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A weekly dose of nutty history, pop culture, and recipes from Lee Zalben, aka The Peanut Butter Guy.

Why Are Peanut and Peanut Butter Prices So High This Year?

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[Karen Sarraga / Shutterstock]

From The Wall Street Journal to the Kalamazoo Gazette, everyone seems to be reporting on the price of peanut butter going through the roof this year.

The major brands of peanut butter have announced wholesale price increases and many consumers have already seen a spike at their local grocery stores by 20% to 30% or more, and those that haven't will likely see increases by the middle of November.

So just what's up with the peanut market?

It's complicated.

The issue involves the farmers that grow the peanuts, the shellers that process them, and companies that buy them to turn into products like peanut butter, cocktail peanuts, peanut brittle, etc.

Let's start with the 2010 peanut crop. While the yield was okay, the quality of the crop wasn't terrific and a higher than usual percentage of the total crop was unsuitable for food processing. That left manufacturers chomping at the bit for peanuts from the 2011 crop.

Under normal circumstances, you'd think that would lead to farmers planting more peanuts in 2011. But it didn't.

You might recall from your seventh grade science class that in the early 1900s George Washington Carver championed the cultivation of peanuts in the South as a way to strengthen the cotton crop. At the time, cotton was being decimated by the boll weevil beetle. Years of monoculture farming had drained the soil of its nutrients and the cotton crops were not strong enough to resist predators. Carver knew that peanuts were a nitrogen-fixing plant, meaning they added nitrogen, a nutrient essential to growing strong cotton, back into the soil. By implementing a crop rotation system, alternating a year of growing cotton with a year of growing peanuts, both crops would be stronger.

Now back to 2011.

The price of cotton was skyrocketing this spring, many suspect due to increased consumption of new clothes by a fast-growing middle class in China. Farmers grew more cotton this year to take advantage of the rising price. And then came the worse thing that could have happened: a drought in the Southeast, which meant that the planted peanuts had depressed yields. A tight situation got even tighter, and following the law of supply and demand, the price of peanuts went up.

At my company, Peanut Butter & Co., we have absorbed as much of the cost increases we're experiencing as possible and are working with our warehouse, freight, and fulfillment suppliers to decrease our overhead so that we can keep our retail price as low as possible (as a natural/specialty product, we're already sold at a premium).

And here's the good news. Ounce for ounce, peanut butter remains one of the most inexpensive forms of protein money can buy, even with the price increases. The National Peanut Board reports that the average consumer will see the cost of one serving of conventional peanut butter (about two tablespoons of a store or mass market brand) will increase less than 4 cents, from 12.7 cents to 16.5 cents.

One tip. Many manufacturers will offer coupons to help soften the blow of any price increases that consumers experience so be sure to check your favorite peanut butter brand's Facebook page and deal sites.

About the author: Lee Zalben was a PB&J-loving kid that grew up to be the founder and president of Peanut Butter & Co., which began as a Greenwich Village sandwich shop serving nothing but peanut butter sandwiches and expanded to include the now-famous line of all natural flavored peanut butter. Lee is a graduate of Vassar College and enjoys traveling the world in search of interesting foods made with peanuts, tree nuts, and seeds. When he's not working, eating, flying or writing, he enjoys scuba diving and training elephants.

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