Processing Costs and Derived Demand for Screened Versus Unscreened Farmer Stock Peanuts1

Abstract

Abstract Screening of farmer stock peanuts separates smaller, lower value pods from larger, higher value pods by mechanical separation. The returns to screening farmer stock peanuts depend on prescreened peanut quality. The purpose of this research was to examine the post-harvest processing costs and the resulting derived demand schedules between screened and unscreened lots. Screening increased value by $19.79/Mg in screened versus unscreened lots. Due to the removal of peanuts during the screening process, the farmer stock lot value and total value of 45 paired farmer stock lots comparing screened versus unscreened lots differed by only $2.45 (0.10%) and $109.98 (0.98%), respectively. Thus, the total purchase cost to shellers for screened lots is not significantly different from unscreened lots. Differences in shelled stock values on a per ton, per lot, and total basis were $38.86, $17.29, and $704.01, respectively, where processing cost differences were assumed to be zero. However, 16 shelled stock lots (20,287 kg) were rejected due to aflatoxin > 15 ppb in the unscreened peanuts compared to five rejected lots (5265 kg) in the screened peanuts. Estimates for blanching cost and product loss due to shrink and disappearance were applied to the unscreened and screened lots, respectively. For farmer stock lots in which at least one shelled stock lot was rejected, the added processing costs per Mg equate to $349.54 and $153.43 in the unscreened and screened lots, respectively. Deducting the added processing cost from the loan value ($677.73/Mg) resulted in net farmer stock values per Mg of $328.19 and $524.30 in the unscreened and screened lots, respectively. Thus, screening peanuts improved shelled stock peanut quality by reducing rejected lots and processing costs.