American Peanut Growers Group LLC

The economics behind your PB&J
Written by: 
Emma Gregg
Produced by: 
Drew Taylor

America’s favorite legume, the peanut, has a growing number of foreign fans.

In the past 15 years, free trade initiatives like the North American Trade Agreement (NAFTA) and the 2002 Farm Bill have brought more international buyers into the American peanut market.

To stay competitive, American peanut farmers have pooled resources and strategized through companies like the American Peanut Growers Group LLC, which allows growers access to better processing technology, cooperative support and a higher percentage of irrigated fields, resulting in a high quality product for the manufacturer and consumer.

APGG

“If you ask our customers what they think of APGG, I believe superior quality is going to be the first thing that comes to mind,” says Terry Shamblin, president and CEO of the group.

Based in Donalsonville, Georgia, APGG is made up of about 90 peanut growers all located in the southwest corner of the state.

Using a state-of-the-art, fifth-generation LMC-designed shelling plant and adjacent cold storage facility, APGG processes, cleans, sizes and sorts the peanuts, and then sells them to buyers who use them to make peanut butter, salted nuts and candy that includes peanuts.

Shamblin says the reason APGG can guarantee the best product is its modern infrastructure and grower-ownership approach.

“We’ve only been in business for 13 years, so everything in our system is using newer technology, more efficient designs and operates more streamlined,” he says.

The majority of peanut growers in Georgia have fields that are 50 percent irrigated, but the growers of APGG have fields with an average of 85 percent irrigation, which means more consistency in the quality, grade and size of their peanuts.

Shamblin says that because APGG is entirely grower-owned, buyers also enjoy being able to communicate with the “grassroots” of the company. 

While APGG is run in similar fashion to a cooperative, the founding farmers chose instead to become a limited liability company (LLC). That’s because in a co-op, every member is allowed a single vote on company matters; APGG wanted its members to have a number of votes (or shares) based on the number of tons they deliver each year.

Shamblin says this system allows APGG to properly build and support an infrastructure based on its productivity.

“But as long as a smaller grower is growing a good peanut and he’s a member of our company he’s going to get paid the same price for his crop as a guy growing way more tons,” Shamblin says.

To support the smaller peanut grower and level the playing field, APGG has taken advantage of government programs such as the USDA Warehouse Loan Program, which provides loans to growers and organizations that store its product in an approved warehouse.

It’s a brave new market

Shamblin says part of the growth and success of APGG reflects the shifting U.S. peanut market.

In the past, peanut production has been controlled by the federal government through a quota system that required the total amount of peanuts sold in America to equal the domestic demand for the product. Any additional peanuts produced had to be exported or crushed for non-edible use.

This system, which was used in other areas of agriculture, kept prices predictable but resulted in an uncompetitive two-tier price system and made it hard for domestic consumption to increase.

The introduction of free trade and NAFTA, however, propelled American peanuts into the competitive world market instead of their sale being limited to the U.S. market. On the flip side, foreign peanuts have made their way into American markets in smaller quantities, and American farmers must compete with lower prices sometimes offered by foreign growers.

In response, in 2002, the federal government passed the Farm Security and Rural Investment Act, or the 2002 Farm Bill, which eliminated quotas and instead offered subsidies and support programs for growers.

The founders of APGG were aware of how the winds of their industry were changing. As early as September 2001, peanut farmers in southwest Georgia began meeting to figure out ways to stay competitive.

“If you look at cooperatives spread over the U.S., peanuts are one of the crops that have certainly lagged behind,” he says.

After the 2002 Farm Bill passed, Shamblin says combining resources became almost a necessity. In November 2002, APGG was incorporated, and from that point on the company has been in overdrive.

In March 2003, the company sold stock, and in April began constructing its state-of-the-art shelling plant. Shamblin and his staff moved into their new offices on Labor Day weekend. Around the same time, peanuts started to be delivered to the shelling plant. By the following July, APGG had shelled over 60,000 tons of peanuts.

APGG

“I didn’t have any grey hair back then,” jokes Shamblin. “But after that first year, I certainly do now.”

Aside from the stress of those first few years, Shamblin is very pleased with what APGG members have accomplished.

“We may not have all the good growers in this general area, but if you made a list, I’m positive every one of our [growers] would be on that list,” he says.

The future of peanuts

Today, the company is focused on expanding its facilities and finding new ways for members to be profitable.

In 2011, APGG installed solar panels on its drying sheds so it could sell energy to Georgia Power, an electric utility that supplies electric power and energy services to businesses and residents in the state, and has continued to increase its solar output over the next three years.

APGG

“There’s several things that Georgia is known for and sun just happens to be one of them,” says Shamblin. “It’s been a great addition and certainly our customers are pleased to see that we are providing some extra sustainability to our operation.”

APGG is also increasing the capacity of its shelling facility by 20 percent by replacing its equipment with new, higher-efficiency machines.

“Going forward there are still a number of things we could probably do,” says Shamblin. “But we think it’s best to continue to do exactly what we’re good at, which is shelling the peanuts, and keep asking ourselves, ‘what is the market telling us that it needs?’”

Strategic Partnership(s): 
Southern AGCOM
Renewvia
Lewis M. Carter Manufacturing
J. Smith Lanier & Co. / Nationwide Insurance