Peanut program should survive but needs fine tuning

GOOD NEWS for U.S. peanut farmers: You've come through another year without anyone in Washington taking shots at your program.

Observers from the U.S. Department of Agriculture, the Congressional agriculture committees and the peanut industry's own sources, indicate that the current feeling from legislators is that the peanut program works, costs the government nothing and is, in many respects, a model farm commodity supply management program.

Consequently, delegates to the recent annual meeting of the Southwestern Peanut Growers' Association in Wichita Falls, Texas, went home with some sense of well-being. At least for the moment.

Speakers cautioned against complacency, however, and urged growers to continue efforts to unite the entire industry, including manufacturers and shellers, to assure continued viability of the program and to work on fine-tuning current legislation to restore profits lost in the Freedom to Farm act.

Growers expressed concern that recent declines in peanut farmer numbers could continue, leaving domestic demand to foreign producers.

"We need to keep the peanut program intact," said Solomon Whitfield, deputy director of the Tobacco and Peanut Division, USDA. "It's working," he said. "The undersecretary says it is one of the most efficient programs in the USDA. It's the industry leadership and growers like you that make that happen. Integrity is the key. You have people of great character in the peanut industry."

Whitfield said the industry is more unified than ever, with shellers, manufacturers and growers cooperating on some important issues. But he agrees that farmers were hurt by changes in the program in the last farm bill.

"Farmers can't survive by breaking even," he said. "They have to make a profit. We need changes in the program to help farmers."

One of the crucial changes in the Freedom To Farm act was a reduction in support price, reflecting the cost of production, at the time. Due to inflation and reductions in quota the past few years, farmers have lost some 20 percent of their incomes. Many have not survived the cuts.

"Freedom to Farm hurt the South," said Larry Meyers, a Washington lobbyist for the Southwestern Peanut Growers' Association. "With that law, emphasis shifted to the Midwest."

HE SAID peanut support prices set at cost of production resulted in growers producing at a loss in many instances, based on inflation was not addressed adequately in the formula.

"We have legislators opposed to the philosophy of price controls," he said. "Some think it's unfair but do not realize the impact peanuts have on rural economies."

Meyers said the roller coaster ride other commodities are taking shows the instability possible in agriculture. "Folks are beginning to realize the value of consistent prices," he said.

Meyers said peanuts have two distinct advantages over some other program crops. "This is a no-net cost program. And peanuts are healthy."

Alan Mackey, a legislative aide for U.S. Rep. Larry Combest, R-Texas, says areas to watch in coming months are attempts by Congress to target benefits. "There is a feeling that payments go to too many large farms," he said.

"Also, some legislators want to tie benefits to conservation. Watch that closely. Such a program will be difficult to administer, and it could end up in the lap of the Environmental Protection Agency. It's a good concept, but we shouldn't put a commodity program in a box that will result in adverse effects down the road."

Christy Cromley, a legislative aide for Rep. Charles Stenholm, D-Texas, says the peanut program should survive. "It has been successful."

Meyers agrees. "I think the program will stay intact if you maintain the no-net cost stipulation. Failure of the entire industry to cooperate may jeopardize the program, too," he said.

"I get questions from other commodity organizations asking about the peanut program."

Meyers said one reason Congress has not come after the program, other than its success, is that legislators understand that "times are tough in agriculture. That has helped preserve successful programs."

He said the buyback issue, which allows farmers and shellers to buy non-quota peanuts out of the additional pool and sell as quota, needs to be adjusted to prevent abuse. Overuse of the provision, which was included in the program to assure ample supply of edible peanuts for domestic use, especially in low production years, results in oversupply and a lid on quota prices.

"There is a lot of discussion on the buyback," he said.

Changes in the multi-peril crop insurance program will benefit the peanut industry, Meyers said, and should reduce insurance fraud. "The changes include stiff penalties for agents, companies and growers who abuse the program," he said. "Also, stipulations that will allow farmers to reconcile yields will benefit growers."

Aflatoxin issues will continue to threaten the industry, he said. "Producing low quality peanuts will not improve markets."

Whitfield said the peanut industry needs to stand united to tell it's story. "There's a good story to tell about this industry," he said. "You just have to tell it to the right people."

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