Hold that PB&J -- peanut prices are going up

This final note today, courtesy of the U.S. Department of Agriculture -- and, incidentally, bad news for the children of the Ryssdal household.

No more crunchy peanut butter in their school lunches. The USDA says the drought in the south is going to trip the 2011 peanut harvest 13 percent. JM Smucker -- which makes Jif and, by itself, accounts for almost half the peanut butter market in this country -- says prices will go up 30 percent by the end of the year.

So you've got to figure creamy's cheaper than crunchy, right? Fewer peanuts?

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Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.
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An occasional guest on Marketplace is Dan Ariely, the Duke behavioral economist famous for writing Predictably Irrational. One of the points I remember him making is that people tend to disproportionately focus on percentage changes in prices, while losing track of the actual dollar total. For example, a normally $300 video game system that is suddenly on sale for 90% off is likely to be much more attractive to an interested buyer than would a typically $15,000 vehicle on sale for 5% off - even though $270 in game system savings is less than $750 in vehicle savings. This explains why auto dealers sometimes give free game systems with new cars.

A standard jar of peanut butter costs about $3, translating a seemingly significant 1/3 increase in price into a fairly minor actual change of $1/jar. If we assume that the Ryssdal family consumes one jar per week or 52 jars per year, the annual addition is merely $52. The percentage change just sounds so much scarier than the actual money change because the product is so cheap to begin with.

I dont know where you live Paul . But here in Florida there is no such animal as 3 dollar peanut butter in brand names. 4 to almost 8 dollars is more realistic.So the price increase is rather significant for me .

Kai - I suggest switching to crunchy almond butter... the kids will love it! (It's also healthier)
Love your show,

Guess we'll all be looking for substitutes for our peanut noodles, peanut butter & jelly sandwiches, etc. I checked with some authorities on the shelf life of unopened jars of peanut butter and their advice was 12-18 months, so I won't be buying huge stores of peanut butter for my pantry. Wonder what Five Guys will do about its free peanut policy?

Oh no! I rely on Jiff Crunchy as a diet staple, and it is an excellent Hurricane food! Just like coffee, climate is limiting the crop yield. The population of the world is increasing - which as a single factor is the one most likely to spell doom for man's future unless we wise-up and stop trying to put 3x people in a 1x world.

Well, Kai, the creamy may actually be a tiny bit more dense by volume with peanuts after the nuts are mashed into paste with air removed, but it matters little. Peanut butter is sold by weight. Which weighs more, a pound of crunchy or a pound of creamy?

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