Peanut industry rebounds from salmonella outbreak

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WASHINGTON --- Go figure: Food makers processed more peanuts over the past year than nearly any other time on record despite a national salmonella outbreak blamed for killing nine people and scaring consumers away from peanut products for months. Peanut farmers who once feared $1 billion in losses are chalking up their good fortune to a bad economy that has more people reaching for peanut butter as a cheap lunch.

Agriculture Department numbers back up the theory. Peanuts processed for snacks -- items such as sandwich crackers that were heavily recalled -- were slightly down for the accounting year ending July 31. But peanuts used for peanut butter set an all-time record at 1.1 billion pounds, topping the previous year's total by 100 million pounds.

That was enough to make the year's overall peanut production the third highest in history, missing the top mark set in 2005 by just a fraction of 1 percent, with nearly 2 billion pounds processed.

"This is very unusual," said Sanford Miller, a senior fellow at the Joint Institute for Food Safety and Applied Nutrition at the University of Maryland. He said the rebound from a national food scare typically takes far longer, sometimes years.

The salmonella outbreak linked to Peanut Corp. of America was blamed for sickening hundreds of people and led to one of the largest product recalls in U.S. history. Industry officials projected massive losses as the Food and Drug Administration, in January and February, added item after item to a lengthy recall list.

Retail sales of peanut butter -- most brands of which were removed from the tainted peanut supplies -- dropped from about $100 million in monthly sales through the end of 2008 to about $87 million for the four weeks ending Feb. 22, according to market research firm Nielsen.

But by March sales had bounced back to their pre-outbreak strength, remaining high through the summer and fall.

Tim Burch, a peanut farmer from Newton, in southern Georgia, said he and others were "sweating it" in February. Orders stopped coming in and inventories began backing up, he said.

But "it appears that peanuts weathered the storm reasonably well," he said. "I do know that peanut butter manufacturers are running wide open."

There were many industry losers, including those who got stuck with potentially tainted products and little immediate recourse from the company responsible, which filed for bankruptcy.

Also, the booming production didn't translate into record retail sales. Even with the quick rebound, the downturn in the weeks surrounding the scare left annual peanut butter sales down 2.5 percent from the previous year. Industry officials believe peanut snacks were down even more. That gap between sales and production suggests to some that production might have been boosted by the scare as manufacturers and other bulk users restocked after throwing out potentially tainted supplies.

"It took a while for (Peanut Corp. of America) to trace back where all that peanut butter had gone, and because of consumer confusion there was a lot of peanut butter that was discarded," said Patrick Archer, the president of the American Peanut Council. "I think some of the increase was to replace stocks."


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