By Erik Dohlman, Linwood Hoffman, and Edwin Young, Economic Research Service, USDA

With the recent (2002) elimination of the longstanding “marketing quota” system that supported domestic peanut prices at well above world levels, the U.S. peanut sector is in the initial stages of adjusting to a more uncertain, market-oriented environment. At the aggregate level, some early indications are that the adjustment process for U.S. peanut farmers has been difficult, resulting in deep losses of revenue and a rapid exit from peanut production by some producers.

In 2003, the value of U.S. peanut production was down 30 percent and prices fell by nearly 25 percent compared with 2001. U.S. peanut-planted acreage is at its lowest since 1915, and planted acreage has declined sharply in several important peanut producing states–55 percent in Virginia and nearly 40 percent in Texas since 2001.

Peanut production is concentrated geographically, with a relatively small subset of counties in just seven states accounting for a great deal of the output. As a result, changes to the peanut program have potentially important economic implications not just for the individual farm households that produce peanuts, but perhaps for some rural communities as well.

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