Impacts of the Farm Bill on Peanut Production in Southwest

Alabama

Steve Brown

Extension Economist

Alabama Cooperative Extension System

Peanut Enterprise Analysis Prior to New Farm Bill for Southwest Alabama

Yield (3679 lbs. / Acre)

Gross Farm Sales

Government Payments and Crop Insurance

Total Gross Farm Returns

4 Year Average / Acre

$959.15

$54.41

$1,013.56

Peanut Enterprise Analysis Prior to New Farm Bill for Southwest Alabama

Total Gross Farm Returns

Cash Expenses

Amortized Quota Purchases

Returns Above Operating Expenses

4 Year Average / Acre

$1,013.56

$653.09

$81.69

$278.78

Expected Effects on Peanut Profitability in Southwest Alabama

Total Operating Expenses

Cash Rent Prior to 2002

Total Operating Expenses Less Cash Rent

4 Year Average / Acre

$653.09

$177.43

$475.66

Expected Effects on Peanut Profitability in Southwest Alabama

Operating Expenses Except Cash Rent

Projected Cash Rent for 2003 +

Expected Total Operating Expenses

$ / Acre

$475.66

$70.00

$545.66

Expected Effects on Peanut Profitability in Southwest Alabama

Expected Total Operating Expenses

Breakeven Yield Based on $355/ ton Loan Rate

Prior 4 Year Average Yield for Southwest Alabama Peanuts (tons/acre)

Per Acre

$545.66

1.54 tons

1.84 tons

Projected Peanut Profitability in Southwest Alabama With-Out Base

Peanut Sales(4 Year Avg. Yield x Loan Rate)

(1.84 tons x $355)

Minus Total Operating Expenses

Returns Above Operating Expenses With-Out Government Payments

$ / Acre

$653.20

$545.66

$107.54

Projected Peanut Profitability in Southwest Alabama on Base Acres

Returns Above Operating Expenses With-Out Government Payments

Direct Payment

(1.84 tons x $36 x 85%)

Counter Cyclical Payment

($495-($355+$36) x 85% x 1.84 tons)

Returns Above Operating Expenses With Government Payments

$ / Acre

$107.54

$56.30

$162.66

$326.50

That’s All Folks!