Peanuts in Georgia field
Peanuts in Georgia field - 
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Scott Jagow: We continue now our coverage of the global food crisis. Yesterday, we looked at the causes and the consequences. Consequences could be dire in many countries. But some American farmers who struggled for many years may see things turn around. People are eating more low-cost foods like spaghetti, canned goods and peanut butter. Josephine Bennett reports from Georgia on the situation for peanut farmers.

Josephine Bennett: It's the start of peanut season in South Georgia. Over the next few weeks, farmers here will be plowing and planting their fields. Justin Jones has been farming his whole life. He is counting on increased demand and hopes to be harvesting his crop in about four months.

Justin Jones: We planted last year, if my memory serves me right, about 300 give-or-take acres. And we probably exactly doubled this year to 600 on the nose.

Jones' decision is partially based on the rising price of oil. His Georgia green peanuts don't need fertilizer, and the cost of that fertilizer has doubled over the last few years. But there's a good reason not to grow peanuts: government subsidies on corn-based biofuel. Richard Barnhill is a peanut broker in Albany, Georgia.

Richard Barnhill: The farmer's got to decide can I make more with corn or with peanuts or with cotton or with soybeans. So, the ethanol issue is affecting all farm commodities.

Still. the U.S. department of agriculture is predicting a 16 percent jump in peanut harvests this year. That's because the farmers know the declining dollar will drive demand for peanuts in places like Europe and Japan. China, normally a major world supplier, has decided to hoard all of its peanuts for domestic use.

The storage room at McClesky Mills in Smithville looks like an airplane hangar. A front loader is moving a mountain of peanuts into underground storage. Most of the peanuts here will be used to make peanut butter. Barnhill says sales of the lunchbox staple are up, which is pretty typical in tough economic times like these.

Barnhill: It's a good source of protein. It is affordable. And we also find that one of the first things that people cut out in a tough economy is eating out.

Barnhill says peanut supplies are tight but not critical, at least not yet. But for farmer Justin Jones, increased demand is good news.

Jones: I hope it depletes the supply and makes the price go up. Of course, that's a farmer's motto.

If peanut prices follow the lead of other commodities, Jones will be getting his wish.

In Macon, Georgia, I'm Josephine Bennett for Marketplace

Jagow: Coming up tomorrow, how U.S. food manufacturers are coping with higher-priced ingredients. Check out all the Food Fight coverage on our Web site: