Thursday, October 13, 2011

The Latest Casualty of the Drought - Peanut Butter...


If you've got any "PB and J" lovers in your house and have some extra pantry space, you might want to stock up on the creamy stuff now (or the crunchy variety, if you prefer) - before a drought-related price jump takes place in the very near future...

The peanut crop is rapidly becoming the latest casualty in the ongoing southern U.S. drought.  Supplies are diminishing and a rather dramatic ramp-up of wholesale prices for everything from peanut butter to mixed nuts is about to take place as a result.


Extreme to excessive drought conditions continue across a large portion of the southern U.S., as depicted by the red, orange and brown shaded regions on the image below:



...unfortunately for peanut lovers, the hardest hit area corresponds almost perfectly with the prime real estate for peanut production:


With the drought already well underway earlier this spring, many farmers planted cotton (a more drought tolerant crop) rather than take a risk on the drought breaking.  This, along with what crops were planted suffering from extreme heat and lack of rain have resulted in a shortage of peanuts in the U.S.  Only 38% of the U.S. peanut crop was rated "good" or "excellent" last month, which is down from about 60% at the same time last year.  


According to this article in the Wall Street Journal (subscription may be required), Jif has announced a 30% increase in wholesale peanut butter prices beginning in November and Peter Pan has announced a 24% increase "in a couple weeks".  Kraft has announced a planned 40% increase in prices for its "Planters" brand on October 31st.  You can expect that a good chunk (no pun intended) of the increases will be passed along to consumers.

In fact, many analysts are warning that we should not be shocked to see a standard size jar of peanut butter rise above $4.00 by year end...


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1 comment:

Anonymous said...

We just see the headlines and never think of the knock-on effects.

An interesting post.