Peanut Chaos Every Year: Can the Government's Price-Support Purchases Last Forever? Farmers Hope for a Better Production and Marketing Chain

The "peanut chaos" in Yunlin has been raging for a week, with peanut production and marketing issues entangled with political mudslinging. Although the government acted quickly, using "price-support purchases" to calm public sentiment, some farmers believe that "government intervention" is not a long-term solution for the industry. Some farmers' associations privately admit that purchase volumes are nearing saturation, that this time they are cooperating with the central government to "weather the hard times together," and that they worry buying up large quantities of peanuts at high prices will create sales pressure in the future. (To read the farmers' association opinions, click here.)

Farmers generally believe that the production and marketing chain for crops must be improved so that "peanut chaos" does not repeatedly undermine farmers' confidence. In this regard, Hu Chung-jih, Director-General of the Agriculture and Food Agency, said in a recent interview that next year a "production registration system" for peanuts will definitely be established, making information such as production area, output, quality, price, and import volume all open and transparent. Only then can processing plants feel confident about taking on the crop, and only then can the government respond early and prepare for imbalances.

November Peanut Prices Were Like a Roller Coaster, Farmers Trembled with Fear

Farmers described this year's peanut price fluctuations as like riding a roller coaster. The second-crop peanut fields (early-sown in July) were affected by the 812 heavy rains, with output falling by 20 to 30 percent. With less supply, prices rose. The opening price in early November was 45 yuan (per Taiwan catty), then rose to 48 yuan, but in less than five days the price fell by nearly ten yuan. Then, on November 12, the results of the import quota "premium" bidding were announced, and Yunlin County Magistrate Chang Li-shan also misspoke about "import news" at the county council, making the already frozen peanut buying sentiment even more sluggish.

Originally it was thought the final purchase price would be 35 yuan (per Taiwan catty). "In fact, this is also the average farm-gate price for second-crop peanuts in past years. As long as there is no major typhoon or disaster, the purchase price is almost always like this (35 yuan)." Unexpectedly, the government suddenly stepped in, allowing peanuts at the end of the production period to close at a support price of 40 yuan, higher than the market rate. Kang Tien-tsai, who grows oil beans (specifically used to make cooking oil), sighed, "With 40 yuan, we should be secretly smiling now; we can't keep thinking about getting more."

Crop Failure and Low Output: Farmers Originally Expected Prices to Rise, but They Fell Rapidly

A peanut farmer surnamed Huang in Maguangcuo, Tuku Township, said that this year there was indeed a crop failure. In past years his field could produce 800-900 Taiwan catties per fen, but this year only 200-500 (Taiwan catties). "At first the output was frightening; everyone thought, how can it be so little, so the purchase price kept rising." But as middlemen filled up their inventories and supply from producing areas increased, the overall purchase price began to fall, settling around 35 to 36 yuan.

In addition to market supply and demand mechanisms, some farmers believe that announcing the results of the tariff quota "premium" bidding during the harvest period is too sensitive. Although the bidding results have been announced in mid-November in past years, this year domestic second-crop peanuts clearly had a chance to push prices higher, only to be crushed by the "import news."

Regardless of Peanut Quality, Purchases Are Made at the Same Price, and Farmers' Feelings Differ Greatly

Afterward, the Council of Agriculture called for "price-support purchases," hoping to stabilize farm-gate prices as soon as possible. However, this also meant peanuts of uneven quality all met the same fate. Lin Chien-sheng, who helped "review" purchase quality at one cooperative after another, said that some pods were clearly substandard at a glance, and offering 40 yuan for such quality would simply make things hard on processing plants. But if they did not step in, they would be watching the fruits of farmers' four months of hard work go up in smoke. Whether he judged them qualified or not, he was caught in a dilemma.

The situation was just the opposite for Maguangcuo peanut farmer Chang Wen-huo. His peanuts had a high good-quality rate, and his yield was also 600 Taiwan catties per fen, making him one of this year's "top performers." "Last year the quality was even better, the pods were whiter, and there were many with three kernels; output even reached nearly 900 (Taiwan catties)." But he did not catch the earlier purchase price of 47 yuan, and had expected a second round of increases. Now that the government says it will buy at 40 yuan, he can only accept it.

The purchase price was the same, but farmers' feelings differed greatly. "40 yuan is both a support price and a ceiling price!" A farmer surnamed Lin in Dongshi Township was equally resentful. How could peanuts of good and poor quality all have the same purchase price of 40 yuan? Although helpless, he could only accept it. Chen Ping-chou, chairman of the Yuanchang Township Young Farmers Association, grows Black King Kong (that is, black peanuts). He said Black King Kong has a growing period 20 days longer than oil beans, and field input and management costs are higher. The farm-gate purchase prices of the two differ by 10-20 yuan (per Taiwan catty). Now with a support purchase price of 40 yuan, it is equivalent to declaring the upper price limit for Black King Kong, which is unfair.

"We Haven't Received the Money Yet; No Matter What They Say, We Don't Feel at Ease"

A peanut farmer surnamed Wu, who had only gone to the Dongshi Township Farmers' Association the day before to register for purchases and was still waiting for the Agriculture and Food Agency to match him with other cooperatives, has never been confident about whether the "peanut chaos" is over. "We haven't received the money yet; no matter what they say, we don't feel at ease. Although the government says it will buy at 40 yuan, it hasn't said who will come to buy, and no one has come to look at our fields. We don't know whether they will buy everything or whether there are any quality standards. We can only keep waiting."

After seven days of drying, the harvested peanuts are completely dry. Leaving them in the open air one more day adds one more risk. He worries that peanuts left too long will decline in quality or even lose oil content, and if the weather is unstable and changes suddenly, there are even greater concerns about mold or insects. Not only are the peanuts suffering, but the farmers waiting for government purchases are also enduring torment.

Therefore, a small number of peanut farmers did not participate in the central government's purchase policy this time and still chose to sell to familiar middlemen at 35 or 36 yuan, prioritizing cash in hand for greater security. A farmer surnamed Hung, who grows nearly 1 hectare of peanut fields, admitted that he was worried the government would go back on its word or that the policy would change, and was also afraid that if the peanuts were not sold soon and quality declined, the later the purchase price would be, the lower it would become.

Low Good-Quality Rate This Year, Farmers Suffered Crop Failure, and Middlemen's Processing Costs Were Also High

This year in August there were consecutive days of heavy rain. Rain during the flowering period led to poor pollination, and later growth lacked rain and was dry, which also affected peanut fruit development. Volatile weather not only affected output but also hurt quality. "What used to be spread out like this was the amount from three fen of land; now all six fen of land is only this much." Liu Ming-tsun, who grows white-kernel peanuts, said that in past years one fen of land yielded 700 Taiwan catties, but this year it was halved to only 400 Taiwan catties. Chang Pao-cheng, who switched from rice to peanuts, also said that this year output was low and quality was not top-grade, so he had to specially hire workers to do sorting, adding another 10 percent to costs.

Observations from the purchasing side were even more striking. Walking into a peanut shelling factory where machines rumbled so loudly that people had to shout to talk, the Luohuasheng Production and Marketing Group in Huwei Township has machinery and equipment with shelling capacity among the top in the country, able to process 300 bags, about 10 tonnes, of in-shell peanuts a day. Almost all harvested and sun-dried peanuts must first go through shelling before processing.

Ting Ming-kuei, chairman of the National Peanut Association, pointed out that this year the good-quality rate of peanuts was extremely low. From 15 tonnes of in-shell peanuts, only 8.5 tonnes of peanut kernels suitable for processing could be selected. "Only half of what we buy can be used." (Note)