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Government Quotas Guarantee $10 Million in Sales To One Georgia Producer

May 24, 1993

WASHINGTON (AP) _ A Georgia farmer and businessman who teamed up six years ago now control the largest share of the government’s peanut quotas, guaranteeing them more than $10 million in gross annual income at current support prices, documents show.

Neon Earl Bass, 46, of Leslie, Ga., and John Varner of Atlanta owned or rented 30.1 million pounds - almost 1 percent of the entire national peanut quota in 1992, according to internal Department of Agriculture records obtained by The Associated Press.

Their hold was almost four times as much as the nation’s second largest quota holder, Hamill McNair of Mitchell County, Ga., who controls 7.8 million pounds, the documents showed.

″It took a good bit of years to get there, six or seven years to do that,″ Bass said in a telephone interview. ″But we weren’t just buying land for the quota, we were buying it to get irrigated land.″

Quotas give the holder the exclusive right to grow peanuts for the domestic market and sell them at government guaranteed prices that are more than twice the world market price. The quotas were assigned to farms decades ago and are transferred when the land is sold.

The peanut program has come under fire in Congress in recent years because of the increasing concentration of the quotas in the hands of a few farmers.

The General Accounting Office, the investigatory arm of Congress, earlier this year found nearly 20 percent of the quotas are held by just 409 producers, and over half are in the hands of 2,334 farmers.

The large quota holders are concentrated in three states. The list of 2,334 farmers includes 1,006 who control 831 million pounds of quota in Georgia; 353 who control 280 million pounds in Alabama; and 302 who control 260 million pounds in Texas.

″It’s a remarkable concentration of benefits in the hands of a very few people,″ said Rep. Dick Armey, R-Texas, a persistent critic of the peanut program. ″There’s only a small portion of farmers who are capable by land condition to grow the crop, and then that small sample is further concentrated by the government giving so few the privilege to sell.″

Supporters, however, say producers like Varner-Bass are an aberration. They contend the program provides economic stability to thousands of small farmers while providing American consumers with a safe, reliable supply of high- quality peanuts.

″In any program, you can’t worry about the 1 percent at the top end or the 1 percent at the bottom end,″ said Mitch Head, a spokesman for the Peanut Advisory Board. ″The program is designed to protect those in the middle.″

The records obtained by the AP show that 25 producers control more than 3 million pounds of quota each, enough to guarantee them more than $1 million in gross income each year, at the current support price of $675 per ton.

The GAO concluded in its study earlier this year that quota holders make an average annual return on their production costs of 51 percent.

But producers like Bass contend gross income figures are misleading and that the average profit margin for peanuts is only $40 to $50 an acre. For an average yield of 3,000 pounds per acre, a farmer with 3 million pounds of quota would have to plant 1,000 acres to make a profit of $40,000 to $50,000, using Bass’ profit estimates.

″We do it in volume, that’s where it comes out,″ Bass said. ″There’s a lot of risk involved that all these people don’t see.″

The increasing concentration of quotas in the hands of so few farmers has even supporters of the program concerned, because of the potential fallout in Congress.

Head, whose organization represents peanut growers, said he thinks most farmers would be willing to discuss changes in the peanut program.

″I don’t think anybody would have any problem discussing it when the next farm bill comes up,″ he said. ″But when you get to the point of telling a farmer he can have only so much quota, I don’t know how you do that.″

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