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Why is the Price of Peanut Butter Soaring?

November 10, 2011  by: Paulose  Points: 20   Category: Money Market    Views: 537

Soaring price of peanut butter is already scorching the peanut butter lovers with its 300 % hike in price. It is still going to increase. The favorite staple of most of the American kids is moving away from the reach of common man with its unimaginable hike in price.


Picking up a jar of peanut butter at a grocery has been a favorite purchase of most the Americans. It was a favorite staple food. Kids love it to add taste in their sandwiches. Most of the American parents dream of peanut butter for their sandwiches, especially in families with kids because they can stretch peanut butter a long way.

Peanut price is soaring high

The price of peanuts is soaring high alarmingly. A ton of Runner peanut was sold for about 450 dollars a year ago but it is about 1,200 dollars now. Runner peanut is a good variety of peanut, large in size and good for roasting, grown in American states. It is popular in making butter. The consumers are blinking hard at this hike and are more worried about the days to come.

Why this hike in the price of peanut butter?

1) Less production

Peanut production this year was 13 percent less than last year. The climatic conditions were not helpful to the crop. Mother nature was not in favor of the farmers. The intense heat and drought conditions in the Southern states of the US, where peanut is produced, caused failure in crop production and the worst peanut harvest in decades.

2) Delay in planting

Farmers who own thousands of acres of land blame the dry weather which was the reason for their delay in planting.

3) Many farmers switched to soy and other crops

Many farmers in the largest peanut-producing states changed their crops and switched over to other money bringing crops. They had expected some drawback in peanut and decided not to plant peanuts this year. Many of them have planted crops like corn, soybean and cotton.

4) Attraction of profits

Profit margin from other crops such as cotton and soy was more attractive than peanut. Moreover, the farmers had to calculate other aspects of income such as crop rotation, irrigation issues, and an e-coli scare which have been affecting peanut since 2009.

5) Increase in demand and shortage of production naturally cause price hike

In the recent years the demand for peanut is increasing since it is healthy for diabetic and cardiovascular patients. Statistics reveal that the Americans are consuming about 800 million pounds of peanuts and related food products every year. Peanut is also used in many other products such as candy production and cosmetics. Hence the demand is increasing more while production is decreasing. This demand and shortage is naturally driving the prices up.

Hard days are ahead. Many grocery stores have already started marking up hiked prices on peanut butter due to the shortage. The price hike is going to pinch the kids in days to come.



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