By Hayley Boriss and Marcia Kreith, Agricultural Issues Center, University of California.
Revised September 2013 by Diane Huntrods, AgMRC, Iowa State University.
Peanuts (Arachis hypogaea) are thought to have originated in South America where they thrive in tropical and subtropical climates. Because the edible seeds of this annual legume (a member of the pea and bean family) plant start above ground but mature underground, peanuts are also known as groundpeas or groundnuts.
In the United States, peanuts were considered a regional food of the South until after the Civil War, when technological advancements resulted in an increased demand for peanut oil, peanut butter, roasted and salted peanuts, and confections. In addition, the noted scientist George Washington Carver identified numerous manufactured nonfood uses for the peanut and plant parts and encouraged plantings of peanuts as a rotational crop for cotton production, which expanded acreage in the early 1900s (American Peanut Council, Virginia-Carolina Peanut Promotions).
Peanuts have been marketed as a cheap source of protein compared to cheese and red meat and as a good source of essential vitamins and minerals. With decreasing prices and increasing production of peanuts, U.S. demand for peanuts has remained strong over the last decade and a half. Per person consumption of all peanut products was 6.4 pounds in 2008 (ERS). This is lower than the 1989 high of 7 pounds per person, although per person consumption has remained relatively stable since the mid-1990s.
The majority of consumption in the United States is attributed to peanuts used as a food source, as opposed to oil or meal, and peanut butter has been and remains the largest source of consumption on a per pound basis. Per capita consumption of peanut butter has remained stable since the mid-1990s, following a peak in consumption at 3.6 pounds per person in 1989. In 2007, peanut butter consumption was estimated to be 3.3 pounds per capita, or just over half of total peanut consumption. Peanuts consumed as snacks and in candy are also popular forms of consumption, with consumption per capita in 2008 at 1.4 and 1.1 pounds, respectively. (ERS)
Prepared from roasted peanuts, peanut butter can be eaten as is or added to a variety of food items.
Because refined peanut oil does not absorb food flavors and has a high smoke point, it is the frying oil preferred by many restaurants. Unrefined peanut oil is a popular choice for salad dressings, roasting vegetables and other uses where a healthy but flavorful oil is desired.
Defatted roasted peanut flour is a gluten-free source of protein. The flour can be used to thicken soups, fortify breads and pastries and coat meats and fish.
Peanuts have a high oil content (45%-52%) compared to many other oilseed crops. With a yield of 3,000 pounds per acre (see below) and a 70 grade (70% of the weight of the peanut in shell) and 50 percent oil content, peanuts could potentially produce 120 to 150 gallons of biodiesel per acre. The yield from peanuts is much higher than that of soybeans at 46 gallons per acres and corn at 18 gallons but lower than that of rapeseed, which yields 122 gallons per acre and of sunflowers, which yield 98 gallons. (University of Florida)
Some types of peanut plants are raised for hay and sold as bales, pellets or cubes. Peanut hay has also been used as ornamental material for turf. Peanut plants are also being used as a cover crop in citrus groves.
Peanut production is concentrated in three major geographic areas of the United States: the Southeast (Alabama, Florida, Georgia, Mississippi, South Carolina), the Southwest (New Mexico, Oklahoma, Texas) and Virginia and North Carolina.
The four types of peanuts grown commercially in the United States are the runner, Virginia, Spanish and Valencia. The runner type, used mainly for peanut butter, is the primary commercial peanut raised. This type makes up 80 percent of the country’s planted acreage, mostly in the Southeast. The Virginia type, grown mainly in Virginia and North Carolina for gourmet snacks, provides 15 percent of the U.S. crop. Spanish peanuts, commonly grown in Oklahoma and Texas for a variety of cuisines, provide 5 percent of the national crop. Valencia peanuts, raised almost exclusively in New Mexico, provide 1 percent of the crop. These peanuts are usually roasted and sold in their shells as well as used for all-natural peanut butter.
Total U.S. peanut production has varied, ranging from a high of nearly 5.2 billion pounds in 2008 to a low of around 3.3 billion pounds in 2002. U.S. production of peanuts jumped to more than 6.7 billion pounds in 2012, up from 3.7 billion pounds the previous year. With an average price of $0.34 per pound, the total value of the 2012 peanut crop was $2.3 billion, continuing the trend of higher prices and thus higher total crop value. (NASS 2013)
Georgia remained the leading peanut-producing state by far, reporting a crop of more than 3.3 billion pounds, followed by Alabama, which produced 876 million pounds; Florida, which produced 780 million pounds; and Texas, which produced 507.5 million pounds. North Carolina, South Carolina and Mississippi are also significant producers of peanuts. (NASS 2013)
Peanut yields continued to rise, increasing to 4,192 pounds per acre, up from 3,386 in 2011. Georgia recorded the highest average yield of 4,550 pounds per acre, an increase from the previous year. Mississippi recorded the second highest average yield of 4,400 pounds of peanuts per acre, also an increase from 2011. (NASS 2013)
According to USDA’s Foreign Agricultural Service (FAS), the United States is ranked third in terms of world production of peanuts. China is the largest producer of peanuts, with about double the production of India, the world’s second largest peanut producer.
The United States is a net exporter of peanuts. In 2012 peanut exports totaled more than $351.4 million in value, a 24 percent from 2011 and surpassing imports by roughly $161.8 million. (FAS 2012)
The largest export market for peanuts in 2012 was Canada, which purchased peanuts valued at more than $119.3 million, followed by Mexico, which purchased peanuts valued at nearly $78.5 million (FAS 2012). The U.S. reputation for high-quality products has facilitated exports to countries in the European Union and others, but phytosanitary requirements and aflotoxin contamination have become increasingly contentious issues in world peanut trade.
The United States also exported peanut oil valued at nearly $12.8 million in 2012, a triple-digit increase of 103 percent from 2011. The largest buyers were Canada, Italy, Hong Kong and Malaysia. Sales to Canada and Hong Kong both saw triple digit increases in 2011. (FAS 2012)
In 2012, the United States imported $189.6 million worth of peanuts, up from $67.4 million in 2011. The peanuts were purchased mainly from Argentina ($109.3 million and a 345 percent increase), followed by Mexico, China and Nicaragua. (FAS 2012)
Peanut oil, with a total value of nearly $15.6 million, was also imported in 2012. The largest purchases were made from Argentina (nearly $7.7 million) and Nicaragua (more than $6.2 million). (FAS 2012)
Government Subsidies and the 2008 Farm Act
The Food, Conservation, and Energy Act of 2008 (2008 Farm Act) provides peanut producers with access to marketing loan benefits, direct payments (DPs), counter-cyclical payments (CCPs) and average crop revenue election (ACRE) payments. In addition, many producers may benefit from subsidized crop and revenue insurance available under previous legislation, as well as from new permanent disaster assistance. Moreover, producers are affected by conservation and trade programs.
Under the 2008 Farm Act, all current peanut production is eligible for nonrecourse commodity loans with marketing loan provisions for crop years 2008 through 2012. The loan program provides short-term financing and assists producers when market prices are low. Because the loans are nonrecourse, producers may forfeit the crop rather than pay back the loan if prices fall below the loan rate plus interest. National loan rates for peanuts are $3.55 per ton until 2012.
Direct payments and CCPs are available to eligible peanut landowners and producers who enter into an annual agreement with USDA's Farm Services Agency (FSA). For crop years 2008 through 2012, peanut DPs are made at the fixed rate of $36 per ton. For producers with eligible historical peanut acreage, CCPs are paid whenever a commodity's target price is greater than the calculated effective price for that commodity. For peanut producers, the target price is $495 per ton and the maximum CCP is $104 per ton.
The ACRE program is a new program in the 2008 Farm Act, and like DPs and CCPs, is administered by FSA. Beginning in 2009, peanut producers can elect this revenue-based, counter-cyclical program, which is an alternative to receiving CCPs. Once in ACRE, producers must remain in the program through 2012 and need to enroll annually to receive payments. Producers who choose to participate in ACRE also face reduced DPs and lower marketing assistance loan rates. (ERS)
Global Ag Trade System, Foreign Ag Service (FAS), USDA.
Oil Crops Yearbook, ERS, USDA.
Production of Biofuel Crops in Florida: Peanut, Florida Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida, 2008.
A Short Peanut History, Virginia-Carolina Peanut Promotions.
Created February 2006 and revised September 2013.