International Trade Liberalization Impact on the U.S. Peanut Industry

The acceptance of the NAFTA and GATT trade agreements will impact the U.S. peanut industry. This paper examines trade distorting policies and evaluates the effects of trade liberalization on peanut producers, shellers, manufactures, and U.S. consumers of peanut products. Decreasing marketing quotas and support prices are expected to reduce gross income peanut farmers, revenues to local governments, and tax bases in rural communities. Reduced peanut production would impact buyers/shellers through greater price variability and risk, changes in marketing methods and contractual relationships, and increased emphasis on buying high quality peanuts. Manufactures will have additional sources for peanut supplies. Consumers’ savings from decreases in raw peanuts prices are expected to be less than those from switching to lower-priced peanut products.