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Rising peanut prices rippling from food banks to fast food

TAMPA - Perhaps it's time to stop saying things cost "just peanuts." Peanut prices are skyrocketing lately, thanks to scorching droughts in the Southeast, and that's leading to problems everywhere from grocery stores and French fries to potato chips cooked in peanut oil. Some experts now expect outright shortages next year. "There just aren't enough peanuts to go around," said Ryan Freymuller, operations manager for Mickey's Peanuts in Palm Harbor, which supplies more than 100 ballparks around the nation with bagged nuts. "We saw our own prices go up 27 percent for raw nuts from one day to the next." Peanut butter prices are jumping, and because peanuts are grown and harvested only once a year in the fall, Freymuller expects problems this season to ripple through 2012, leading to higher prices for a range of shoppers.
Much of the problem comes down to weather. All those wildfires in Texas this summer were only the most visible signs of a terrible drought across the Southeast that all but decimated the farm fields, which normally produce about one third of the nation's peanut crop. If that production shortfall wasn't enough, scores of farmers in Southeastern states have stopped growing peanuts and started growing corn and cotton that are reaching record-high prices, according to the U.S. Department of Agriculture. Farmers this year devoted 11 percent fewer acres to peanuts nationally, with the major reduction coming from top-producing Georgia, where the sheer acreage of peanut growing is the lowest it's been since 1982, a recent USDA report concludes. Nationally, total peanut production could be down by 13 percent. Demonstrating basic supply and demand forces at work, peanut prices almost doubled in some regions this year, the USDA said. In just the last 90 days, prices on Tampa Bay area grocery shelves have seen similar increases. The average price of an 18-ounce jar of Jif peanut butter jumped 37 percent this fall, with Target, Sweetbay and Winn-Dixie all raising prices between 40 and 70 percent, according to the Tampa Tribune's Market Basket survey of grocery prices. Publix raised Jif prices from $2.65 per jar to $3.45 in the last two weeks, while Winn-Dixie's price rose from $2.65 to $3.45. Only Walmart was able to maintain its price at about $2.50 a jar. Food banks are especially feeling the pinch of rising peanut butter prices. "This year we really have seen a drop in the donations of peanut butter that come in on a regular basis," said Steve Kilburn, director of communications at the St. Petersburg Free Clinic. Food banks appreciate peanut butter because it had been a relatively cheap source of protein that doesn't need to be refrigerated and is good for the variety of the clients food banks serve. "It's a kid-friendly protein," Kilburn said. "It's also good for homeless people because you can make a meal out of peanut butter and a loaf of bread for weeks." Higher peanut prices are also putting pressure on a growing number of restaurants that use peanut oil. The Five Guys burger chain hands out free peanuts in restaurants and uses peanut oil to cook its French fries. Fast food giant Chick-fil-A has uses peanut oil to cook its chicken breasts ever since the 1960s, when founder Truett Cathy decided peanut oil was healthier and tasted better than other oils. Chick-fil-A is one of the nation's largest peanut oil buyers, snapping up 20 percent of domestic production. "So, yes, we are keenly aware of rising costs," said Mark Baldwin, a spokesman for the company. With prices rising at the farm level, Chick-fil-A has been negotiating directly with farmers to keep costs down, Baldwin said. For now, the restaurant chain has decided not to pass cost increases on to customers through "well into next year," he said. Whether peanut prices ease back down anytime soon will have a lot to do with where the broader economy goes, said Freymuller, of Mickey's Peanuts. "When we process, we freight in nuts, so that's diesel, which is up. We cook with natural gas or propane, which is up. We package in plastic bags, which is petroleum, which is up," Freymuller said. Even without this summer's huge price spike, peanut prices were already up about 50 percent in the last five years, Freymuller said, and though Mickey's has had to raise prices on many of its nuts, Freymuller said he's trying to hold off raising them too high too quickly. But don't expect prices to drop anytime soon. "Wherever your peanut prices are now, that's probably where they're going to be for at least the next 12 months," said Bob Sutter, chief executive of the North Carolina Peanut Growers Association. That's because the entire peanut crop of 2011 has been picked, and there won't be another harvest until next fall. Big brands such as Jif and Skippy will have first pick of the crop, Sutter said. But "there will be some people who will not be able to get peanuts." For now, the best advice for peanut-lovers is to watch more carefully where they buy peanut butter. At Sweetbay, for instance, the standard jar of Jif may cost $3.49, but the same size jar of the store's Hannaford brand costs less than half, just $1.49.

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