Peanuts have become an important alternative crop for farmers in parts of Arkansas, particularly on the lighter, sandier soils of the Delta. They provide another rotation option alongside cotton, soybeans, corn and rice and, under the right circumstances, can generate attractive returns… but peanuts aren’t an easy crop to grow.
They require specialized equipment, significant operating capital, careful irrigation and disease management, precise harvest timing and access to an agricultural infrastructure that doesn’t exist nearly as widely as the infrastructure supporting traditional Mid-South crops.
The recent problems surrounding Delta Peanut have exposed another risk that Arkansas peanut farmers now have to consider. A farmer can successfully produce an excellent peanut crop and still face a serious financial problem if the infrastructure needed to receive, store, shell and market that crop suddenly isn’t available.
Peanuts Require Specialized Equipment
One of the first differences between peanuts and crops such as soybeans is the machinery required to harvest them. A peanut farmer can’t simply drive through the field with the same combine he uses for soybeans or corn. Peanut harvest is essentially a two-step operation.
First, a peanut digger or inverter moves through the field, cutting beneath the plants, lifting the peanuts out of the ground and turning the plants over into windrows. The peanuts then need time to dry. Afterward, a peanut combine—often called a picker—moves through the windrows and separates the peanuts from the vines. That means growers may have substantial capital tied up in peanut-specific diggers, combines, harvesting equipment, trailers and other machinery.
University of Arkansas Extension has previously identified machinery costs as an important component of Arkansas peanut economics. That specialized investment creates a problem when the market changes. A soybean combine can potentially harvest thousands of acres of soybeans, corn, and rice across numerous farms. A peanut digger has a considerably narrower purpose. If a farmer stops growing peanuts, much of that investment can become stranded capital.
Seed and Production Costs Add Up Quickly
Peanut seed represents another substantial expense. Peanuts require relatively high seeding rates, and growers are purchasing seed specifically suited to commercial peanut production and the requirements of their contracts and markets.
Then come the expenses familiar to virtually every row-crop producer:
- Fertilizer and soil amendments.
- Herbicides.
- Fungicides.
- Insecticides when needed.
- Fuel.
- Labor.
- Repairs.
- Crop insurance.
- Interest on operating capital.
- Land costs.
- Irrigation.
Those expenses are committed long before the farmer knows exactly what the crop will yield or what grade it will ultimately receive. Like every farmer, the peanut producer is making a substantial financial bet months before harvest.
Irrigation Is Critical in Arkansas
Water management presents another challenge. Arkansas peanut production differs somewhat from production in traditional peanut states such as Georgia. A large percentage of Arkansas peanuts are grown using furrow irrigation rather than center pivots. That creates its own management challenges.
Growers need adequate moisture for yield and pod development, but excessive moisture can increase disease pressure and peanut irrigation decisions are closely connected to crop maturity. The farmer can’t simply circle a date on the calendar and say irrigation is finished. Crop development, weather conditions, soil moisture and expected digging date all influence that decision.
Too little water at the wrong time can hurt yield and quality. Too much water can contribute to disease problems. Getting it right requires management.
Disease Control Can Be Expensive
Disease is one of the major production challenges facing Arkansas peanut growers. Southern blight is among the most common soilborne peanut diseases in Arkansas. Growers can also contend with Sclerotinia blight, Rhizoctonia limb rot, leaf spot diseases and other problems. These diseases aren’t merely agronomic inconveniences. They cost money.
Fungicide programs may require multiple applications during the growing season, and some treatments can represent significant per-acre expenses. A grower therefore has to weigh the cost of preventive disease management against the potential yield and quality losses that could occur without it. And even a good fungicide program doesn’t eliminate all disease risk.
Arkansas Pigweed Doesn’t Give Peanuts a Pass
Anyone who farms in Arkansas knows about Palmer amaranth. Peanut growers have to deal with it too. Herbicide-resistant pigweed has become one of the state’s most difficult weed-management problems, and peanuts don’t necessarily provide growers with all of the weed-control flexibility available in some herbicide-tolerant soybean and cotton systems.
A few escaped pigweeds can quickly become much more than a cosmetic problem. They compete with the crop, interfere with harvest and replenish the seedbank for future years. That means peanut weed control has to be taken seriously from the beginning of the season.
Harvest Timing Can Make or Break the Crop
Peanut harvest requires another level of precision. The farmer has to determine when enough pods have reached the proper maturity to begin digging. Dig too early and immature peanuts can reduce yield and grade. Wait too long and mature pods can deteriorate or detach from the plant, leaving valuable peanuts behind in the soil.
Then there is the weather.
Once peanuts have been dug and inverted, they’re lying in windrows waiting to dry sufficiently for the picker. Rain at the wrong time can interfere with that process. In effect, the peanut farmer has two critical harvest operations—digging and picking—with weather exposure between them. That creates a different risk profile than harvesting many conventional row crops.
Growing Pounds Isn’t Enough
Peanuts are ultimately entering the human food supply. That makes quality particularly important. Farmers aren’t simply trying to produce the greatest possible number of pounds per acre. The peanuts have to meet commercial quality standards. Loads are sampled and graded, and quality can affect their value. Foreign material, damaged kernels, moisture and other characteristics matter.
Aflatoxin presents an additional concern because contamination can severely limit how peanuts can be marketed. Consequently, a production problem can hurt a farmer twice. It can reduce the number of pounds harvested while simultaneously reducing the value or marketability of the pounds that remain.
Rotation Limits Where Peanuts Can Be Grown
Peanuts can provide excellent rotational benefits, but they aren’t a crop that should simply be planted continuously on the same ground. Rotation is important for controlling soilborne diseases and other production problems. Peanuts also perform best on appropriate soils, particularly lighter and sandier ground. That naturally limits where the crop fits in Arkansas.
Interestingly, peanuts can provide a valuable rotational benefit on some of those acres because they’re a nonhost for southern root-knot nematode, which can cause problems in other Arkansas crops. That has helped make peanuts an attractive rotation crop on certain cotton ground. But the combination of soil requirements and rotation needs means Arkansas can’t simply expand peanut acreage indefinitely.
Then the Peanuts Have to Go Somewhere
This is the part of peanut production receiving considerably more attention following the problems at Delta Peanut. Peanuts don’t have the same marketing infrastructure as soybeans. If an Arkansas soybean farmer doesn’t like the bid at one elevator, there are often other elevators, processors or river terminals competing for the crop. There is also a highly developed national commodity market providing transparent price discovery. Peanuts are different.
Most commercial peanut production is tied much more closely to contracts and specialized infrastructure. Once harvested, farmer-stock peanuts need appropriate receiving facilities, inspection and grading, storage and eventually shelling. The local grain elevator can’t necessarily solve the problem. That makes the relationship between farmer and peanut buyer considerably more important.
Delta Peanut Has Exposed Counterparty Risk
The situation surrounding Delta Peanut demonstrates a risk that farmers don’t always think about when calculating an enterprise budget: counterparty risk. Farmers usually spend enormous amounts of time thinking about production risk.
- Will it rain?
- Will irrigation be sufficient?
- Will disease pressure be manageable?
- What will fertilizer cost?
- What will yields be?
- What will commodity prices do?
But there is another question… Will the company on the other side of my contract be able to perform?
That question becomes particularly serious with peanuts because the farmer needs more than another person willing to write a check.
- He needs someone capable of receiving the crop.
- He needs grading.
- He needs warehouse capacity.
- He needs shelling capacity somewhere in the supply chain.
And all of those things have to be available when harvest arrives.
Freight Could Become a Major Expense
The construction of Delta Peanut’s Jonesboro shelling facility helped address one of the historical disadvantages facing Mid-South peanut growers: transportation. Before substantial shelling capacity existed locally, peanuts could be received in the region but ultimately transported considerable distances for shelling.
Moving farmer-stock peanuts hundreds of miles isn’t free. If Arkansas growers once again have to rely more heavily on shelling infrastructure in Mississippi, Alabama, Georgia, Texas or elsewhere, transportation costs become part of the equation. A farmer might find another buyer and still discover that the economics don’t look nearly as attractive after additional freight and handling costs are included.
The relevant question therefore isn’t simply: “What are you paying for peanuts?” It is: “What is my net return after I get the peanuts to you?”
The Hidden Cost Could Be Stranded Equipment
There may also be a longer-term consequence of the Delta Peanut situation that receives less attention. What happens if Arkansas peanut acreage declines substantially? Farmers have invested in peanut-specific machinery based on the expectation that they would continue producing the crop.
If a farmer decides to move those acres back into soybeans, cotton or corn, he can’t simply convert a peanut digger into a soybean header. That machinery still exists. The loan payment may still exist.The depreciation certainly exists. And its resale value depends upon somebody else wanting to grow peanuts.
If numerous Arkansas and Missouri growers decide to leave peanut production at approximately the same time, a significant amount of used peanut equipment could hit the market simultaneously. Basic economics suggests what could happen next. More equipment for sale combined with fewer regional buyers could push used machinery values lower. A farmer who thought he owned a valuable piece of harvesting equipment could discover that its market value has fallen precisely when he needs to sell it. That’s a real financial risk.
The 2027 Decision Is About More Than Peanut Prices
When Arkansas growers begin planning their 2027 crop mix, comparing the expected price of peanuts with soybeans, corn or cotton won’t be enough. The peanut decision now needs to include several questions.
- Can I produce peanuts profitably?
- Do I have suitable ground?
- What will my input costs be?
- What equipment do I own, and what does it cost me annually?
- Who is buying my peanuts?
- Where will I deliver them?
- How much will transportation cost?
- Is adequate storage available?
- Where will the crop ultimately be shelled?
- How financially secure is my counterparty?
- What happens if that buyer can’t perform?
Those last few questions may carry considerably more weight than they did a year ago.
Peanuts Still Have a Place in Arkansas Agriculture
None of this means peanuts no longer make sense in Arkansas. The crop has legitimate agronomic advantages. Arkansas growers have demonstrated that they can produce excellent yields. Peanuts provide diversification and can fit extremely well into certain rotations. The question isn’t whether Arkansas farmers can grow peanuts. They clearly can. The question is whether the economic and marketing infrastructure surrounding those farmers is dependable enough to justify the investment required to grow them. That’s a fundamentally different question. And the Delta Peanut situation has brought it to the forefront.
Agriculture has always involved risk. Farmers understand weather risk, production risk and price risk better than almost anyone. But when a farmer invests in specialized machinery, commits an entire growing season to a crop and delivers into a market dependent upon a relatively small number of specialized buyers, another form of risk becomes impossible to ignore. The farmer doesn’t just need to know he can grow the crop. He needs to know someone will be there to take it when harvest comes.
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