A bad peanut harvest, as well as farmers getting paid more to grow other crops, has limited the supply and forced many manufactures to raise the prices on the creamy, or chunky, substance. CNNMoney.com explains what price increases you can expect to see:
Kraft (KFT, Fortune 500) will raise prices for its Planters brand peanut butter by 40% starting Monday, while ConAgra (CAG, Fortune 500) has instituted increases of more than 20% for its Peter Pan brand that went into effect this month.
J.M. Smucker (SJM, Fortune 500), which makes Jif, will introduce price hikes of around 30% starting Tuesday.
Prices for a ton of runner peanuts, commonly used to make peanut butter, hit nearly $1,200 this month, according to the U.S. Department of Agriculture. That’s up from just $450 per ton a year ago. Overall, the USDA projects that American peanut production will hit 3.6 billion pounds this year, down 13% from last year.
The price increase is likely to hit many American households. That’s because, as the Washington Post reports, “peanut butter is in 90 percent of American houses” and most American kids “will eat an average of 1,500 peanut butter sandwiches by the time they graduate from high school.”
So what’s the culprit? CNNMoney.com blames “intense heat and drought that hit the southern U.S. this year, as well as to high prices for other crops that led farmers to focus their efforts elsewhere.”
Chris Brand, a spokesman for Giant food stores, told CNNMoney the “outlook does not look good until next year’s crop is harvested and produced.”