World Agricultural Economic and
Environmental Services (WAEES)
U.S. Peanut Industry Profile
Patrick M. O’Brien
December, 2013
Game Plan
2013/14 Summary
2014/15-2020/21 Baseline
Make-or-Break Variables
Cost of Production
Exports
2013/14 Summary
Receipts $/ac
Returns over Variable $/ac
Area Harvested mil/ac
Yield lb/ac
Production mil/lb
Total Use mil/lb
Export mil/lb
Farm Peanut Price c/lb
Peanut Oil Price $/lb
10/11
11/12
12/13
13/14
748
272
1,255
3,312
4,157
4,534
606
22.6
82
1,077
526
1,081
3,386
3,659
4,415
535
31.8
102
1,152
585
1,594
3,832
6,108
4,966
777
30.1
100
836
264
1,304
3,567
4,665
5,097
814
23.4
98
20/21
19/20
18/19
17/18
16/17
15/16
14/15
13/14
12/13
11/12
10/11
09/10
08/09
07/08
06/07
05/06
04/05
03/04
02/03
01/02
00/01
99/00
98/99
97/98
96/97
95/96
94/95
93/94
92/93
Peanut Receipts (Blue) and Returns (Red) Per Acre ($)
1400.00
1200.00
1000.00
800.00
600.00
400.00
200.00
0.00
20/21
19/20
18/19
17/18
16/17
15/16
14/15
13/14
12/13
11/12
10/11
09/10
08/09
07/08
06/07
05/06
04/05
03/04
02/03
01/02
00/01
99/00
98/99
97/98
96/97
95/96
94/95
93/94
92/93
Peanut Producer’s Income After Cash
Costs ($ million)
$1,000,000
$900,000
$800,000
$700,000
$600,000
$500,000
$400,000
$300,000
$200,000
$100,000
$-
2014/15-2020/2021 Baseline
Average 2014/15-2020/21
Receipts $/ac
Returns over Variable $/ac
Area Harvested mil/ac
Yield lb/ac
Production mil/lb
Total Use mil/lb
Export mil/lb
Peanut Price c/lb
Peanut Oil Price $/lb
920 Large Volume/Disappointing Prices
325 Add COP Erosion in Returns
1,300
3,785 Trend Slowing in Percentage Terms
4,950
5,000 Population Growth/Stable Exports
765 Retrenchment at 12/13 & 13/14 Levels
24.3 Large Supplies/Stock Efficiency Gains
105 Spill Over Impact/Premium Position
Make-Or-Break Variables--COP
Cost of Production Spill Over
Input intensive nature of peanut production drives
costs of production up faster than producer prices
even after adjusting for increases in yield
Corn versus Peanut Unit Costs of Production
Demonstrate a). spill over of costs from general
farm economy and b). impact of slower yield growth
for peanuts on unit costs
20/21
19/20
18/19
17/18
16/17
15/16
14/15
13/14
12/13
11/12
10/11
09/10
08/09
07/08
06/07
05/06
04/05
03/04
02/03
01/02
00/01
99/00
98/99
97/98
96/97
95/96
94/95
93/94
92/93
Peanut Costs of Production Per Acre ($)
650.00
600.00
550.00
500.00
450.00
400.00
350.00
300.00
Make-Or-Break Variables--Exports
Exports
Most Variable Element in Peanut Accounts
Positive Factors: Slowing Growth in Production
relative to Growth in Demand abroad
Negative Factor: High U.S. prices make the U.S. the
residual supplier in the current market setting
Options for Expanding Export Growth: Making the
U.S. the preferred supplier in the high-end
market where quality commands buyer loyalty
and price premium
19/20
18/19
17/18
16/17
15/16
14/15
13/14
12/13
11/12
10/11
09/10
08/09
07/08
06/07
05/06
04/05
03/04
02/03
01/02
00/01
99/00
98/99
97/98
96/97
95/96
94/95
93/94
92/93
Peanut Exports (1,000 tons)
1000
900
800
700
600
500
400
e.g…the China Market for Peanut Oil
General Chinese Appeal:
Income Distribution
1.3 billion with Incomes of $3,388
160 million in Middle Class with Incomes of $9,912
Middle Class Characteristics
Interest in Consumer Goods Exploding
From 1% of auto sales in 2000 to 13% currently
700 million cell phone subscribers
Shopping as Favorite Leisure Activity (9.8 vs 3.6 hours
per week)
e.g…the China Market for Peanut Oil
Middle Class Characteristics
Food Quality and Safety Concern
50-75% convinced that food supply is not safe
French Hagen Daaz Ice Cream
35 Yuan ($6) for 2 oz. cup (Brand Recognition with
Mixed Chinese/English Labeling/No
Counterfeits)
New Zealand Fresh Milk
36 Yuan (vs 12 Yuan) per liter (New Zealand Package/
48-hour Freshness Guarantee/Quality-Safety
Assurance/No Counterfeits)
e.g…the China Market for Peanut Oil
“America’s Finest” Brand
Sensitivity to Chinese Measures of Quality/Safety
Identity Preservation
Bulk with Licensed Distributor or Pre-packaged
Licensed Distribution/Retail Marketing
Stay out of common marketing channels/specialized
supermarket channels
Expect 3-5 Year Brand Building Effort
Consider Cooperative Marketing Effort for “America’s
Finest” as umbrella brand