Why is American Peanut the Luckiest Nut in the World?

Topics: International trade, Peanut, Fair trade Pages: 5 (1614 words) Published: November 25, 2008
The luckiest nut in the world

Why is the American peanut the luckiest nut in the world?

The peanut was introduced to China by Portuguese traders in the 1600s and another variety by American missionaries in the 1800s. They became popular and are featured in many Chinese dishes, often being boiled. In the 80’s production began to increase more by 2006 China was the world's largest peanut producer. A major factor in this increase has been China’s move away from a communist economic system toward a free market system so that farmers are free to grow and market their crops as they decide. Although India and China are the world's largest producers of peanuts, they account for a small part of international trade because most of their production is consumed domestically as peanut oil. Exports of peanuts from India and China are equivalent to less than 4% of world trade. The nut gained Western popularity when it came to the United States from Africa. It had become popular in Africa after being brought there from Brazil by the Portuguese around 1800. The major producers/exporters of peanuts are the United States, Argentina, Sudan, Senegal, and Brazil. These five countries account for 71% of total world exports. In recent years, the United States has been the leading exporter of peanuts. The major peanut importers are the European Union (EU), Canada, and Japan. These three areas account for 78% of the world's imports.

The peanut is one of the most protected cash crops in the world. Peanuts were designated by the U.S. Congress to be one of America’s basic crops. In order to protect domestic industry by keeping prices artificially high, the United States Department of Agriculture conducts a Program for Peanuts. The Price Support Program consists of a two-tier price support system that is tied to a maximum weight quota. Domestic peanuts produced subject to the weight quota are supported at the higher of two prices, while peanuts over quota or those produced on farms not having a quota are supported at the lower rate. The quota support price acts as a floor price for domestic edible peanuts. For producers who fail to fill their quota in any given year, there is a maximum 10% over marketing allowance for the subsequent year. Pursuant to the program, producers may place peanuts under nonrecourse loan with the Commodity Credit Corporation (CCC) at the designated support price or they may privately contract for the sale of their crop. This program was replaced by a market loan program similar to other commodities in 2002. How has the United States manipulated the import and export of the peanut to work to their advantage? The US has invested heavily in the peanut trade. They have poured massive amounts of money into advancing technologies for production and given huge subsidies to peanut farmers in the United States to keep themselves at an unfair advantage. Developing countries such as Senegal have been unable to compete with the United States. These countries have not had the finances to properly develop and sustain the production of peanuts. They have had to rely on large loans from the developing countries. Having to repay these loans has not allowed them to make any profit from what has proven to be a lucrative resource. What can be done to level the playing field in the peanut trade so that all maybe able to reap the benefits of the peanut? Is fair trade is the solution? Review of the Literature

The big deal about peanuts
The peanuts inclusions in food products; Peanuts, as an ingredient, may be used in sauces, ice creams, confections, ethnic dishes, baked goods, snacks, and salads. Peanuts are especially popular in confections, with half of the top 10 selling candy bars in the U.S. are said to have peanuts or peanut Butter. Peanuts can also be used in a variety of forms, including butter, oils, flour, purees, sauces, and boiled. World peanut production totals approximately 29...

Cited: Weede, Erich. "Globalization and Inequality." Comparative Sociology 7.4 (Nov. 2008): 415-433.
Gordon, John Steele. "In the Spaghetti Bowl." Commentary 126.3 (Oct. 2008): 65-66.
Miller, Michael. “Who’s Afraid of Free Trade?” Action Institute (Oct. 2007) http://www.acton.org/commentary/commentary408.php
Goodman, Michael K. "Reading fair trade: political ecological imaginary and the moral economy of fair trade foods." Political Geography 23.7 (Sep. 2004): 891-915.
Goldsmith, James. “The Trap” Carroll & Graf, New York 1994.
Stiglitz, Joseph E. "Fair Trade." National Interest May 2008:
"Fair enough." Economist 378.8471 (Apr. 2006): 33-33.
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