Plummeting peanut production pumps peanut butter prices
Posted November 2, 2011
Enfield, N.C. — This year’s plummeting peanut production has caused several peanut butter makers to raises prices. Peter Pan and JIF raised their wholesale peanut butter prices 20 percent Monday, while Smuckers introduced 30 percent price hikes Tuesday.
Bob Sutter, chief executive of the North Carolina Peanut Growers Association, says peanut production is down this year across the nation. At the beginning of the season, farmers figured they could make more money by planting other crops, he said.
“It's a matter of supply and demand,” Sutter said. “Cotton prices were high this spring, and that prompted farmers to plant cotton instead of peanuts this year.”
That, plus a bad drought in Texas, caused peanut supplies to be down 13 percent from last year. Sutter says consumers should get used to the higher prices.
“The price of peanut butter is not going to come back down until we get another crop,” he said.
That crop will come next fall. In Halifax County, farmer Jerry Hamill says Hurricane Irene caused him to have one of the worst crops he has ever seen. However, his 300 acres of peanuts have saved the season.
“The rain benefited the peanuts,” he said.
Almost all of Hamill’s peanuts will be ballpark peanuts – the kind roasted in the shell. The smaller peanuts used for peanut butter are grown mostly in the Deep South, but some North Carolina peanuts get mashed into butter.
“Just because (consumers) are paying what they think is a high price for peanut butter, I promise you the farmer isn't getting any of that increase,” Hamill said.
Sutter says prices for in-shell roasted peanuts will rise as well. Companies that package nuts for snacks say they are watching their competitors to determine whether price increases will be necessary.