts says.

“That shows good faith and opens up the lenders to loaning money to producers,” Roberts says.

The Commission is also supporting the Capital Access Program, a state fund that allows rural banks to lend to small businesses and farmers. For every dollar that the state puts in, $4 returns to the state. The Virginia General Assembly approved the program, but was cash-strapped and didn't fund it last year.

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