Changing World of Peanut, Peanut Raw Exports by Tyron Spearman Marketing Editor
Highlights from the 12th Annual International Peanut Forum, London, England.
The battle for a share of the world's market of edible peanuts is constantly changing. World production now averages nearly 26.7 million metric tons annually. While much of the production is consumed as peanut oil, a lucrative trade in edible peanuts involves about 1.25 million metric tons. As the trade of peanuts has increased, the market is mostly affected by the following factors: price, quality, on-time service to buyers and ample supplies for the market.
Peanut, Peanut Raw Production
China is the world's largest producer of peanuts, with a two-crop annual production of about 10 million metric tons. Following closely is India with 7.5 millions metric tons, also with two crops annually. The peanuts from these two countries are mostly used for cooking oil, but do export edible peanuts when market conditions and exchange rates are favorable. Next in line is the United States with 1.8 million metric tons. About one-third of the U.S. production is exported as edible kernels. Indonesia produces about 1 million metric tons, mostly for domestic markets. Then comes Argentina, having recently claimed the title of the largest export edible marketer, producing .7 million metric tons. Argentina grows peanuts strictly for export with almost no domestic need for them. Other countries producing export peanuts include: Burma (.55 million MT), Senegal (.55 million MT), Zaire (.56 million MT), Nigeria (.35 million MT), Vietnam (.34 million MT) and South Africa (.17 million MT).
Peanut Raw Export Markets
During the past 25 years, countries vying for a share in the edible peanut market have changed completely, while production has increased slightly or, in some years, held steady. At the International Peanut Forum in London, Peter Morgan of Barrow, Lane and Ballard, said, "The key word in the future of export peanuts will be globalization. The past shows us that things are constantly changing." Morgan said the top exporters in 1970, in order, were Nigeria, Niger, South Africa, Sudan, USA, India, China and Argentina. In 1985, the rankings in order of exports were USA, China, Argentina, India, South Africa, Sudan and Malawi. In 1998-99, the U.S. Foreign Agricultural Service estimates that the world's peanut exporters are, in order, Argentina (27%), USA (26%), China (18%), India (16%), Vietnam (11%) and South Africa (2%). As the players change, so do the export issues. The Peanut Grower proudly highlights keynote speakers during the 12th Annual International Peanut Forum in London, England.
To bring price stability to the European continent, 21 countries have agreed to adopt a common currency, the Euro, which will form a new trading block as large as the United States. The region's population is 290 million, with an import market base of over $486 billion. Eleven countries adopted the Euro on January 1, 1999. By July 1, 2002, all 21 countries are planning to unite in one currency. For the U.S. peanut industry, traders must understand the implications and be able to discuss trading in Euros when needed. David Kemp, vice president of ABN AMRO Bank, urged U.S. peanut traders to find banking partners with Euro expertise.
Retail Changes in the EU
In the United Kingdom, five retailers control 70 % of the market. For peanuts to survive, suppliers must be on the preferred list of suppliers for each supermarket. Retailers are looking for ways to keep customers, increase spending per customer, know customer demands and promote loyalty by rewarding customers. Home shopping networks and efforts by smaller shops create competition, as they try to survive the domination of supermarkets.
Peanut retailers need to organize in-store displays, develop new uses for peanuts in biscuits, cereals and other products. Stores should increase international purchases to provide variety to customers.
International Food Industry Challenges
"Growing populations and political stability dominate food industry challenges," said John Giles, director of Promar International. A more affluent society is evolving in many countries. Eastern Europe, led by a stable Poland, offers more than 340 million customers with potential expansion into Russia, where 40% of the food is imported. Within the food industry, deregulation, further concentration at the retail level and a growing food-service sector is expected. Political instability, lack of cash and the absence of product loyalty will greatly impact positive changes in the food industry. Technology and food safety will be prominent issues in the future. Consumers and countries will demand genetic modification-free products and more markets will develop for organic foods, especially in the United Kingdom (5-7%). Other challenges include growth of India, China and Latin American export markets and the next U.S. Farm Bill.
Snacks in the United Kingdom
The UK's 2.5 billion pound snack market is three times its coffee market, two times the cookie market and equal to its fresh fruit and vegetable market. The category is divided into nuts, crisps and salty snacks. The nut category, however, is not as snack-friendly as crisps because 80% of peanuts sold are packaged in large 200 gram packages. Even so, investment into the market has been in packaging and not advertising. In television advertising, 14 million pounds was spent on crisps and 19 million pounds on snacks overall, but nothing on nuts.
Just as in the U.S., the British are concerned with healthy eating, but convenience may be most important. In the British family, both parents work and commute 45 minutes to work. Snacks must be portable, easy to eat, be highly disposable and offer instant gratification. Other counties, such as Spain, Italy and France, lag behind in the snack market as the family meal remains important to local customs.
As for peanuts, over 60% of those consuming nuts are over the age of 35. "Unless the peanut market gets exciting and attracts new and younger consumers, it will die," said Andy Rush, KP Foods.
EU Aflatoxin Regulations
Effective January 1999, the European Union harmonized its aflatoxin regulations. The sampling methods and analysis procedures must be aligned by December 31, 2000. This will significantly impact the international peanut trade.
Raw peanuts now entering the European Economic Community's borders must have less than 15 parts per billion (ppb) of total aflatoxin and not more than 8 ppb of B1, the most toxic of the aflatoxin components. In processed products, aflatoxin levels cannot exceed 4 ppb total, and only 1 ppb of B1.
For the American industry, the message is clear. Ship quality peanuts and avoid problems later. Unification of testing between the U.S. and the EU will be key. The quality issue will impact all origins sold to the EU markets.
Peanut allergy continues to be major issue for the food industry, particularly in the United Kingdom. Retailer demands for segregated facilities and inconsistent product labeling have forced food processors to assess internal procedures and address allergy awareness in both their manufacturing and marketing processes.
Johanna Hignett, Nestle, UK, said that his company is hoping to maintain a sense of reality with the customers and media by providing up-to-date allergy information, communicating changes in products and labels to customers, maintaining a list of foods free of peanuts, nuts or derivatives. Even a list of doctors trained in allergy treatment is maintained by Nestle. The issue is top priority in the United Kingdom and will be in the future.
Genetically Modified Foods
Genetically modified foods has been a constant topic in the European press. While there are no genetically modified peanuts on the market, the issue affects a number of other food ingredients.
Ann Foster represented Monsanto, the leader in genetically modified foods and the developer of genetically modified soybeans, beans, corn, cotton and potatoes. Foster said that the European Union has approved genetically modified corn and soybeans, including Roundup Ready soybeans and Bt corn, but no genetically modified products are being grown commercially in Europe. Trail plantings are underway in France and Spain.
Genetically modified tomato paste was recently introduced and sold successfully in the British market.