Progress 09/15/01 to 09/30/04
Outputs
The Peanut Center has worked on several projects this year. One of the research projects dealt with examining the price transmission from the reduction in farmer peanut prices to the peanut butter consumers. The dataset used was the monthly price data for the period from 1984-1999 on shelled peanut prices from USDA Peanut Market Summary reports. The monthly peanut butter prices and the prices of other peanut processing products are reported by the Bureau of Labor Statistics. Regressions were performed testing asymmetry from peanut prices to wholesale peanut butter prices and from wholesale peanut butter prices to retail peanut butter prices. Another study explored the factors affecting household consumption of in-shell peanuts, with special attention paid to the effects of three nutritional attributes: protein, calories and saturated fat. The data was from a nationwide telephone survey of household peanut consumption. An ordered probit model was specified to explore
the factors. Research was also conducted to analyze consumer preference for various types of snack peanuts. The data was from a nationwide survey of snack peanut consumers. A multinomial logit model was estimated to explore the factors.
Impacts
Results indicate that for the period of 1984-1999 that there were both long- and short-term price transmission asymmetries observed in the peanut butter processing industry. Thus, any price decrease of farmer stock peanuts is not likely to be entirely passed on to the final consumers of peanut butter. Nutrition consideration plays an important role in in-shell peanut consumption. Thus, nutritional education is a very important program for the peanut industry.
Publications
- Branch, W.D. and S.M. Fletcher. 2004. Evaluation of Advanced Georgia Peanut Breeding Lines with Reduced-Input and Without Irrigation. Crop Protection 23:1085-1088.
- He, S., S.M. Fletcher, and A. Rimal. 2004. Nutrition Consideration in Food Choice. Journal of Food Distribution Research 35(1):124-126.
- He, S., S.M. Fletcher, M.S. Chinnan, and Z. Shi. 2004. Factors Affecting School Students Consumption of Peanut Butter Sandwiches. Journal of Food Distribution Research 35(1):112-117.
- Fletcher, S.M. and C.L. Revoredo. 2004. Does the US Need the Peanut Tariff Rate Quota Under the 2002 US Farm Act? 2003 Georgia Peanut Research Extension Report, UGA/CPES Research-Extension Publication No. 2-2004, pg. 10.
- Fletcher, S.M. and C.L. Revoredo. 2004. Supplier Reputation and Price Premium: The Case of Peanuts in Rotterdam. 2003 Georgia Peanut Research Extension Report, UGA/CPES Research-Extension Publication No. 2-2004, pg. 11.
- He, S., M.S. Chinnan, and S.M. Fletcher. 2004. Factors Affecting School Students Consumption of Peanut Butter Sandwiches. 2003 Georgia Peanut Research Extension Report, UGA/CPES Research-Extension Publication No. 2-2004, pg. 12-13.
- Luke-Morgan, A., S. Fletcher, J.W. Todd. 2004. Tomato Spotted Wilt Virus: Economic Impact of Management Options Using a Resistant and Susceptible Cultivar, 2003 Georgia Peanut Research Extension Report, UGA/CPES Research-Extension Publication No. 2-2004, pg. 14-15.
- McCorvey, A.E., A.S. Luke-Morgan, and S.M. Fletcher. 2004. Comparison of Returns Above Variable Cost Given Potential 2004 Commodity Price Scenarios for the Southeastern Representative Peanut Farms. 2003 Georgia Peanut Research Extension Report, UGA/CPES Research-Extension Publication No. 2-2004, pg. 16-17.
- McCorvey, A.E., A.S. Luke-Morgan, and S.M. Fletcher. 2004. Impact of the Financial Viability of Southeastern Representative Peanut Farms of Potential Yield Restricting Factors. 2003 Georgia Peanut Research Extension Report, UGA/CPES Research-Extension Publication No. 2-2004, pg. 18-19.
- Revoredo, C.L. and S.M. Fletcher. 2004. Does the Existence of Market Power Affect Marketing Loan Programs? 2003 Georgia Peanut Research Extension Report, UGA/CPES Research-Extension Publication No. 2-2004, pg. 20.
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Progress 01/01/03 to 12/31/03
Outputs
The Peanut Center has worked on several projects this year. The Center is continuing to analyze the economic impact from the UGA TSWV Risk Index in regards to promising breeding lines, tillage methods, planting patterns and planting date. Research was conducted on a TSWV index extreme situation of planting out of the window using resistant cultivar and planting within the window using a susceptible cultivar. The Center expanded their peanut representative farms to eleven and updated them in 2003. Each farm was developed by a panel of approximately six producers of similar size, geographic location and production practices to derive a consensus farm. Pro forma financial statements were developed. These farms are being used to analyze the impacts of potential adoption of alternative production technologies, environmental regulations, water usage and policy implications on the economic viability of the peanut sector. Using these representative farms, the potential impact
of additional alternative payment limitation options were analyzed and presented to Congress. Depending on which payment limit option is used for direct payment and counter-cyclical payment, the number of farms within the limit ranged from zero to ten for the farm entity alone. Another area of research utilizing these farms was the examination of the financial viability of them if water restrictions were mandated. Water restrictions would impact yields which were analyzed at a 10% and 20% reduction. With the new 2002 Peanut Program, peanut buying points were in for a major change. A survey was conducted to collect information on buying points facilities and operations. Preliminary results indicate that the return above total cost for the representative peanut buying point under various scenarios considered ranged from a loss of $(2.50)/ton to a profit of $5.42/ton. Furthermore, results indicate that the previous loan handling and storage fees were too low to operate at a profitable
margin. A peanut cost of production survey was conducted in the Southeast for the 2001 crop year. A survey instrument was developed based on previous USDA peanut COP survey instruments. Georgia NASS conducted the survey. The data is currently being assimilated and analyzed. Reports will be forthcoming in 2004. Research was also conducted on the factors affecting school students consumption of peanut butter sandwiches. A survey was conducted of school age children.
Impacts
While research on Georgia peanut buying points indicated a positive profit per ton, those profits may still be too low to ensure long term economic viability. Thus, the return on initial capital investment was analyzed. Under the 2002 FSRI Act, the representative peanut buying point had a return on investment of only approximately 1.5%.If the economic capacity was increased from the standard 69% level to a level of 95%, the return on investment would increase to about 5%.These returns on investment do not indicate a profitable business venture relative to other investment opportunities. In regards to TSWV, research validates the importance of both the cultivar selection and the planting date, especially when more than one component of the index is pushed to the extreme. Water restrictions had a major impact on the peanut representative farms financial viability. For a 10% yield reduction, net cash farm income of all the farms were reduced by 50.5% relative to the
benchmark. Approximately 82% of the surveyed school children eat school lunches but only 41% liked the taste of the peanut butter sandwiches served at school. To increase the level of peanut butter sandwiches consumed at school, the sandwiches taste needs to be improved significantly.
Publications
- He, S., S.M. Fletcher, and A. Rimal. 2003. Consumer Evaluation of the Desirability of Four Types of Information on Food Labels. Journal of Food Distribution Research 34(1):69-71.
- He, S., S.M. Fletcher, and A. Rimal. 2004. Nutrition Consideration in Food Choice. Journal of Food Distribution Research 35(1) in press.
- He, S., S.M. Fletcher, M. Chinnan, and Z. Shi. 2004. Factors Affecting School Students Consumption of Peanut Butter Sandwiches. Journal of Food Distribution Research 35(1) in press.
- Revoredo, C.L. and S.M. Fletcher. 2003. Supplier Reputation and Price Premium: The Case of Groundnuts in Rotterdam. Proceedings of 83rd EAAE Seminar Food Quality Products in the Advent of the 21st Century: Production, Demand and Public Policy. British Food and Scandinavian Food Journal (In press)
- Luke-Morgan, A.S., S.M. Fletcher, and A.E. McCorvey. 2003. Farm Commodity Payment Limits: What Does This Mean for Southeast Peanut Farms? 2002 Georgia Peanut Research Extension Report, UGA/CPES Research-Extension Publication No. 2-2003, pg. 4-11.
- Luke-Morgan, A.S., S.M. Fletcher, and A.E. McCorvey. 2003. SoutheasternRepresentative Peanut Farms Established and Updated Through the National Center for Peanut Competitiveness, 2002 Georgia Peanut Research Extension Report, UGA/CPES Research-Extension Publication No. 2-2003, pg. 12-18.
- Revoredo, C.L. and S.M. Fletcher. 2003. Assessing the Price Competitiveness of Argentinas Peanuts in the US Market After Argentinas Currency Devaluation, 2002 Georgia Peanut Research Extension Report, UGA/CPES Research-Extension Publication No. 2-2003, pg. 16.
- Revoredo, C.L. and S.M. Fletcher. 2003. The US 2002 Farm Act: The Potential Effect on US Peanut Exports, 2002 Georgia Peanut Research Extension Report, UGA/CPES Research-Extension Publication No. 2-2003, pg. 17.
- Subramaniam, V., N.B. Smith, A.K. Culbreath, S.M. Fletcher, D. Gorbet, S. Holbrook, R. Pittman, B. Branch, J. Todd, E. Cantonwine, and S. Gremillion. 2003. The Economic Impact of Different Fungicide Schedules on Various Peanut Genotypes in Southern Georgia, 2002 Georgia Peanut Research Extension Report, UGA/CPES Research-Extension Publication No. 2-2003, pg. 18-21.
- Subramaniam, V., N.B. Smith, S.C. Phatak, S.M. Fletcher, A.K. Culbreath, B. Branch, J.R. Dozier, and A.G. Bateman. 2003. An Economic Evaluation of Different Schedules of Chlorothalonil and Tebuconazole Sprays on Non-Irrigated Conservation Tillage Peanuts, 2002 Georgia Peanut Research Extension Report, UGA/CPES Research-Extension Publication No. 2-2003, pg. 22-27.
- Webb, L.D., S.M. Fletcher, N.B. Smith, and A.S. Luke-Morgan. 2003. The Impact of the 2002 Farm Security and Rural Investment Act on the Economic Viability of Peanut Buying Points in Georgia, 2002 Georgia Peanut Research Extension Report, UGA/CPES Research-Extension Publication No. 2-2003, pg. 28-31.
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Progress 01/01/02 to 12/31/02
Outputs
The Peanut Center has worked on several projects this year. The Center is continuing to analyze the economic impact from the UGA TSWV Risk Index in regards to promising breeding lines, tillage methods, planting patterns and planting date. The Center has established ten representative peanut farms throughout the Southeast. Each farm was developed by a panel of approximately six producers of similar size, geographic location and production practices to derive a consensus farm. Pro forma financial statements were developed. These farms will be used to analyze the impacts of potential adoption of alternative production technologies, environmental regulations, water usage and policy implications on the economic viability of the peanut sector. Using these representative farms, the potential impact of the alternative payment limitation options were analyzed and presented to Congress. Depending on which payment limit option is used for direct payment and counter-cyclical
payment, the number of farms within the limit ranged from zero to nine for the farm entity alone. If the three entity rule or spousal rule was considered, the range was from three to all ten farms within the limits. In regards to the marketing loan benefits limit, the number of farms within the payment limit ranged from one to ten for the various proposals. This points out the importance of the generic certificates. With the new 2002 Peanut Program, peanut buying points were in for a major change. A survey was conducted to collect information on buying points facilities and operations. If there previous fee structure was maintain, they would not generate enough income to be profitable and maintain economical viability. Based on the survey, the cost of handling and storage was estimated to range between $50 and $63 per ton depending on whether cleaning and drying services are offered. With the new peanut program, peanut producers and leaders wanted to know if the industry was better
off with the new program relative to the old program. The peanut representative farms were used to compare potential peanut gross revenue for the two programs. The economic viability of the peanut producers were not considered. The preliminary analysis indicate that the peanut gross revenue generated under the 2002 farm bill is substantially greater than what might have been generated under the 1996 FAIR Act. A peanut cost of production survey was conducted in the Southeast for the 2001 crop year. A survey instrument was developed based on previous USDA peanut COP survey instruments. Georgia NASS conducted the survey. The data is currently being assimilated and analyzed. Reports will be forthcoming in 2003.
Impacts
When constant peanut production is considered and aggregated over the six years of the 2002 Farm Bill, the aggregate benefit of the 2002 fill over the 1996 bill ranges from $81,100 to $797,000 per representative farm if the producer receives the decoupled payments equal to the proportion of cropland owned. If the producer receives 100% of the decoupled payments, those figures rise to $246,000 to $1,548,400 for the aggregate over the years 2002-2007.
Publications
- Baldwin, J.A., J.W. Todd, J.R. Weeks, D.W. Gorbet, A.K. Culbreath, A.S. Luke-Morgan, S.M. Fletcher, and S.L. Brown. 2002. `A Regional Study to Evaluate Tillage, Row Patterns, In-furrow Insecticide, and Planting Date on the Yield, Grade, and Tomato Spotted Wilt Incidence of the Georgia Green Peanut Cultivar.' 2002 Peanut Update, The University of Georgia Cooperative Extension Service, College of Agricultural and Environmental Sciences. Pp. 19-21.
- Revoredo, C.L. and S.M. Fletcher. 2002. `World Peanut Market: An Overview of the Past 30 Years,' UGA/CAES Research Bulletin 437.
- Fletcher, S.M., 2002. `Peanuts: Why the Policy Debate in Georgia?' 2001 Georgia Peanut Research Extension Report-UGA/CPES Research-Extension Publication NO. 2-2002.
- Luke, A.S., Fletcher, S.M., Baldwin, J.A., Martin, N.R., Shurley, W.D. 2002. `Twin versus Single Row: Will the Increase in Yields Justify the Additional Cost?' (1998), 2001 Georgia Peanut Research Extension Report-UGA/CPES Research-Extension Publication NO. 2-2002.
- Luke, A.S., Fletcher, S.M., Todd, J.W., Martin, Culbreath, A.K., Gorbet, D.W., Baldwin, J.A., Brown, S.L. 2002. `Economic Analysis of Validation Experiments for the UGA TSWV Risk Index Components (1999),' 2001 Georgia Peanut Research Extension Report-UGA/CPES Research-Extension Publication NO. 2-2002.
- Hancock, S.J., Ray, T.S., Fletcher, S.M., Thomas, W.A. 2002. `New Generation Cooperatives (NGCs): A Feasible Solution to Georgia Peanut Marketing?' (1999), 2001 Georgia Peanut Research Extension Report-UGA/CPES Research-Extension Publication NO. 2-2002.
- Luke, A.S., Fletcher, S.M., Todd, J.W., Baldwin, J.A., Gorbet, D.W., Weeks, J.R., Culbreath, A.K., Brown, S.L. 2002. `A Regional Planting Date Study: Georgia Green and TSWV-More Than Yield Management,' (1999) 2001 Georgia Peanut Research Extension Report-UGA/CPES Research-Extension Publication NO. 2-2002.
- Luke, A.S., Fletcher, S.M., Todd, J.W. 2002. `An Evaluation of At-Plant Insecticides and Net Returns,' 2001 Georgia Peanut Research Extension Report-UGA/CPES Research-Extension Publication NO. 2-2002.
- Fletcher, S.M., Hancock, S.J., Ray, T.S., Thomas, W.A. 2002. `Vertical Integration Through Cooperation: Opportunities for Georgia's Peanut Producers to Capture Profits from Soil to Shelf,' 2001 Georgia Peanut Research Extension Report-UGA/CPES Research-Extension Publication NO. 2-2002.
- Hancock, S.J., T.S. Ray, S.M. Fletcher, and W.A. Thomas. 2002. `Peanut Producer's Perceptions and Attitudes Toward Alternative Marketing Institutions.' UGA/CAES Research Report No. 679.
- Revoredo, C.L. and S.M. Fletcher. 2002. `Speculative Inventories, Contracts, and Product Differentiation: Explaining the Decreasing Variability in the World Peanut Price.' Proceedings of the 8th International Conference on Computing in Economics and Finance, Aix-en Provence, France, June 2002. https://gemini.econ.umd.edu/cgi- bin/conference/download.cgi?paper_id=238
- Revoredo, C.L. and S.M. Fletcher. 2002. `Role of a Forward Contract under New Peanut Policy Environment.' Proceedings of the 2nd Workshop on Economics of Contracts in Agriculture, Annapolis, U.S., July 2002. http://www.arec.umd.edu/Policycenter/contractsinag/papersfolder/revor edo-and-fletcher.pdf )
- Fletcher, S.M. 2002. `'`Peanuts: Responding to Opportunities and Challenges from Intertwined Trade and Domestic Policies.' Conference on `Free Trade of the Americas, the WTO, and the New Farm Bill, San Antonio, TX. http://cnas.tamu.edu/publications/powerpoint/papers/Fletcher.pdf
- Rimal, A.P. and S.M. Fletcher. 2002. `Snack Peanuts Purchase Pattern: Effects of Nutrition Consideration and Household Characteristics.' `Journal of Agriculture & Applied Economics. 34(1):51-65.
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Progress 01/01/01 to 12/31/01
Outputs
The Peanut Center has worked on several projects this year. The Center is continuing to analyze the economic impact from the University of Georgia TSWV Risk Index. Data being analyzed includes an index continuation/validation study considering current cultivars and selected promising breeding lines under single and twin row patterns and with and without the at-plant insecticide Thimet. Research is also being conducted on an index extremes study, which considers certain key factors of the index at extreme conditions to determine the impact on production and economic factors. The Field Adaptive Research Model (FARM) is continuing to be analyzed with tests being conducted in Georgia and Alabama. The Center has continued the development of FARMCATS as a tool to help producers track and organize real time cost and production data. The program has been distributed to producers in Georgia, Florida, Alabama, North Carolina and Texas. The Peanut Center has conducted a study on
potential benefits from vertical integration through cooperation for peanut producers. A major component of this study was a benefit-cost analysis. This analysis focused on a ten year projected budget, the earnings per share discounted to year 1, and the benefit-cost ratio. The benefit-cost study revealed that forming a new peanut cooperative shelling plant could be an economically viable option. The per share member investment was calculated to be $151 to $161. The projected benefit-cost ratios ranged from 2.12 to 1.68 over a ten-year schedule. This means that a member is projected to average about 6.8% to 11.2% return (discounted at 4%) on his/her investment over the first ten years. The Center has also conducted a study on the potential economic loss for irrigated peanut producers due to drought. Given the expected loss in income of $297/acre and the expected increase in expenditures of $107 to $147/acre, the drought may have $404 to $444/acre impact on irrigated peanut producers
with no relief from crop insurance. While these losses may seem high, when land and quota rent costs are included ($100/acre and $0.10/lb), the cost per acre for producing irrigated peanuts is $1173/acre. Thus, the expected loss in revenue due to drought is about 28%.
Impacts
An irrigated peanut producer can have an expected loss in income of $297/acre and an expected increase in expenditures of $107 to $147/acre due to drought conditions. Thus, the drought may have a $404 to $444/acre impact on irrigated peanut producers with no relief from crop insurance. While these losses may seem high, when land and quota rent costs are included ($100/acre and $0.10/lb), the cost per acre for producing irrigated peanuts is $1173/acre. Thus, the expected loss in revenue due to drought is about 28%.
Publications
- Branch, W.D., and S.M. Fletcher. 2001. "No-Pesticide Preliminary Yield Trials in Peanut." Peanut Science 28(1): 21-24.
- Baldwin, J.A., J. W. Todd, J. R. Weeks, D.W. Gorbet, A.K. Culbreath, A. S. Luke-Morgan, S. M. Fletcher, and S. L. Brown. 2001. "A Regional Study to Evaluate Tillage, Row Patterns, In-Furrow Insecticide, and Planting Date on the Yield, Grade, and Tomato Spotted Wilt Virus Incidence of the Georgia Green Peanut Cultivar." Proceedings of the 24th Annual Southern Conservation Tillage Conference for Sustainable Agriculture, Oklahoma City, OK. Pp 24-36.
- Fletcher, S.M. and N.B. Smith. 2001. "Peanut Policy." (In) J.L. Outlaw and E.G. Smith, (eds.), The 2002 Farm Bill: Policy Options and Consequences. Farm Foundation.
- Luke-Morgan, A.S., S.M. Fletcher, N.B. Smith, J.A. Baldwin, J.W. Todd, S.L. Brown. 2001. "Analysis Of Potential Economic Loss For Irrigated Peanut Producers Due To Drought." 2000 Georgia Peanut Research-Extension Report, UGA/CPES Research-Extension Publication No. 2-2001. Pp 3-8.
- Hancock, S.J., T.S. Ray, S.M. Fletcher, and W.A. Thomas. 2001. "New Generation Cooperatives: Adding Value to Rural Georgia." 2000 Georgia Peanut Research-Extension Report, UGA/CPES Research-Extension Publication No. 2-2001. Pp 9-14.
- Hancock, S.J., T.S. Ray, S.M. Fletcher, and W.A. Thomas. 2001. "Producer Acceptance of a New Peanut Marketing Cooperative: A Survey of Georgia Peanut Producers." Faculty Series: FS 01-07, Department of Agricultural and Applied Economics, University of Georgia.
- Hancock, S.J., T.S. Ray, S.M. Fletcher, and W.A. Thomas. 2001. "A New Generation Peanut Cooperative in Georgia: A Benefit-Cost Analysis." Faculty Series: FS 01-08, Department of Agricultural and Applied Economics, University of Georgia.
- Fletcher, S.M. and S.J. Hancock. 2001. "Counter-Cyclical Peanut Program Proposal." National Center for Peanut Competitiveness Publication 05-01.
- Hancock, S.J., S.M. Fletcher, W.A. Thomas, and T.S. Ray. 2001 "The Economic Feasibility of Forming a New Generation Peanut Cooperative in Southwest Georgia." National Center for Peanut Competitiveness Publication 10-01.
- Fletcher, S.M. 2001. "Peanuts: Why the Policy Debate in Georgia?" National Center for Peanut Competitiveness Publication 12-01.
- Fletcher, S.M. 2001. "Peanut Positions on New Farm Legislation." (In) P. Rosson and A. Hobbs (eds.) Summary of Testimony on 2001-02 Farm Legislation. Center for North American Studies, CNAS 2001-3, Texas A&M University.
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