U.S. farmers fear demand hurt by peanut butter scare

WASHINGTON (Reuters) - U.S. farmers say they're worried that the food poisoning outbreak linked to peanut butter could scare consumers away from the American staple at a time when a record crop is already weighing on the market.

An outbreak of salmonella traced to a peanut plant in Georgia has made more than 500 people in 43 states sick, and may be linked to eight deaths, U.S. officials have said.

"Right now, we're fearful," said Wes Shannon of Tift County, Georgia, who, like most peanut growers, runs a small family farm.

The outbreak was traced to the Peanut Corporation of America in Blakely, Georgia, according to the U.S. Food and Drug Administration.

The company's peanut butter ingredients have been identified in cookies, energy bars, candy, ice cream, and dog treats, and more than 180 products that have been pulled from store shelves.

So far, about 31 million pounds of peanut butter and paste have been recalled, affecting products made by General Mills Inc, Kellogg Co, PetSmart Inc and other companies.

Other brands of peanut butter, including the jars that line supermarket shelves, are not involved in the recalls.

Americans eat about 700 million pounds of peanut butter and 600 million pounds of peanuts a year, according to the National Peanut Board.

The salmonella scare couldn't have come at a worse time for farmers, said Larry Ford, who plants 800 acres of peanuts on his 2,500-acre farm in Florida.

Last year, farmers harvested a record 5.15 billion pounds of peanuts, up 40 percent from 2007, government data shows.

"In one year, we have just got more peanuts than we've got places to go with them," Ford said.

Ford's 2008 crop was sold long ago. But he worries contracts for the coming year will be slashed, as peanut shelling companies were already calling for a 20 percent cut in plantings before the outbreak.

Peanuts are the "main money-maker" on Dee Dee Darden's small farm in Smithfield, Virginia. She said slumping consumer demand would hurt her acreage and bottom line.

"I hope that people don't have the mass hysteria -- 'Oh we have to get rid of all the peanuts' -- but really listen and understand that there are a lot of safe peanut products out there," she said.

Darden also runs a small country store, and said her customers haven't stopped buying peanut items.

"When times are tight with the economy, people tend to eat peanut butter because it's one of the cheapest sources of protein that we have available," she said.

A market researcher who studies how consumers shop said she expected consumers won't stay away from peanut butter for long.

"We will see a temporary dip in purchases, and then over a three-month period, consumers almost have like amnesia that anything was ever wrong to begin with," said Michelle Barry, senior vice president of The Hartman Group in Bellevue, Washington.

(Editing by Walter Bagley)