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Will drought in the South take the PB out of your PB&J?

Post by John Gillie / The News Tribune on Nov. 28, 2011 at 2:58 pm with No Comments »
November 28, 2011 3:04 pm

Peanut butter is disappearing from some food bank shelves in the Midwest as peanut butter manufacturers raise their wholesale prices by 20 to 40 percent.

But Northwest grocers say that while shelf prices are drifting upwards, don’t expect the lunchbox staple to disappear from shelves anytime soon.

John Boyle, senior vice president of sales and marketing for Metropolitan Markets, said peanut butter is still available in quantity though prices are increasing somewhat to reflect a smaller crop this year.

Sara Osborne, spokeswoman for Safeway in the Northwest, said that while supplies are tighter there’s still plenty of peanut to go around.

Peanut farmers say a combination of factors this year has put spot prices for peanuts in the stratosphere.

Peanut prices spiked to over $1,200 per 1,000 pounds (up from $465 in 2010) for runner peanuts, the kind used to make peanut butter, in mid-November. But the Georgia Peanut Commission says that prices doesn’t reflect the true cost of peanuts to food manufacturers.

Most peanut farmers contracted to sell their peanuts last spring before planting at a far lower price.

“A low supply of peanuts left from last year’s crop, poor market prices at planting and drought conditions throughout this year’s growing season have converged at one time to create a perfect storm that is driving up the price of peanuts,” said the commission. ” The tight peanut supply and the rules of supply and demand, not farmers, are responsible for higher prices consumers may experience.”

Most farmers contracted to sell their peanuts at a lower price last spring because they need a firm contract for purchase of their crops in order to get financing for the upfront costs of planting, growing and harvesting. When the weather remained dry in places such as Georgia and Texas where peanuts are grown, the crop volume fell and peanut prices for peanuts not under contract went up.

Those prices are declining now, and peanut farmers are expected to plant more acres next year.

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