The Future Growth of the Peanut Industry

December 12, 2012, my first day as CEO and President of the National Peanut Board (NPB), seems like yesterday. After spending my entire career in the commercial side of the peanut industry, I felt that I had a good understanding of how to represent the peanut farmers of America, but I still had concerns about what would be the best way to go about it. After a short time on the job, I became confident that we had an excellent team in place and a board, made up of peanut farmers, who were fully supportive. We were financially stable and had good systems and financial controls in place, which allowed me to immediately start focusing on our mission. But what was our mission?

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?I started talking to our team about what we really wanted to accomplish at NPB. We were here to improve the livelihood of U.S. peanut farmers. For every ton of peanuts sold in the United States, an assessment of $3.55 is deducted to fund our activities. Every five years, the United States Department of Agriculture (USDA) holds a referendum of peanut farmers to vote whether to continue the National Peanut Board. If they are getting a return on their investment, they will vote in favor.(1)

In time, we totally revised our mission statement to make it succinct – “To improve the economic condition of America’s peanut farmers and their families.” That’s something our team and board members can easily work towards and communicate with anyone who asks what we do.?

The Three-Legged Stool Approach

To put our mission into practice, early on, we started talking about how to determine what success looks like and what factors would make up our three-legged stool and approach.

First Leg

First leg is to increase domestic demand for peanuts. Our domestic market is our largest and most important, and growing it is the fastest path to helping our farmers sell more peanuts and get more for them.

Second Leg

Second leg is to incrementally grow demand for peanuts by providing support to the American Peanut Council (APC) and industry in export efforts.

Third Leg

Third leg is research production, helping farmers reduce the cost to produce a ton of peanuts by continuously increasing yields and reducing required input amounts. Driving down the cost of peanuts means keeping the price of peanuts competitive with other origins and competing products in domestic and international markets.

All three legs of the stool are critical to success. We help our farmers produce more peanuts more efficiently while at the same time working to sell more peanuts domestically and abroad. One leg does not work without the other two, the stool cannot stand.

Defining Success by the Numbers

With our mission and approach laid out, we started talking for the first time about the true measure of demand – per capita consumption. We wanted to take population changes out of the equation and look at how many pounds of peanuts each man, woman and child in the U.S. eat annually. In 2012, per capita consumption of peanuts was 6.8 pounds. As we saw a surge of peanut consumption during the pandemic, we reached an all-time high in 2021 of 7.8 pounds. Last year, we fell back to 7.7 pounds, and the final number for 2023 is the same, meaning we are successfully holding onto the gains made in 2021 and 2022. This growth in per capita consumption has been a collective success of many peanut industry organizations and brands and NPB is proud to have contributed to these remarkable achievements.

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Improving the Sustainability of Peanuts

By increasing yields and requiring fewer inputs to grow peanuts, we found that we could also improve the sustainability of peanuts. We funded the first analysis of the amount of water required to produce a serving size of peanuts compared to other primary nuts – almonds, walnuts, and pistachios. This research confirmed that peanuts are the most water-efficient, requiring only 3.2 gallons for a one ounce serving size versus 28.7 for almonds, 23.6 for pistachios and 26.7 for walnuts.(2) We also began to communicate the compelling sustainability story about peanuts, how they use the residual nutrients from the crops before them and how other crops perform better when planted in rotation with peanuts. To a farmer, sustainable means being able to produce a crop that is good for the earth, good for the business bottom line and good for the communities where peanuts grow and are processed, and we’ve told our story using that framework.

Acknowledging Barriers and Changing the Conversation Around Peanut Allergy

Every industry has barriers it must work to break down. The peanut industry’s barrier, for the past 30 years, has been peanut allergy.

Peanut allergy is the single largest headwind to peanut consumption in the U.S. and many of our important export markets such as Canada and Europe. When I joined NPB, we not only were we facing peanut bans in schools, airplanes, and public spaces, but also tremendous misinformation and sometimes hysteria about the issue. We surveyed parents and caretakers of children in 2013 and discovered that there was a perception that peanut allergy was much more prevalent than the reality – 10 times over. We knew we had to change the conversation.

Monitoring

Given that data, we also stepped up real-time media monitoring to allow us to quickly address erroneous and incomplete reporting not based on the science. By politely approaching journalists and providing them with the facts, we see far fewer errors in coverage on peanut allergies today. We have also built many great relationships with the press because of our continuous efforts.?

Advocating

Early on, I started attending food allergy advocacy and research meetings. The reception I received was almost hostile at first, but in time food allergy advocates, researchers and physicians began to see that NPB recognized the seriousness of peanut allergies and that we wanted to help find solutions. Developing personal relationships and communicating to these groups about our sincere commitment to helping find solutions and the (now $36+ million) dollars NPB had and continues to spend on research and education around peanut allergy helped build trust over time.

Leading

As people learned that NPB was an initial funder of research that led to the early introduction of peanut protein to infants to help prevent peanut allergy, and an early funder of research that led to oral immunotherapy to reduce the risk of accidental ingestion to those already with a peanut allergy, we became recognized as a true partner and friend to the food allergy community.(3)

Supporting and Uniting the Industry

When I joined NPB, because of my long involvement in the industry, I knew we had to become more focused and cohesive if we were to grow and succeed. We have worked to communicate our goals and share resources with other peanut organizations so that we are shooting at the same targets. When state organizations have requested resources from us, I have always responded, “What is ours is yours.”

The APC has done a remarkable job of increasing U.S. exports of peanuts, not only in sheer volume but in measures of value. The world needs more sustainable, plant-based protein and the U.S. is well-positioned to help supply the peanuts. NPB has been a valued partner to APC as a provider of funding, resources, and leadership over the past 10 years.

One of the most effective steps we have taken is to host an annual marketing summit where we invite staff and board members of state and industry organizations to come to our PR agency Golin’s office to learn about our marketing plans for the upcoming year.

These are just a few examples of countless efforts that have brought the industry together, which has not only contributed to unity in messaging among the many groups, but also has led to a unity like I have never seen over the past 40 years. We have truly come together across all the segments.

Looking to the Future

When I started at NPB in 2012, the average crop size the prior five years was only two million tons with an average yield of about 3,000 pounds per acre. Looking over the most recent five years, we are producing three million tons a year with yields one-third higher approaching 4,000 pounds. Our production research funding helped lead to these higher yields and crops and our domestic and international marketing support has helped find markets for them. Again, the three-legged stool analogy applies. As farmers became more productive and efficient, they were not forced to reduce peanut plantings because industry marketing efforts led to increased demand. On the other hand, the industry was able to supply the increases in demand created from the marketing efforts. The proverbial question of what comes first, the chicken or the egg? One cannot exist without the other.

As we have seen growth in production the last 10 years, we will continue to see higher average yields and more production in the future. I believe within 10 years we could be producing four million ton peanut crops. Through industry efforts like the Peanut Genomics Initiative , the genetic yield potential will increase to higher levels while the cost to produce peanuts will come down. Even in the unlikely scenario that there is no growth in genetic yield potential, we are far from achieving today’s yield potential. Average yields of over 7,000 pounds per acre are not unheard of today, leaving a lot of room for an increase in today’s national average yield of approximately 4,000 pounds.

How does the industry sell another one million tons of peanuts a year? That is a daunting question considering that the domestic market for peanuts is a very mature one. Over 90% of American households have at least one jar of peanut butter in their pantry.(4) How do we make it even more accessible to others? Our neighbor to the north, Canada, has historically been a huge market for peanuts, but that is also a mature market like ours in the States. Europe, a traditionally important market, has declined as a U.S. export market. We now have less than a 10% market share in Europe.(4)????????????

Following the status quo will not be the answer to the U.S. moving another million tons of peanuts per year. We must find new ways to consume more peanuts than with traditional uses here in the U.S. and around the world. We are constantly looking at new product innovations and always searching for the next peanut powder or a new peanut snacking concept. How can we create more dining occasions for peanuts and peanut butter? Some ways to do this include product innovations, forward thinking and more.

Tapping New Innovations

NPB is currently working with a national brand to bring peanut milk and other peanut-based beverages to market sometime in 2024. The plant-based alternative milk market in the U.S. is expected to reach $42.86 billion by 2029 . Peanuts have struggled to establish a presence in this market because of what I believe to be unfounded fears of peanuts as an allergen. The company we are working with is confident they can manage peanuts safely in their production facility and produce a high-quality, delicious beverage consumers will love and with a nutritional profile on par with cow’s milk. NPB is providing funding to assist in product development and marketing support once the product hits the market.

Having New Outlooks

NPB must continue to build on the gains we have already made with the peanut allergy dilemma. Although we have made great progress, there is much work to be done. We are making inroads with school food service and college dining programs to bring peanuts and peanut butter back to their menus. Although food bans are not recommended by experts, many schools and systems still have them. We must work to reverse them while making sure new ones don’t come up. We know from experience that we can help preempt bans while being considered, but reversing bans already in place is exceedingly difficult.

The amount of research and therapeutic research to help those with a peanut allergy is very exciting. As “the poster child of food allergies,” peanuts get a lot of unwanted attention, but most new food allergy solutions begin with peanuts. There are new concepts for immunotherapy for peanuts under development like a skin patch that introduces peanut protein through the skin to help increase tolerance to peanuts. There is even a toothpaste under development as an immunotherapy tool. We also are seeing, and supporting with NPB funding, efforts to develop injectable pharmaceuticals that may lead to outright cures one day. An end to peanut allergy is becoming a real possibility in the not too distant future.

Until we find that elusive cure for peanut allergy, the absolute best tool we have is prevention through early introduction of peanut protein to infants between the age of four to six months. Research shows that the prevalence rate for an allergy goes up 30% for each month past six months of age that peanut protein is introduced to a child at high risk, which is one with severe eczema or an egg allergy.(5)

The slow pace of embracing early introduction by American healthcare providers has been surprising and frustrating. NPB will continue to devote resources to encouraging healthcare practitioners to inform and educate families on the importance and procedures for early introduction.

USDA’s Women, Infants and Children’s (WIC) Program serves approximately half the children in the U.S. As I write this, neither WIC’s current nor proposed food packages for infants six to 12 months include peanut-containing foods and encourage early feeding to prevent an allergy – making them out of sync with the department’s own ?Dietary Guidelines for Americans . The evidence in support of early introduction is clear. NPB will continue working to educate WIC staff through other channels, such as partnering with the independent National WIC Association .

Rethinking New and Old Uses for Peanuts

To move another million tons of peanuts a year with population growth at a pace of less than 1% per annum(6) will require out-of-the box thinking and approaches to new applications and rethinking on old uses for peanuts, such as for peanut oil and animal feed.

The U.S. produces approximately 5.8% of the world’s peanuts, yet we produce only 2% of the world’s peanut oil. There is massive demand for edible oils such as peanut oil in the world’s most populous countries, India and China. Yet, the U.S. does not even meet its own needs for peanut oil, as we are net importers. Another great opportunity for peanut oil could be for use as biodiesel, made possible through government incentives.

To participate in peanut oil markets more fully, for both food use and biofuels, will require starting with a clean slate and becoming much more efficient in how we grow, handle and process peanuts for oil. To succeed will require a separate stream of peanuts for peanuts destined for crushing.

The oil content of today’s peanut varieties is about 48%. Researchers have peanut varieties in their plant collections with oil content up to 62%. There have been no efforts to breed high oil content varieties, but now with interest in developing markets for peanut oil, work is underway. Texas A&M University, for example, in partnership with Chevron, is working hard to develop high oil content varieties . The breeding goal is to make the oil from these acceptable for fuel or edible use.

There are many opportunities to gain efficiencies, such as continuous flow drying, which would eliminate the massive amounts of capital tied up in dryer trailers that sit unused for nine months of the year. A farmer who grows rice and peanuts shared some startling information. The average semitrailer at his buying point dried only five loads of peanuts in 2022. On his farm, five semis pulling hopper bottoms transported 100 loads of rice each. What if we could develop continuous flow drying, perhaps adapting existing grain drying technology to peanuts? With high moisture grading, peanuts could be commingled before a continuous flow drying process. Hopper bottom trailers could bring peanuts in from the field, be graded, unloaded, and quickly return to the field for another load.

There are a lot of economic considerations to be addressed before the industry could produce peanuts specifically for oil. First, it must work for the farmer economically, which means the varieties must yield on par or be less expensive to grow. To build infrastructure will require huge capital investment for drying, handling, and crushing capacity. Another consideration is the impact increasing the supply of peanut oil will have on the current peanut crushing sector. For the U.S. to fully participate in peanut oil markets on a level equal to our participation in peanut production will require time and thought. The pull from the biofuel sector may provide enough impetus to bring the process along.

You can read more here about my thoughts on how the U.S. might be missing an opportunity on peanut oil.

Understanding the Use of High Oleic Peanuts in Animal Feed

There has been recent research on the use of whole high oleic peanuts in poultry feed. The nutritional profile of the eggs has improved and even the meat in broilers has better nutrition. Dr. Marshall Lamb, an economist with the National Peanut Research Laboratory in Dawson, Georgia, estimates a market potential for high oleic peanuts for feed use of 150,000 tons per year.

Staying Ahead of the Game

Many years ago, one of my economics professors at the University of Georgia made a statement during a lecture that has stayed with me ever since. He said that markets, over time, will gravitate to the average cost of production. During my long career in agriculture, I have not seen anything to disprove the statement. That statement from the 1970s had a profound effect on my thinking and has been at the center of my philosophy on how to best serve peanut farmers during my time at NPB.

By supporting production research, we have helped farmers to increase yields and reduce expensive inputs, continuously driving down the cost to produce a ton of peanuts. Markets are constantly seeking that average cost of production number and by making it elusive, farmers can stay ahead of the game.

We have also worked diligently to market and promote peanuts to increase demand. If markets must constantly have to find more supply, they aren’t going to be in position to chase after that average cost of production number as aggressively. Just like water, markets seek their own level- their equilibrium. By driving increases in demand while at the same time helping to reduce the cost of production, we can make it more difficult for markets to reach that average cost of production.

Building for the Future

Serving as CEO and President of the National Peanut Board has been a great honor and the highlight of my career. From the beginning, our team of NPB staff members and agency partners was supportive of me and bought into my vision of where we could take NPB. I quickly became confident in them and did my best to provide direction and stay out of their way. What gives me confidence that NPB will continue to be successful under its new leadership is that much of this original core team is still in place and is even stronger with new additions.

I am excited about this next chapter – the third decade – of the National Peanut Board. I look forward to seeing the team build on past accomplishments and reach even greater heights in the years to come.

SOURCES

1 Referendums in 2014 and 2019 passed overwhelmingly with 92% in 2014 and 93% in 2019 voting in favor of continuation respectively.

2 “Water footprint of peanut, almond, walnuts, and pistachios in the U.S.,” Mekonnen.

3 Bob Parker was recently honored by a leading food allergy advocacy organization, Food Allergy Resource and Education (FARE) with a “Food Allergy Champion Award.”

4 Foreign Agricultural Service of USDA

5 Roberts, G. et al. Defining the Window of Opportunity and Target Populations to Prevent Peanut Allergy. JACI, Volume 151, Issue 5, P1329-1336, May 2023

6 U.S. Census and Federal Reserve Bank of St. Louis (FRED)

7 U.S. Stocks & Processing, NASS-USDA