With global peanut production huffing past the 45 million metric ton mark in 2018, according to International Nut and Dry Fruit Board, the global appetite for this unassuming ground nut has been skyrocketing. Not only have peanuts established themselves as an increasingly versatile food item in the human diet, but their consumption is distributed globally, with China producing and consuming approximately 40% of the produce.
Worldwide, peanut producers are facing daily challenges, especially when it comes to such a large-scale and wide-ranging supply and demand operation. Concerns regarding food safety and quality, as well as the right pricing model, need to be considered, in order to supply an end-product that is both compliant and in line with consumer demands.
Critical trends in the peanut industry
There are a number of overarching trends, that have not skipped the peanut industry. Global growth of the middle class has led to an increase in consumption of perceivably more sophisticated and healthier food items, such as nuts. On the other hand, foreign contaminants, aflatoxin and decreasing availability of agricultural resources continue to impact the peanut industry.
Certain price-sensitivity issues have also been noted, with a bumper harvest in the USA in 2017 creating an oversupply on the market. This, in turn, pushed the local raw product prices marginally lower. Nonetheless, the price has remained stable over the long run and in line with the demand.
Creating opportunities out of common challenges amongst peanut processors
While the peanut production industry has seen a steady expansion and is projected to record double-digit growth over the next 10 years, certain challenges remain. Some of these have been addressed through the implementation of automation solutions in production plants.
Here are a few challenges and the opportunities that arose out of those, through the implementation of apt strategies.
Globally, countries and trade blocks have undertaken stringent steps to guarantee that the quality of peanuts imported from alternative markets matches their safety criteria. A pre-export check (PEC) certificate is a common instrument for this monitoring. A recent scare between USA producers and the EU regarding revocation of their PEC and inability to export to the block, tackled the scenario of oversupply on the local market and its negative effect on the product price.
Processing equipment with advanced optical systems is well positioned to alleviate some of these concerns. Advanced optical systems can detect anything from mold, to rancidity and yellow discoloration, pinked peanuts, dirty faces and mechanical product damage. Some machine can even pinpoint any traces of aflatoxin amongst the peanuts. With aflatoxin concerns becoming more and more prevalent in the peanut industry, this capability can act as a great safety net for any current or potential producer.
Due to the increasing costs of labor in the peanut production industry, there has been a steady shift towards labor reduction and automation in many developed producer markets. Although this does bring with it a reduction in industry employment levels, the sheer benefits for the producers are manifold.
By eliminating the human-factor challenges, such as the cost of recruitment, days off, fatigue and sight overviews through the implementation of automated systems, the producers not only increase the speed of their production lines, but also the error-free yield and reduced disposal of untainted products.
There are numerous variables that can affect the price that a producer can charge for an end product. In the USA, FDA score assigned to a producer directly correlates to the price that that producer can charge. The higher the score, the higher the price. Also, highly automated production lines have the flexibility to align their products with more competitive prices, due to the absence of high labor costs.
Sorting machinery can assist a peanut producer to manufacture higher quality products, by insulating premium batches from duds and boosting yields. This, in turn, allows them to set higher prices and/or profit margins.
Key global producers and consumers of raw peanuts and related derivatives
According to the most recent statistical yearbook published by the International Nut and Dried Fruit Board, the global peanut production has increased by over 24% over the past decade. This has, in part, been fueled by burgeoning demand from some of the most populous markets in the world.
Currently, the top world producer of peanuts is China (41%), followed by India (14%) and USA (7%). Interestingly, the world consumption figures are all but identical, with China and India taking the top accolades, and USA being pushed into the fourth position by Nigeria.
Although, like any other food industry, peanut production faces various challenges, careful implementation of innovative technologies and strategies can turn these into opportunities. Whether through automation of correct pricing models, jumping onto the innovation bandwagon will guarantee you improved yields and productivity, with your costs charted onto a downward trajectory. Overall, this can guarantee greater profitability over time.