Peanut Program:

Changes Are Needed to Make the Program Responsive to Market Forces

T-RCED-93-18: Published: Mar 10, 1993. Publicly Released: Mar 10, 1993.

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GAO discussed the Department of Agriculture's (USDA) peanut program. GAO noted that: (1) peanut farming has become increasingly concentrated as smaller farms have been consolidated to form larger-scale operations; (2) technological advances and other improvements have led to yields nearly five times greater than the yields produced in 1934; (3) in 1991, fewer than 22 percent of the peanut producers controlled over 80 percent of the quota; (4) the annual quota support price averaged $697 per ton, while the estimated cost of producing peanuts averaged $463 per ton; (5) the gap between prices and costs has generally increased over time, since the quota support price increases each year when production costs increase; (6) the peanut program supports farmers with assigned quotas who elect not to grow peanuts but sell or rent their quota; (7) the peanut program adds anywhere from $314 million to $513 million each year to consumers' costs to buy peanuts; (8) legislative changes in 1977 and 1981 transferred most of the program's costs to consumers; and (9) the program's effect on international trade is unclear because there is uncertainty as to the extent that the program results in additional U.S. exports, the quantity of U.S. exports affects world prices, and producers would respond to price changes on the world market if the peanut program did not exist.

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