United States 

Department 

of Agriculture 

www.ers.usda.gov 

 A Report from the Economic Research Service

Kelsey Wittenberger, kwittenberger@ers.usda.gov

Erik Dohlman, edohlman@ers.usda.gov

Peanut Outlook

Impacts of the 2008-09 Foodborne 

Illness Outbreak Linked to 

Salmonella in Peanuts

Abstract

Between January and April 2009, a foodborne illness outbreak linked to Salmonella

resulted in one of the largest food safety recalls ever in the United States. The source 

of the outbreak was linked to one peanut processor handling less than 2 percent of the 

U.S. peanut supply, but the scope of the recalls was magnified because the processed 

peanut products were used as ingredients in more than 3,900 products. Although 

consumer purchases of peanut-containing products initially slowed as the scope of 

the recalls spread, retail purchases returned to normal within several months and the 

total volume of peanuts processed during the 2008/09 (August-July) marketing year 

increased slightly from that of the previous year. These developments suggest that the 

recalls will not have a lasting impact on peanut demand and production. 

Keywords: Peanuts, Salmonella, food safety

Acknowledgments

The authors are grateful to Mark Ash, Linda Calvin, Lewrene Glaser, Fred Kuchler, 

Janet Perry, Daniel Pick, and Greg Pompelli of the Economic Research Service for 

their insightful comments and suggestions on this report.We also appreciate the timely 

effort and helpful review comments made by Tiffany Arthur and Scott Sanford (Farm 

Service Agency) and Nathan Smith (University of Georgia).We extend gratitude to 

Linda Hatcher for excellent and precise editing and for support in preparing the manuscript for publication.

Contents

Approved by USDA’s 

World Agricultural 

Outlook Board

Processed Peanut Recalls of 

2009 Linked to Salmonella. . . 2

Background on the 

Peanut Industry. . . . . . . . . . . 5

Economic Implications of 

Peanut Product Recalls. . . . . 8

Current Issues in Food 

Safety That May Impact 

the Peanut Industry. . . . . . . 12

Conclusions. . . . . . . . . . . . . . . . 13

References. . . . . . . . . . . . . . . . . 14

Appendix 1. Investigations 

by the U.S. Food and Drug 

Administration of PeanutProcessing Plants Owned 

by the Peanut Corporation 

of America in 2009. . . . . . . . 17

Appendix 2. Peanuts: Supply 

and Disappearance on a 

Shelled-Equivilant Basis, 

United States. . . . . . . . . . . . . 18

OCS-10a-01 

February 2010
2

Peanut Outlook: Impacts of the 2008-09 Foodborne Illness Outbreak Linked to Salmonella in Peanuts / OCS-10a-01

Economic Research Service/USDA

One of the Largest Food Recalls in U.S. 

History Is Linked to Processed Peanuts

The 2008-09 foodborne illness outbreak linked to processed peanuts caused 

one of the largest food recalls in U.S. history. From the time the Centers 

for Disease Control and Prevention (CDC)1

 began tracking these outbreaks 

in November 2008 to the agency’s final report in April 2009, 714 cases of 

illness were linked to Salmonella Typhimurium and may have contributed 

to 9 deaths (CDC, 2009). The U.S. Food and Drug Administration (FDA) 

identified two peanut-processing plants owned by the Peanut Corporation of 

America (PCA) as the source of contamination. Both plants were primarily 

intermediary processors that sold ingredients to other companies. Most 

recalled products, such as cakes, candy, cookies, peanut crackers, and ice 

cream, contained peanut paste or peanut butter. Other products, including pet 

foods and snack mixes, contained blanched, granulated, or roasted peanuts. 

Some recalled products were produced in bulk and sold directly to institutions for use or repackaging. Total recalls involved more than 3,900 products 

from over 200 companies (CDC, 2009; FDA, 2009b).

The cost to consumers and producers from food safety recalls can be large. 

Direct costs from recalls were primarily borne by manufacturers of processed 

foods rather than by manufacturers typically associated with the peanut 

industry (such as shellers and peanut processors). U.S. peanut supplies were 

basically unaffected because recalled products contained less than 2 percent 

of the peanut supply. Nevertheless, sales of nearly all products containing 

peanuts declined temporarily as consumers waited for potentially harmful 

products to be identified and removed from store shelves. Initial data suggest 

that consumer purchases of products containing peanuts declined between 

January and February 2009 and returned to previous levels by April 2009 

(Smith, 2009; The Nielsen Company, 2009a; The Nielsen Company, 2009b; 

The Nielson Company, 2009c; National Peanut Board, 2009).2

Foodborne Illnesses Affect a Wide Range 

of Products and Can be Difficult To Trace

An estimated 76 million cases of foodborne illness occur each year in the 

United States, causing approximately 325,000 hospitalizations and 5,000 

deaths (CDC, 2005a). Local and State health departments investigate 

between 400 and 500 foodborne illness outbreaks each year (CDC, 2005a). 

These investigations often remain unresolved due to the difficulty of identifying and grouping cases of an outbreak within a short period. In some cases, 

especially at the start of an investigation, officials are only able to narrow the 

source of contamination to a particular commodity (such as strawberries) or a 

group of processors or producers (such as spinach produced in California).

When faced with a large multi-State outbreak and only partial information on 

the source of contamination, the CDC, along with other regulatory agencies, 

issues consumer warnings. Recent warnings have involved raw alfalfa sprouts 

Processed Peanut Recalls 

of 2009 Linked to Salmonella

1

The food safety role of CDC is 

primarily to monitor, investigate, and 

identify foodborne illness outbreaks. It 

is not a regulatory agency, but it works 

closely with regulators and health 

departments at the Federal, State, and 

local levels to gather information and 

coordinate communication about risks 

to the public.

2

The authors did not have direct 

access to this retail scanner data. With 

access to more detailed data, a more 

refined analysis of consumer purchasing behavior by product type would be 

possible.
3

Peanut Outlook: Impacts of the 2008-09 Foodborne Illness Outbreak Linked to Salmonella in Peanuts / OCS-10a-01

Economic Research Service/USDA

(2009), raw jalapeño peppers and raw serrano peppers (2008), tomatoes 

(2008), and bagged spinach (2006). As an investigation progresses, regulators are often able to identify the source of contamination more precisely and 

target their control measures accordingly.

Events Surrounding the 2009 

Recalls of Processed Peanuts

CDC first noted a new outbreak of Salmonella Typhimurium3 on November 

10, 2008, and worked with State and local partners to assess the outbreak. 

Preliminary analysis by CDC and public health officials in multiple States 

through January 4, 2009, suggested peanut butter as the likely source of 

the bacteria causing the infections (CDC, 2009). On January 8, 2009, the 

Minnesota Department of Health further identified the likely source as King 

Nut peanut butter. The next day, FDA4

 initiated inspections at the processing 

plant that produced King Nut peanut butter, which was owned by the Peanut 

Corporation of America (PCA). For a timeline of FDA investigations of PCA 

processing facilities, see appendix 1.

On January 10, an opened 5-pound container of King Nut peanut butter tested 

positive for the outbreak strain of Salmonella. While it was possible that the 

peanut butter was contaminated after it was opened, PCA initiated a limited, 

voluntary recall of King Nut peanut butter. This brand was primarily sold in 

bulk containers to institutions rather than directly to consumers.

CDC issued 24 public reports about the foodborne disease outbreak from 

January 8, 2009, to March 16, 2009. CDC began reporting by citing specific 

recalls:5

 on January 12, CDC issued a public announcement that King Nut 

peanut butter was the likely source of the outbreak; on January 13, CDC 

reported further recalls of peanut butter; and on January 16, recalls of peanut 

crackers were mentioned. However, after initial investigation of PCA’s 

processing plant in Blakely, GA, it became apparent that the recalls would be 

too numerous to communicate individually in CDC reports.

On January 17, CDC recommended that consumers “postpone eating other 

peanut butter containing products...until information became available about 

whether that product may be affected” (CDC, 2009). This report emphasized 

that major retail brands of peanut butter did not appear to be associated with 

the outbreak. Furthermore, this report referenced for the first time a standalone FDA website that detailed product recalls associated with peanuts. As 

this webpage was updated and improved, CDC reports shifted from listing 

recalled products to referencing product categories and providing a link for 

more specific information.

PCA, which was headquartered in Lynchburg, VA, processed peanuts in nine 

production facilities throughout the United States. PCA primarily sold bulk 

shipments to institutions (cafeterias, nursing homes, etc.) for direct use and 

to food manufacturers for use as an ingredient in processed foods. The first 

PCA plant to be investigated by FDA was located in Blakely, GA (appendix 

1). Subsequently, several other PCA plants were investigated, and a second 

processing plant in Plainview, TX, also issued a recall. PCA faced extensive 

liability as a result of numerous lawsuits filed by consumers and their intermediaries and filed for chapter 7 bankruptcy on February 13, 2009. 

3

The bacteria Salmonella causes the 

disease salmonellosis in humans, and 

is the second most common identified 

foodborne illness for humans in the 

United States, causing approximately 

40,000 cases of salmonellosis each year 

(CDC, 2008). Because many milder 

cases are not diagnosed or reported, the 

actual number of infections is likely 

much higher, with studies suggesting 

that less than 1 in 30 Salmonella cases 

are reported and identified by health 

professionals (Frenzen et al., 1999). 

4

FDA regulates about 80 percent of 

the U.S. food supply, with approximately 2,700 food inspection staff throughout the United States responsible for the 

oversight of roughly 44,000 U.S. food 

manufacturers and 100,000 registered 

food facilities (Becker, 2009). Some 

of the foods in FDA’s purview include 

dairy products, produce, processed 

foods, food additives, animal feed, 

game and exotic meats, and veterinary 

drugs (Buzby et al., 2008). FDA does 

not regulate domestic and imported 

meats, poultry, and processed egg 

products that are otherwise inspected 

by USDA’s Food Safety and Inspection 

Service.

5

All food safety recalls were voluntary and issued by affected companies. 

FDA coordinated the release of this 

information, and CDC issued summary 

reports to more widely communicate 

this information to the public.
4

Peanut Outlook: Impacts of the 2008-09 Foodborne Illness Outbreak Linked to Salmonella in Peanuts / OCS-10a-01

Economic Research Service/USDA

The 2008-09 foodborne illness outbreak linked to Salmonella in peanuts 

caused one of the largest food recalls in U.S. history. National news media 

coverage was more sustained than usual due to the size of the recall and 

numerous updates. According to the final CDC report published on April 

29, 2009, 714 cases of illness linked to Salmonella Typhimurium were 

confirmed, with 9 illnesses contributing to death.

Although peanuts processed by PCA accounted for at most 2 percent of the 

U.S. peanut supply, they led to the recall of over 3,900 products containing 

peanuts by more than 200 food manufacturing companies (CDC, 2009; FDA, 

2009b). Recalled products containing peanut ingredients include brownies, 

cakes, pies, many types of candy, cereals, cookies, crackers, donuts, dressings 

and seasonings, prepared fruit and vegetable products, ice creams, peanut 

butter and products, pet foods, pre-packaged meals, snack bars, snack mixes, 

and toppings (FDA, 2009b). 
5

Peanut Outlook: Impacts of the 2008-09 Foodborne Illness Outbreak Linked to Salmonella in Peanuts / OCS-10a-01

Economic Research Service/USDA

Although relatively small from the perspective of the overall farm economy, 

peanuts are an important crop in parts of the three main production regions: 

the Southeast (Georgia, Alabama, Florida, Mississippi, and South Carolina), 

the Southwest (Texas, Oklahoma, and New Mexico), and the Mid-Atlantic 

(Virginia and North Carolina). In 2007, 6,182 farms produced peanuts (U.S. 

Department of Agriculture (USDA), National Agricultural Statistics Service 

(NASS), 2009b). In 2008/09, production hit a record 5.1 billion pounds with 

a farm-gate value of $1.2 billion (USDA, NASS, 2009a).6

Peanut Processing

The peanut-processing industry is complex, with multiple transactions between 

firms occurring before the commodity reaches its final market. However, in terms 

of food safety, the peanut industry is easier to manage than many because peanuts 

are rarely sold fresh. Processors heat shelled and roasted peanuts to a high 

temperature, destroying much of the bacteria present. To date, regulation for the 

control of bacteria has focused on this processing step.

After harvest, raw peanuts are dried to prevent spoilage. USDA provides 

inspection and grading services, designed to segregate peanuts into edible 

and inedible classes and to determine quality premiums and producer prices. 

Often, raw peanuts are then stored in cold storage warehouses until they are 

further processed.

In the United States, the majority of peanuts are shelled (i.e., the shell is 

removed) and the majority of shelled peanuts are processed and used as 

ingredients in peanut butter, snack foods (such as nut and trail mixes), 

candy, and other products (primarily extracts and flavor enhancers) (fig. 1) 

(appendix 2). A sizable amount of shelled peanuts are also exported and 

processed in other countries or crushed domestically to obtain peanut oil 

(used for cooking) and meal (used mainly as an animal feed). In addition, 

a small amount of peanuts are used as planting seed or roasted and sold as 

“ballpark” nuts and in-shell snacks.

Large food manufacturers that use shelled peanuts typically process them 

in-house because they prefer the control and cost savings in-house processing 

brings. However, some stand-alone processors sell processed peanut ingredients 

to other food manufacturers. Stand-alone peanut processors, such as PCA, tend to 

supply a large number of buyers with small batches of processed peanuts. 

Prior to the 2009 Recalls, the Volume 

of Peanut Processing Was Steady

USDA’s National Agricultural Statistics Service (NASS) publishes monthly 

data on peanut stocks and processing, which serve as a proxy for peanut 

use. Total processing volume was steady between 1999/00 and 2002/03 and 

then increased for several years until 2004/05. From 2004/05 until 2007/08, 

volume was steady at around 2.1 billion pounds of “farm stock”7 peanuts 

annually as increasing peanut butter processing offset declines in every other 

category (fig. 2). Peanut butter production (and use) was aided by the slow 

Background on the Peanut Industry

6

The Peanut Backgrounder provides 

an overview of the policy environment and broad market trends in the 

peanut industry (Dohlman and Livezey, 

2005). The monthly Oil Crops Outlook

provides up-to-date forecasts of peanut 

production, supply, demand, and prices 

(Ash et al., monthly).

7

USDA adjusts data relating to 

peanuts to an in-shell-equivalent basis 

to enable comparison across product 

categories. A conversion factor of 

1.33 is typically used when converting 

shelled peanuts to an equivalent in-shell 

measure.
6

Peanut Outlook: Impacts of the 2008-09 Foodborne Illness Outbreak Linked to Salmonella in Peanuts / OCS-10a-01

Economic Research Service/USDA

rate of increase in the retail price of peanut butter between 1999 and 2008. 

Retail peanut butter prices lagged behind the overall Consumer Price Index 

for much of this decade,8

 particularly after passage of the Farm Security Act 

of 2002, which loosened supply restrictions and lowered farm-level prices 

(fig. 3) (U.S. Bureau of Labor Statistics (BLS), 2009; Dohlman et al., 2004; 

Dohlman et al., 2006).The average price of retail creamy peanut butter 

increased 9 percent between 2007/08 and 2008/09, although prices began to 

decline following the recalls of peanut products.

Figure 2

Aided by increasing peanut butter processing, total peanut 

processing increased between 1999/2000 and 2008/2009

Million pounds, farm stock basis

Note: Marketing year is August-July.

Source: USDA, National Agricultural Statistics Service, Peanut Stocks and Processing.

0

500

1,000

1,500

2,000

2,500

3,000

Total

Other

Peanut butter

1999/2000 2001/02 2003/04 2005/06 2007/08

Marketing year

Figure 1

An overview of peanut processing 

Source: USDA, Economic Research Service, Oil Crops Outlook; USDA, National Agricultural 

Statistics Service, Peanut Stocks and Processing; USDA, Foreign Agricultural Service, Global 

Agricultural Trade System.

(90 percent)

Shelling processor

(5 percent)

Planting seed

(20 percent)

Crushing

facility

(20 percent)

Exports

Ball park peanuts

Exports

(1) Peanut oil

(2) Peanut meal

Food

Peanut snacks manufacturer

Peanut butter

Peanut candy

Others

Food

manufacturer

with in-house

peanut

processing

Farm

(5 percent)

Roasting (in shell)

processor

(Together 60 percent)

Peanut

processor

(1) Wholesale or 

retail vegetable oil

(2) Livestock feed Peanut snacks

Peanut butter

Peanut candy

Others

8

BLS tracks the price of creamy 

peanut butter in major cities as a part of 

the Consumer Price Index.
7

Peanut Outlook: Impacts of the 2008-09 Foodborne Illness Outbreak Linked to Salmonella in Peanuts / OCS-10a-01

Economic Research Service/USDA

Figure 3

Retail creamy peanut butter prices trailed 

overall inflation between 2003 and 2008

Index

Note: Peanut data refer to the “U.S. city average for peanut butter, creamy, all sizes, per pound.”

Source: U.S. Department of Labor, Bureau of Labor Statistics.

Consumer Price Index

Food index

Peanut index

95

100

105

110

115

120

125

130

135

140

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
8

Peanut Outlook: Impacts of the 2008-09 Foodborne Illness Outbreak Linked to Salmonella in Peanuts / OCS-10a-01

Economic Research Service/USDA

U.S. Federal or State agencies have initiated only two recalls of peanut products, and both recalls were linked to Salmonella. The first such recall was due 

to a foodborne illness outbreak linked to Salmonella (serotype Tennessee) in 

peanut butter in late 2006 through 2007. The source was traced to a single 

processing facility that produced Peter Pan peanut butter for retail distribution. The peanut processor issued a nationwide, voluntary recall, and FDA, in 

conjunction with CDC, warned the public. Retailers and consumers were able 

to identify affected products by the brand name and serial number on the packaging. The identified processing facility was temporarily closed and repaired.

The voluntary recall of peanut butter and consumer warnings in 2007 did not 

appear to strongly affect use of peanut products. In fact, the primary effect was 

to increase peanut butter production in order to replace destroyed peanut butter 

and replenish retail supplies (fig. 4). The ease of identification (by brand and 

batch number) helped consumers and retailers to remove contaminated products 

and may have contributed to a temporary shift to other brands of peanut butter.

Economic Implications of 

2009 Peanut Product Recalls

Two major companies that collect retail scanner data9 released 4-week data 

on peanut butter purchases covering periods during and after the food safety 

recalls.10 These data show that 2009 purchases of peanut butter declined in 

the first 4 weeks of January and February compared with 2008 purchases 

(Smith, 2009; The Nielsen Company, 2009a; The Nielsen Company, 2009b; 

The Nielson Company, 2009c; National Peanut Board, 2009). Purchases 

declined the most in January, with both companies reporting double-digit 

declines. During the first 4 weeks of April, May, and June 2009, consumer 

Economic Implications of 

 Peanut Product Recalls

9

The Nielsen Company and 

Information Resources, Inc.

10Retail sales data are not publicly 

available for categories of products 

other than peanut butter. In 2008/09, 

peanut butter was 57 percent of U.S. 

peanut processing.

Figure 4

Peanut processing increased for several months 

following the 2007 recall of Peter Pan peanut butter

Million pounds, farm stock basis

Source: USDA, National Agricultural Statistics Service, Peanut Stocks and Processing.

0

50

100

150

200

250

Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July

2006/07

3-year average

prior to 2006/07

Outbreak first announced

February 15, 2007
9

Peanut Outlook: Impacts of the 2008-09 Foodborne Illness Outbreak Linked to Salmonella in Peanuts / OCS-10a-01

Economic Research Service/USDA

purchases increased from the year before. Consumer purchases were unusually high in April and May.

Several factors may have influenced the reported temporary decline in 

consumer purchases in 2009 compared with the same period in 2008. First, 

monthly retail prices for peanut butter (reported by BLS) between January 

and March were, on average, 10 percent higher in 2009 than during the same 

timeframe the preceding year (fig. 5). Second, by comparing just 2 years of 

data, it is unclear whether the monthly variations represented normal variability or whether the changes registered in 2009 were a significant departure 

from longer term trends. Many factors, including seasonal consumption 

patterns, discounts and promotions, and general economic conditions can 

affect demand in a given month. Nevertheless, these data indicate that 

consumers temporarily reduced purchases during the height of the recall of 

peanut-containing products. Afterwards, purchases increased substantially 

when information about recalls was more widely disseminated.

Even though the quantity of products involved in the recalls was large, the 

amount of peanuts contained in these products was not a significant portion 

of the U.S. peanut supply. Consequently, the recalls did not represent a significant disruption to the available supply of peanuts. 

One indicator of anticipated retail demand for peanut products is peanutprocessing activity, which reflects orders from food manufacturers and retailers. 

Even after the recalls were announced, monthly processing volumes remained 

largely unchanged from, or even higher than, levels of the previous 3 years 

(fig. 6). Despite the temporary decline in retail consumer purchases, the volume 

of peanuts processed during the entire 2008/09 marketing year (August/July) 

increased 1.5 percent from the previous year. Processing of peanut butter 

increased 9 percent from the previous year, from 1.35 billion pounds to 1.47 

billion pounds, possibly because major brands of peanut butter were not recalled. 

However, the quantity of processed snack peanuts declined 14 percent, from 565 

million pounds in 2007/08 (on a farm-stock basis) to 489 million in 2008/09.

Figure 5

Recent food safety concerns have not 

significantly affected peanut butter prices

Dollars per pound

Source: U.S. Department of Labor, Bureau of Labor Statistics.

Price of creamy 

peanut butter

Outbreak first 

announced

February 15, 2007

1.00

1.20

1.40

1.60

1.80

2.00

2.20

2.40

2006 2007 2008 2009

Outbreak first 

announced

January 8, 2009
10

Peanut Outlook: Impacts of the 2008-09 Foodborne Illness Outbreak Linked to Salmonella in Peanuts / OCS-10a-01

Economic Research Service/USDA

While recalls of products containing peanuts did not dramatically affect peanut 

processing, without the recalls, processing may have increased further for 

two reasons. First, the 2008 peanut crop was the largest on record. As a result, 

2008/09 ending stocks were unusually high and excess supplies might have 

encouraged greater use. Second, peanut butter is a relatively inexpensive 

staple good, often cited as “recession proof,” and declining consumer incomes 

might have increased use further in the absence of the recalls.11 Thus, uncertainty following the recalls of peanut-containing products may have temporarily dampened some of the incentives to further increase peanut processing.

Food safety outbreaks of perishable commodities can have a large effect 

on the supply and price of available products. In an effort to safeguard the 

public, regulators can restrict supply and drive up prices. For example, a 

restriction on imports of green onions in 2004 more than doubled prices 

for several weeks (Calvin et al., 2004). However, the price of peanut butter 

following food safety recalls of peanut products in 2009 remained the same 

as before the recalls (fig. 5).12 Recalls of products containing peanuts were 

large in total, but did not dramatically restrict supplies of peanut products. 

In addition, peanut products have a long shelf life, which would help smooth 

any temporary restriction in supply.13

Monthly farm-level peanut prices are another potential indicator of a market reaction to the product recalls (fig. 7). Reported farm-level prices actually increased 

following product recalls; however, the farm-level prices reported by NASS 

generally do not represent current market conditions. Typically, farmers contract 

prices before planting begins and may store their harvested peanuts many months 

before completing a sale to a processor. In addition, a revision to the NASS pricecollection methodology (designed to better capture additional payments made to 

farmers) likely boosted reported prices starting in January 2009.14

USDA currently forecasts lower peanut production and prices in 2009/10 

than the year before. However, these developments are primarily a response 

to the large peanut stocks built up by a bumper crop in 2008/09 that was 

11Although the evidence is limited, 

several studies suggest that peanuts 

(specifically, snack peanuts) may be, 

in economics terminology, an “inferior” 

good. Inferior goods are those for 

which consumption tends to increase 

as incomes decline and to decrease as 

incomes grow (He et al., 2005; He et 

al., 1998).

12BLS does not report sale prices or 

discounts (coupons) that may have been 

used to bolster purchases of peanut 

butter.

13A more complete analysis of specific 

products could help determine the price 

impacts at a more microeconomic level.

Figure 6

Peanut processing shows little change following 

2009 recalls of over 3,900 peanut containing products

Million pounds, farm stock basis

Source: USDA, National Agricultural Statistics Service, Peanut Stocks and Processing.

2008/09

3-year average

prior to 2008/09

Outbreak first announced

January 8, 2009, and recalls

0

50

100

150

200

250

Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July

14Buyers are now specifically asked 

the per pound options price they received 

for contract sales. The options price is 

a premium paid in addition to the sale 

price and can be substantial. The change 

was prompted by concerns by USDA’s 

Farm Service Agency, which reported 

that NASS prices were incomplete (GSA 

and OMB, 2008). 
11

Peanut Outlook: Impacts of the 2008-09 Foodborne Illness Outbreak Linked to Salmonella in Peanuts / OCS-10a-01

Economic Research Service/USDA

likely far higher than the industry anticipated. With peanut production 

exceeding anticipated demand by a billion pounds (22 percent of 2008 

production),15 the amount of peanuts in storage at the end of the 2008/09 

peanut crop year was near record levels (fig. 8).

Responding to the reduced number of peanut contracts and lower contract 

prices in 2009, farmers planted the lowest number of acres on record since 

1915—1.11 million acres. Strong yields should keep production at levels 

seen in recent years—but production will remain 30 percent lower than in 

2008. Yields for 2009 are favorable because farmers who planted peanuts 

restricted area to more productive acreage and weather was generally 

supportive of crop development.

15USDA 2008/09 total peanut 

demand forecast as of October 2009.

Figure 7

Monthly peanut farm prices appear unaffected 

by food safety announcements

Cents per pound

Source: USDA, National Agricultural Statistics Service, Agricultural Prices.

Peanut farm prices

First outbreak 

announced

February 15, 2007

2007 2008 2009

Second outbreak 

announced

January 8, 2009

16

17

18

19

20

21

22

23

24

25

26 Data collection 

methodology revised 

starting in January

Figure 8

Peanut ending stocks rise dramatically in 2008/09

Thousand pounds

Note: Marketing year is August-July.

Source: USDA, Economic Research Service, Oil Crops Outlook.

Production

Total use

Ending stocks

0

1,000

2,000

3,000

4,000

5,000

6,000

1986/87 1989/90 1992/93 1995/96 1998/99 2001/02 2004/05 2007/08

Marketing year
12

Peanut Outlook: Impacts of the 2008-09 Foodborne Illness Outbreak Linked to Salmonella in Peanuts / OCS-10a-01

Economic Research Service/USDA

In the wake of these and other recent foodborne illness outbreaks, public 

officials at the national level are considering changes in policies related to 

prevention, surveillance and enforcement, and response and recovery for all 

food products.

A number of congressional committee hearings have been held to discuss 

the outbreak of foodborne illnesses linked to Salmonella in peanuts. On 

February 11, 2009, a congressional hearing by the Oversight and Investigations Subcommittee of the House of Representatives’ Committee on Energy 

and Commerce was held to discuss the outbreak, and industry officials from 

PCA were issued subpoenas to attend. A subsequent hearing by the same 

committee on the role of the industry in the outbreak was held on March 19 

(Stupak, 2009).

In March, the President created a new Food Safety Working Group, chaired 

by the secretaries of the U.S. Department of Health and Human Services 

(HHS) and USDA to review laws and regulations governing food safety 

(USDA and HHS, 2009). Several steps have been taken to prioritize prevention, strengthen surveillance and enforcement, and improve response and 

recovery (USDA, 2009).

The national dialogue to re-evaluate food safety laws has been elevated by 

recent outbreaks linked to Salmonella in peanuts and activities of the 111th 

Congress. On July 30, 2009, the House of Representatives passed the Food 

Safety Enhancement Act of 2009 (H.R. 2749) (Library of Congress, 2009). 

A similar version of this bill, the Food Safety Modernization Act (H.R. 875), 

was referred to the House Agriculture committee and subsequently referred 

to the subcommittee on Livestock, Dairy, and Poultry (Library of Congress, 

2009). The Senate version of the bill (S. 510 - The Food Safety and Modernization Act) was placed on the Legislative Calendar on December 18, 2009.

Current Issues in Food Safety That 

May Impact the Peanut Industry
13

Peanut Outlook: Impacts of the 2008-09 Foodborne Illness Outbreak Linked to Salmonella in Peanuts / OCS-10a-01

Economic Research Service/USDA

Costs resulting from 2009 recalls of peanut-containing products were considerable for consumers and producers. The outbreak resulted in at least 714 

illnesses, which may have contributed to 9 deaths. In addition, over 3,900 

products were recalled by more than 200 companies. U.S. peanut supplies 

were largely unaffected by these recalls, and the primary concern of the 

peanut industry was reduced consumer purchases of all products containing 

peanuts. Retail sales data indicate that, in the months following the initial 

CDC warning on products containing peanut butter, use declined for several 

months but returned to previous-year levels 4 months later. The level of 

peanut processing throughout the outbreak did not diverge significantly from 

historical trends, suggesting that no major decline in peanut purchases were 

anticipated going forward.

Nevertheless, the two multistate foodborne illness outbreaks linked to Salmonella in peanuts have prompted increased media attention and discussions 

related to food safety, leading to some new measures enacted by private 

industry and regulators. During the 2008-09 food recalls linked to peanuts, 

several trade groups responded by coordinating the flow of information from 

the peanut industry to consumers and decisionmakers. Individual States, 

such as Georgia, have also produced legislation to increase oversight of food 

manufacturing and to establish safety guidelines. At the Federal level, debate 

in the 111th Congress is focused on the frequency of inspections, on-farm 

safety standards, preventative safeguards, recall authority, and the organization of public food safety agencies.

The production, supply, and use of peanuts will continue to be governed by 

fundamental supply and demand prospects. Following a bumper harvest in 

2008, ending stocks in 2008/09 were very high. Large ending stocks have 

already resulted in reduced contracting by peanut shellers in 2009, reducing 

anticipated prices and lowering the number of planted acres to the lowest 

level since 1915. Lower production in 2009/10 is forecast to bring ending 

stocks back to normal, possibly supporting farm-stock peanut prices in 

2010. Historically, U.S. per capita peanut consumption has been steady, with 

overall processing rising at about the rate of population growth (Buzby and 

Wells, 2009). Peanut-processing increases in 2008/09 (1.5 percent) were 

similar to historic trend growth despite a temporary slowdown in consumer 

purchases as a result of the foodborne illness outbreak associated with 

processed peanuts. 

Conclusions
14

Peanut Outlook: Impacts of the 2008-09 Foodborne Illness Outbreak Linked to Salmonella in Peanuts / OCS-10a-01

Economic Research Service/USDA

Ash, Mark, Erik Dohlman, and Kelsey Wittenberger. Oil Crops Outlook, 

Monthly, U.S. Department of Agriculture, Economic Research Service, 

http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.

do?documentID=1288

Becker, Geoffrey S. March 2009. The Federal Food Safety System: A Primer, 

RS22600, Congressional Research Service.

Buzby, Jean, Laurian Unnevehr, and Donna Roberts. September 2008. Food 

Safety and Imports: An Analysis of FDA Import Refusal Reports, EIB-39, 

U.S. Department of Agriculture, Economic Research Service, 

http://www.ers.usda.gov/Publications/EIB39/

Buzby, Jean, and Hodan Farah Wells. February 2009. Food Availability Data 

Set, U.S. Department of Agriculture, Economic Research Service, 

http://www.ers.usda.gov/data/foodconsumption/FoodAvailSpreadsheets.

htm#nuts

Calvin, Linda, Belem Avendano, and Rita Schwentesius. December 2004. 

The Economics of Food Safety: The Case of Green Onions and Hepatitis A 

Outbreaks, Outlook Report No. VGS-30501, U.S. Department of Agriculture, 

Economic Research Service, 

http://www.ers.usda.gov/publications/vgs/nov04/vgs30501/

Centers for Disease Control and Prevention (CDC). January 2005a. 

Foodborne Illness: Frequently Asked Questions, http://www.cdc.gov/ncidod/

dbmd/diseaseinfo/files/foodborne_illness_FAQ.pdf

Centers for Disease Control and Prevention (CDC). May 2008. Salmonellosis 

General Information, http://www.cdc.gov/nczved/dfbmd/disease_listing/

salmonellosis_gi.html

Centers for Disease Control and Prevention (CDC). February 2009. 

Investigation Update: Outbreak of Salmonella Typhimurium, http://www.cdc.

gov/salmonella/typhimurium/update.html

Dohlman, Erik, Linwood Hoffman, Edwin Young, and William McBride. 

June 2006. “The U.S. Peanut Quota Buyout: Sectoral Adjustment to Policy 

Change Under the 2002 Farm Act,” in Blandford, D., and B. Hill, eds., Policy 

Reform & Adjustment in the Agricultural Sectors of Developed Countries, 

Wallingford, Oxfordshire, UK: CAB International.

Dohlman, Erik, and Janet Livezey. October 2005. Peanut Backgrounder, 

Outlook Report No. OCS05I01, U.S. Department of Agriculture, Economic 

Research Service, 

http://www.ers.usda.gov/Publications/OCS/Oct05/OCS05I01/

References
15

Peanut Outlook: Impacts of the 2008-09 Foodborne Illness Outbreak Linked to Salmonella in Peanuts / OCS-10a-01

Economic Research Service/USDA

Dohlman, Erik, Edwin Young, Linwood Hoffman, and William McBride. 

July 2004. Peanut Policy Change and Adjustment Under the 2002 Farm Act, 

Outlook Report No. OCS04G01, U.S. Department of Agriculture, Economic 

Research Service, 

http://www.ers.usda.gov/Publications/OCS/Jul04/OCS04G01/

Frenzen, Paul, Lynn Riggs, Jean Buzby, Thomas Breauer, Tanya Roberts, 

Drew Voetsch, and Sudha Reddy. August 1999. “Salmonella Cost Estimate 

Updated Using FoodNet Data,” FoodReview 22(2):10-15, 

http://www.ers.usda.gov/publications/foodreview/may1999/frmay99c.pdf

General Services Administration (GSA) and Office of Management 

and Budget (OMB). October 2008. Justification for Non-Substantive 

Change Request - Peanut Prices 2008, http://www.reginfo.gov/public/do/

PRAViewDocument?ref_nbr=200810-0535-001

He, Senhui, W. Florkowski, A. Elnagheeb. July 1998. “Consumer Characteristics Influencing the Consumption of Nut-containing Products,” Journal of 

Food Distribution Research 28(2):31-44.

He, Senhui, Stanley Fletcher, and Arbindra Rimal. March 2005. “Snack 

Peanut Consumption: Type Preference and Consumption Manners,” Journal 

of Food Distribution Research 36(1):79-85.

Library of Congress. 2009. Thomas - Home. The Library of Congress, 

http://thomas.loc.gov/

National Peanut Board. September 10, 2009. We’re Going Back to Peanut 

Butter (If We Ever Left It), http://www.energyforthegoodlife.org/

The Nielsen Company. February. 2009a. Salmonella Outbreak Taints Peanut 

Butter Sales, http://blog.nielsen.com/nielsenwire/tag/peanut-butter/

The Nielsen Company. March 2009b. Peanut Butter Sales Still Stuck, 

http://blog.nielsen.com/nielsenwire/tag/peanut-butter/

The Nielsen Company. May 2009c. Update: Peanut Butter Sales Back on 

Track, http://blog.nielsen.com/nielsenwire/tag/peanut-butter/

Smith, Ron. April 2009. Peanut Butter Sales Rebound Following Salmonella

Scare, Southwest Farm Press, http://southwestfarmpress.com/peanuts/ 

peanut-butter-sales-0413/

Stupak, Bart, Chairman. March 19, 2009. The Salmonella Outbreak: The 

Role of Industry in Protecting the Nation’s Food Supply, Congressional 

hearing, Committee on Energy and Commerce, Oversight and Investigations.

U.S. Bureau of Labor Statistics (BLS). January 2009. Consumer Price Index 

- Average Price Data, http://www.bls.gov/data/

U.S. Department of Agriculture (USDA). July 2009. Obama Administration 

Delivers on Commitment to Upgrade U.S. Food Safety System, Press release 

no. 0292.09.
16

Peanut Outlook: Impacts of the 2008-09 Foodborne Illness Outbreak Linked to Salmonella in Peanuts / OCS-10a-01

Economic Research Service/USDA

U.S. Department of Agriculture (USDA) and U.S. Department of Health 

and Human Services (HHS). March 2009. President’s Food Safety Working 

Group, http://www.foodsafetyworkinggroup.gov/Home.htm

U.S. Department of Agriculture (USDA), Foreign Agricultural Service. 

Global Agricultural Trade System.

U.S. Department of Agriculture (USDA), National Agricultural Statistics 

Service (NASS). February 2009a. Crop Values 2008 Summary.

U.S. Department of Agriculture (USDA), National Agricultural Statistics 

Service (NASS). February 2009b. (Updated Sept. 2009) 2007 Census of 

Agriculture.

U.S. Food and Drug Administration (FDA). 2009a. Inspectional Observations 

for the Peanut Corporation of America, http://www.fda.gov/ora/frequent/

default.htm

U.S. Food and Drug Administration (FDA). May 2009b. Peanut Product 

Recalls: Salmonella Typhimurium, 

http://www.fda.gov/oc/opacom/hottopics/salmonellatyph.html
17

Peanut Outlook: Impacts of the 2008-09 Foodborne Illness Outbreak Linked to Salmonella in Peanuts / OCS-10a-01

Economic Research Service/USDA

Appendix 1

Investigations by the U.S. Food and Drug Administration of 

peanut processing plants owned by the Peanut Corporation 

of America in 2009

Blakely, Georgia Plainview, Texas

This processing plant primarily produced 

blanched, split, granulated, and roasted 

peanuts. Peanut meal, peanut butter, 

and peanut paste were also produced. 

This processing plant primarily produced 

peanut butter and peanut paste. Some 

dry and oil roasted peanuts were also 

produced.

January 9—FDA begins preliminary 

inspections. Production and shipment of 

peanut paste and peanut butter cease.

January 10—PCA voluntarily recalls 

King Nut and Parnell’s Pride peanut 

butter.

January 13—PCA voluntarily recalls 

certain lots and types of peanut products 

produced since July 1, 2008. 

January 16—PCA expands recall to 

include all peanut butter produced since 

August 8, 2008 and all peanut paste 

produced since September 26, 2008.

January 18—PCA expands recall 

following confirmation of Salmonella

Typhimurium in unopened peanut butter 

containers.

January 28—FDA completes a preliminary report, which prompts a recall of 

everything produced since January 1, 

2007 (FDA, 2009a). Production at the 

facility stops. 

February 5—FDA issues a final investigation report (FDA, 2009a).

February 13—PCA files for bankruptcy.

January 21—FDA begins inspections.

February 4—Inspectors return to start a 

comprehensive inspection.

February 10—PCA voluntarily ceases 

production at the request of the Texas 

Department of State Health Services.

February 12—The State of Texas issues 

an emergency order suspending production and mandating a recall of all products produced since January 1, 2007. 

February 13—PCA files for bankruptcy.

February 26—FDA issues a final investigation report (FDA, 2009a). 

Source: Compiled by USDA, Economic Research Service from FDA and CDC websites and 

personal correspondence.
18

Peanut Outlook: Impacts of the 2008-09 Foodborne Illness Outbreak Linked to Salmonella in Peanuts / OCS-10a-01 Economic Research Service/USDA

Appendix 2Peanuts: Supply and disappearance on a shelled-equivilant basis, United States

Supply Disappearance Price

Year Food use Roasting stock Shrinkage Average

beginning Beginning Peanut Snack Peanut Other Seed and received

Aug. 1 stocks Production Imports Total candy peanuts butter products Use Exports Subtotal Crush Exports use residual Total by farmers

Cents/ 

--------------------------------------------------------------------------Million pounds, farm stock basis------------------------------------------------------------------------- pound

1986/87 845 3,697 2 4,544 427 511 904 99 139 8 2,073 514 665 219 223 3,694 29.2

1987/88 1,003 3,616 2 4,621 433 497 934 110 112 15 2,072 560 620 226 311 3,789 28.0

1988/89 833 3,981 3 4,817 435 507 1,110 82 132 12 2,255 814 689 227 -12 3,973 27.9

1989/90 843 3,990 4 4,837 439 522 1,193 50 125 7 2,323 624 990 252 -52 4,137 28.0

1990/91 701 3,604 27 4,332 406 472 987 51 111 7 2,021 689 655 277 8 3,650 34.7

1991/92 683 4,927 5 5,615 436 461 1,179 45 101 10 2,211 1,103 1,002 211 33 4,560 28.3

1992/93 1,055 4,284 2 5,341 437 469 1,061 33 135 13 2,122 891 951 216 -189 3,991 30.0

1993/94 1,350 3,392 2 4,744 482 464 967 48 141 14 2,088 670 533 205 188 3,684 30.4

1994/95 1,061 4,247 74 5,382 465 401 944 49 164 14 2,009 982 878 192 123 4,184 28.9

1995/96 1,198 3,461 153 4,812 466 369 968 43 163 16 1,993 999 826 175 61 4,054 29.3

1996/97 758 3,661 127 4,546 480 386 968 44 168 17 2,029 692 668 179 182 3,750 28.1

1997/98 795 3,539 141 4,475 467 408 1,011 47 184 19 2,099 544 682 190 112 3,627 28.3

1998/99 848 3,963 155 4,966 506 465 990 30 181 20 2,153 460 562 192 209 3,576 28.4

1999/00 1,392 3,829 180 5,401 472 524 1,027 27 201 18 2,234 713 743 192 287 4,169 25.4

2000/01 1,233 3,266 216 4,715 473 476 1,002 31 216 15 2,184 548 527 193 167 3,619 27.4

2001/02 1,097 4,277 203 5,577 465 476 1,089 27 180 12 2,226 693 700 169 313 4,101 23.4

2002/03 1,476 3,321 75 4,872 471 459 1,102 32 184 7 2,241 857 490 168 242 3,998 18.2

2003/04 875 4,144 38 5,057 487 551 1,199 22 211 14 2,456 536 516 179 250 3,937 19.3

2004/05 1,121 4,288 37 5,446 518 600 1,248 30 215 12 2,600 393 491 207 340 4,032 18.9

2005/06 1,415 4,870 32 6,317 501 597 1,296 23 216 17 2,616 542 491 155 345 4,150 17.3

2006/07 2,167 3,464 61 5,692 497 552 1,321 13 217 14 2,585 513 603 154 317 4,172 17.7

2007/08 1,520 3,672 73 5,265 426 565 1,346 15 185 21 2,517 496 750 192 279 4,234 20.5

2008/09 1,031 5,162 86 6,279 421 489 1,467 12 212 30 2,571 445 727 139 268 4,149 23.0

Sources: USDA, National Agricultural Statistics Service, U.S. Trade Internet System, and Foreign Agricultural Service, Crop Production, Peanut Stocks and Processing, and Agricultural Prices.