Central Texas peanut producers updated on insurance and base price

By MANDY JOHN | Central Texas Edition

Dr. Ken Stokes explained the economic issues concerning peanuts at the Cross Timbers Peanut Shortcourse, which was held in De Leon on Feb. 11 -- Photo by Mandy John

February 20, 2003 -- Commanche, Eastland, and Erath counties held the Cross Timbers Peanut Shortcourse, on Feb. 11 in De Leon. During this shortcourse, Dr. Ken Stokes, Extension economist with Texas A&M University, talked about the economic issues concerning peanuts, including crop insurance changes and what to do with the base price of peanuts.

Dan Hunter, manager with the Southwestern Peanut Growers, was also available to discuss the importance of joining the cooperative marketing association.

"The one thing I need to do up front is I need to find out what you do know and what you don't know about crop insurance," Stokes said. "With the peanut program, the quota system is being eliminated and peanuts are being brought under the same provisions as other crop programs."

He said that with peanuts, producers share in both the risk of production and the share of the crop. "Two options you must choose is whether you want direct payment on your crop, which is a fixed payment, or a counter-cyclical payment. With this type of payment, the amount you get paid is based on if the prices go up or down.

"Having a market loan is a way of protecting yourself in the peanut production business. If you can't afford to grow peanuts, then you shouldn't grow them. You must be able to afford working in this business."

Stokes said that a problem with decided on what will happen with the market is that there is fluctuation all the time, affecting both the rates and the prices.

"In terms of the assignment of a peanut base, the deadline is set for Mar. 31 and you can assign a cropland on your own farm or another farm. I think it's a risky deal, though, to transfer the peanut base to another farm; it's a lot better to put it on your own land. I don't understand why anyone would sell at base, though," he ended.

"The number one thing to realize is how the peanut program is run this year might not be the same way that it is run next year," stated Hunter. "The Southwestern Peanut Growers is an organization here to help you, the peanut farmer.

"I want to talk to you about the CMA, which is the cooperative marketing association. This gives you a legal entity to market your crop cooperatively and offers you the benefits associated with marketing peanuts.

"When you decide which way to market, we can provide you the same services as your county office. We can also process your loans very quickly."

He said that producers and buyers are all trying to make it work in the peanut industry. "The market loan will be a tool for producers, buyers, and even marketers to use and it will essentially benefit all three groups.

"The big animal out there right now that we need to control is the national posted price. It's important to get some transparency in the market.

"For those of you who are going to grow peanuts, when you sign a contract, you are guaranteed a price. There is no going up on the market price. You will sell your peanuts at a locked price.

"For those of your that will not sign a contract, you are going to receive the benefits of an alternative market. I am not saying one is better than the other, these are just your two options.

"I do encourage you to market peanuts through a co-op, because it will only benefit you in the long run."