The Washington Times

(c) 1991 The Washington Times, March 13, 1991

March 13, 1991, Wednesday, Final Edition


LENGTH: 822 words

HEADLINE: Uncle Sam's peanut blockade

BYLINE: James Bovard

BODY: The federal government has created a severe peanut shortage that is skewering American consumers and food manufacturers. While American politicians lecture foreign nations on the need for free trade, U.S. peanut trade policy is designed to allow farmers to maximize their extortion from consumers.

In normal years, the U.S. government creates an artificial shortage of peanuts by a strict licensing system that dictates exactly how many pounds of peanuts each licensed farmer may grow. On top of this, the United States imposes import quotas that permit Americans to buy only 1.7 million pounds of foreign peanuts each year. This amounts to roughly two foreign peanuts per year for each American citizen. It is easier to import rifles, pistols and toxic chemicals into the United States than to import peanuts.

Import quotas help keep U.S. peanut prices far higher than world prices: The U.S. International Trade Commission estimated that the quota was the equivalent of a 90 percent tariff on peanut imports in 1988. In normal years, peanut farmers make far higher profits than most American farmers, and the bankruptcy rate among peanut farmers is far lower than the rate for other farmers.

Last year, a severe drought hit Georgia, where almost half of all U.S. peanuts are grown. As a result, peanut prices soared, doubling between August and November 1990. Peanut butter is so expensive that the Agriculture Department has stopped buying it for the school lunch program.

High prices are skewering companies that use peanuts. Ed Goodrich, president of Plantation Peanuts in Wakefield, Va., observes, "We are now faced with the possibility of having to shut down." A Southeastern peanut confectionery company has seen its sales fall 80 percent since last year. Barcelona Nuts, a Maryland company, recently laid off 20 percent of its workers because of the high peanut prices and falling demand for peanuts. Peanut expert Jim Mack warns, "Come June of 1991, practically all manufacturers will be out of peanuts unless peanut imports are permitted."

The Peanut Butter and Nut Processors Association (PBNPA) has petitioned the Agriculture Department and the U.S. International Trade Commission to allow 400 million pounds of peanuts to be imported. The PBNPA's proposal outraged farm organizations and farm-state congressmen.

Wilbur Gamble, chairman of the Georgia State Peanut Commission, said, "The [PBNPA's] actions may hold severe antitrust ramifications . . . an issue which we are investigating further." In most states, a company violates the antitrust laws by restricting competition. But, apparently, in Georgia anything that increases competition for Georgia peanut farmers is an antitrust violation.

(c) 1991 The Washington Times, March 13, 1991

Rep. Charlie Rose, North Carolina Democrat, warns, "The [PBNPA's] desire for increased profit or redistribution of income is not the basis on which relief should be granted." Mr. Rose is an expert on the "redistribution of income" caused by the federal peanut program: He has received tens of thousands of dollars in campaign contributions from peanut growers and peanut lobbies for helping to keep peanut prices high.

Rep. Bill Dickinson, Alabama Republican, says the peanut program and quotas give U.S. farmers "an equal chance to compete against the protective subsidies afforded by other nations." But major foreign peanut producers receive little or no subsidies from their governments. The U.S. peanut import quota especially harms Argentina, a nation that is struggling to pay back billions of dollars of debts to American banks.

The Agriculture Secretary has authority to recommend an increase in peanut imports. But the Agriculture Department has thus far refused to allow even a single extra bag of goobers into the United States. Agriculture Department spokesman Daniel Sumner said, "The very fact of imports potentially causes disruption." As usual, the Agriculture Department perceives anything that might lower prices as disruptive but believes that high prices are just fine.

Dan Koehler, of the Georgia State Peanut Commission, warns: "We can ill-afford the unilateral disarmament of our [peanut] program at this or any time." This is typical of the mindless terminology used to justify U.S. trade barriers. U.S. peanut import quotas are designed to prohibit American citizens from buying what they choose. We don't need federal intervention to "protect" citizens by decimating the value of their paychecks.

There is danger that, if the current levels of profitability continue, the Mafia may soon get involved in the peanut business. If the U.S. government truly wants Americans to have cheaper food, we should abolish the Agriculture Department.

James Bovard is the author of "The Farm Fiasco" and of the forthcoming "The Fair Trade Fraud."