THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, August 10, 1995 TAG: 9508100455
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY SUSIE STOUGHTON, STAFF WRITER
LENGTH: Long : 122 lines
Peanuts long the mainstay of local economies in Suffolk and western Tidewater - are facing turbulent times.
Nationwide, the industry is being hurt by foreign competition, free trade and health-conscious consumers counting fat grams.
From the farm to the processing plant, employees worry that they may soon be ``working for peanuts.''
The problems are particularly acute in the shelling industry.
To cut costs, some companies are closing plants or shutting down temporarily. Others are cutting employees or restructuring their organizations.
``Anybody in the industry is downsizing,'' William J. Spain Jr., president of Birdsong Peanuts, said last week.
Peanut officials say foreign competition is the main source of the industry's problems. Two agreements adopted by Congress last year - the North American Free Trade Agreement, or NAFTA, and the General Agreement on Tariff and Trades, or GATT - have allowed other countries to import their cheaper peanuts into the United States.
``With NAFTA and GATT, you're getting competition you've never had before,'' Spain said.
``It's probably the biggest challenge we've ever faced, and we've been in business since 1914.''
Other factors are compounding the problem, peanut officials said. Consumption is down, because many adults are watching fat content. Children, however, are eating more fast-foods and less peanut butter. And the government is buying less for school lunches and giveaway food programs.
Birdsong, with operations in all three peanut-producing areas of the country, has not had to cut any employees or close any plants.
Others have not been so lucky.
Golden Peanut, a company that works in partnership with Gold Kist Peanuts in Suffolk, closed its Cordele, Ga., plant in June. At its Suffolk plant, two employee positions were eliminated, said Golden Peanut executive vice president Jimmy Dorsett.
Citing declining domestic peanut consumption and increased competition from imported peanuts, Golden Peanut was forced to cut its work force by 10 percent.
Dorsett also blames GATT and NAFTA.
``When GATT was signed, that opened the door for foreign markets. It's a pretty tough situation,'' Dorsett said.
The total amount of peanuts and peanut butter allowed into the country under GATT and NAFTA this year is 52,920 metric tons, which is about five percent of the domestic market, said Thomas R. ``Dell'' Cotton Jr., manager of Peanut Growers Co-Op Marketing Association.
Those limits will increase to about 10 percent of the domestic market within the next six years, under the trade agreements, he said.
Not covered under the agreements is peanut butter from Mexico, which comes into this country in unlimited amounts.
``That's really more of a problem because we don't know what we're working with,'' he said.
Suffolk's largest peanut plant, Planters Lifesavers', isn't feeling the full pinch of imports, yet. However, there are some chances brewing.
The year-old plant shut down this week. That's not uncommon when inventory is high, company officials said. The $35 million facility employs about 450.
Planters, the largest peanut processing center in the world, is the city's second largest employer. The Factory Street plant processes 1 million pounds of nuts a day, packing them in cans and bags. It has also diversified into pecans, cashews, pistachios, walnuts and almonds and other products.
Last week before the shut-down, plant manager Gerald Chesser resigned to ``pursue other opportunities,'' according to a statement released by the company.
Pat O'Malley, plant manager of the company's Fort Smith, Ark., operation, replaced Chesser and became director of operations, overseeing both plants.
The Suffolk operation concentrates on oil-roasting and Fort Smith primarily does dry roasting.
The company may shift some other responsibilities, said Planters spokesman Chuck Wallington. ``But we're not planning any major layoffs,'' he said.
The Virginia-Carolina Peanut Farmers Co-operative Association just outside Franklin, has made adjustments. It hired a ``crisis manager'' to help mend financial woes.
The 10-year-old co-op recently asked its members to help relieve its debt load, said John Crowgey, who was hired in June to salvage the operation.
Benjamin E. ``Eddie'' Marks Jr., who had been general manager since 1988, left the company last Wednesday, but said he hoped he could resolve differences with the board of directors and complete the two years left on his employment contract.
``The co-op has some financial difficulties that have resulted from the '93 and '94 crops,'' Crowgey said.
Prices paid for raw peanuts could not be recouped after the nuts were shelled, s aid Crowgey, a free-lance consultant and former banker.
Some of the co-op's 1993 and 1994 peanuts are still being stored.
This fall, the co-operative will not buy peanuts but will lease its storage space for farmer stock peanuts to Hancock Peanut Co. in Courtland. The shelling operations and dry storage capacity have not been leased, Crowgey said.
``Our intention is to continue to operate as long as we can as best we can,'' he said. ILLUSTRATION: Color photos by John H. Sheally II, Staff
Franklin co-op's Peanuts are loaded onto a truck at Nansemond Cold
Storage in Suffolk, left.
Plant manager Bennett Howell and supervisor Nat Chavis inspect the
bags, below.
by CNB