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New Mexico State University

New Mexico State University

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Farm Bill Takes Bite Out of Peanut Acreage

CLOVIS - Farmers across eastern New Mexico's peanut country are anticipating this year's harvest will be cut almost in half because of a dry summer and elimination of a quota system in last year's farm bill, New Mexico State University experts said.

Floyd McAlister, Roosevelt County agricultural agent with New Mexico State University's Cooperative Extension Service, says the state's Valencia peanut crop will be down by near half this season. A large part of the drop-off can be attributed to the elimination of a quota system in last year's sweeping farm bill. (07/02/2003) (NMSU Agricultural Communications Photo by J. Victor Espinoza)

Until this season, New Mexico's peanut producers grew more than 80 percent of the nation's Valencia peanuts, the kind popular for eating right out of the shell. Valencias, sometimes called ballpark nuts, account for less than 1 percent of U.S. peanut production, but they've been a financial mainstay for many farmers here for more than five decades.

Known for their sweetness, Valencias usually have three or more kernels per pod. Well suited to the eastern New Mexico region, the red-skinned peanuts have a shorter growing season than the three other market types: runner, Virginia and Spanish peanuts.

"In our county alone we're down to about 8,000 acres," said Floyd McAlister, Roosevelt County agricultural agent with NMSU's Cooperative Extension Service. "It wasn't that many years ago that we were producing 15,000 acres. Peanuts are a breakeven crop now at best and that sure takes the fun out of it."

The 2002 Farm Bill signaled the end of an era for New Mexico's peanut producers, said Rhonda Skaggs, an agricultural economist with NMSU. The law calls for the government to buy out farmers' peanut quotas over five years, replacing the quota program with a policy similar to those for grains in past years, she said.

The changes have shelled production in New Mexico where the peanut crop has dropped from 22,000 acres valued at $17.5 million in 2001 to 18,000 acres valued at $10 million last year. The price support under the old farm bill was $630 a ton, but under the current version it fell to $330 a ton, barely enough to cover production costs, McAlister said. In addition, some producers are getting cash from a U.S. Department of Agriculture peanut buyout program, which replaced the peanut quota system.

Valencia peanuts have been an almost perfect niche crop for eastern New Mexico, particularly Roosevelt, Curry and Lea counties, said Naveen Puppala, a peanut breeder with NMSU's 164-acre Agricultural Science Center at Clovis. Valencias do so well in the Clovis-Portales area because they face much less disease pressure than in other states, he said. Valencias also thrive in the area's sandy soils.

In eastern New Mexico, only 4,800 acres of the peanuts were grown under quota. But farm program stability and demand for Valencias kept prices up as eastern New Mexico farmers struggled with drought and low grain and cotton prices. "Raising peanuts has kept the irrigated producer in business," McAlister said. "It wasn't highly profitable, but it was a consistent money maker."

With so much uncertainty on the horizon, many New Mexico farmers this spring dropped peanuts in favor of cotton, McAlister said. Meanwhile, he said, some West Texas producers are taking up part of the Valencia slack.
According to the U.S. Department of Agriculture, nine states produce peanuts: New Mexico, Alabama, Florida, Georgia, North Carolina, Oklahoma, South Carolina, Texas and Virginia. Georgia leads the U.S. peanut world with 510,000 acres valued at $229 million last year.

Peanuts and peanut butter are among America's most popular foods. Americans consume more than six pounds of peanuts and peanut products every year, said the Virginia-based American Peanut Council, an industry trade group.