America's consumers have been wondering why the price of that old staple, peanut butter, has skyrocketed in recent weeks.
A puzzled mother in Silver Spring, Md., paid $2.69 for a pound of peanut butter in early March and then, one month later, paid $3.99 for the same amount of peanut butter. In many areas, an 18-ounce jar of peanut butter has risen by more than a dollar in just a few months.Government statistics in fact show peanut butter prices have increased by more than 16 percent since just last October. Prices have risen so sharply that the U.S. Department of Agriculture has actually replaced cholesterol-free peanut butter with high-cholesterol cheese in the nation's school lunch program.
The price rise began after a severe drought in the Southeast damaged the 1990-91 peanut crop and dramatically reduced the availability of usable peanuts.
Normally, consumers are understanding when weather-related crop damage causes a product's price increase. But in the case of peanuts, consumers should be outraged that U.S. government policies have actually caused the price rise.
It's hard to believe, but under current law, the government severely limits the domestic peanut supply by dictating who may plant peanuts, how much they may plant, and in what counties and in what states peanuts may be grown for sale.
For example, not a single farm in Delaware is permitted to grow peanuts for sale in the U.S. edible peanut market. Only two farms in California are permitted to do so.
The government also severely restricts the peanut supply by restricting virtually all imports of peanuts - limiting imports to 1.7 million pounds, less than 1 percent of U.S. peanut usage.
President Bush has on his desk a recommendation from the majority of the U.S. International Trade Commission (ITC) that he suspend this import quota.
This will stabilize prices or even decrease them. There is an estimated shortfall of 400 million pounds of domestic peanuts and an increase in the quota of at least 300 million pounds, as the ITC has recommended, will merely make up the difference.
The wealthy corporate owners of peanut-growing rights, however, are desperately trying to prevent the president from allowing peanut imports. They are making a killing off those extra millions of dollars that consumers have to unfairly pay.
They claim, for instance, that there really is no shortage. The fact is, peanuts at the wholesale level are either unavailable, of poor quality or exorbitantly priced. If there were no shortage, the price of raw peanuts would not have doubled last fall from 60 cents to $1.20 per pound.
Many of the stored peanuts are afflicted with huge amounts of a highly carcinogenic mold, called aflatoxin.
The few privileged peanut growers also claim that there is no need to permit imports since peanuts will be harvested beginning in July. This is a misleading argument since only farms in some parts of Texas will be able to harvest the crop that early.
They also claim that imported peanuts are not as healthy as U.S. peanuts. In reality, the peanuts that would be imported, primarily from Argentina, are of virtually the same quality as this year's U.S. crop.
Finally, they claim that since peanuts have government price supports, the taxpayer will have to pay if imports cause a price decrease that falls below the government's support price.
This potential taxpayer cost is actually a good argument for eliminating the peanut supply limits and price supports altogether. They cost consumers $553 million a year in higher prices alone.
Even so, there is virtually no chance that the price of peanuts will go below the support price this year. In-shell peanut prices reached more than $1,200 a ton following the peanut harvest. The price support is $631 per ton.
Consumers should be outraged that peanuts, a healthy, high protein, no-cholesterol food, are now being provided at a lower quality level and an ever-increasing price solely because of government policies.
(Scott Pattison is director of the Washington, D.C. office of Consumer Alert, a non-profit group.)