August 2010

By Hattie Francis

In 2007, the state of Virginia harvested 21,000 acres and 56.7 million pounds of peanuts for a profit of more than $12 million, according to the National Agriculture Statistics Service. Of those 21,000 acres, all of them were from the Southeastern section of the state, which includes the counties of Greensville, Isle of Wight, Southampton, Surry, Sussex, and the City of Suffolk. In 2008, Royal Oak Peanuts, a family-owned and family-operated business in Southampton County, grew 300 acres of peanuts for a total of 1.6 million pounds.

The Pope family of Drewryville, Virginia grow, process, and produce their own peanuts. With a large ‘R’ on the front of each product, along with bright blue labels for salted, green for unsalted and red for Cajun-spiced, their 20- and 40-ounce aluminum tins attract consumers around the nation. By taking advantage of the changes produced by the 2002 farm bill, Royal Oak was successfully established in 2002. Royal Oak Peanuts has grown each year of their existence and is currently thriving despite the failing U.S. economy.

Result of Change
“Royal Oak Peanuts came about because of a dramatic change in the peanut industry,” says partner and president of Royal Oak Peanuts, Stephanie Pope.
Prior to 2002, the Agricultural Adjustment Act of 1938 enforced a quota system whereby the federal government would determine how many tons of peanuts needed to be sold in the domestic market per year. Through this system, the United States government decided how many acres are needed in order to fulfill the projected number of tons. In order to obtain peanut quotas, the farmer had to inherit, purchase, rent or lease a farm that obtained a portion of that quota. Peanuts that were grown on quota land were kept in the domestic market, and could be used as a food source. “Additonals”—peanuts that were grown by farmers that did not have quota land—were exported and crushed into oil or meal.

The government supported quota-grown peanuts by setting a specific rate for them to be sold in the domestic edible market. The federal government would insure these set prices, and toward the end of the quota system, quota peanuts were being sold in the $600 per ton range. Where quota grown peanuts held higher prices, additonals sold for only about $135 per ton.

The 2002 farm bill took all the quotas and converted them into base acres. The value that was attached to the land because of the quota system was lost and the buyout of the quota system forced all prices to equal about $355 per ton. Farmers are now allowed to grow as many peanuts as they want to, wherever they want to. If they can not sell the crop that is produced, farmers can now put them under government loan just like other commodity crops, such as corn or soybeans.

Thanks to the 2002 farm bill, a company like Royal Oak Peanuts could now retain their own peanut crop for human consumption.
“We decided that we needed to be able to market our own peanuts through a value-added product so that we could make money as a farm,” says Pope. “We sell to other competing peanut companies that will buy from us in bulk lots, we sell to consumers with an upscale gourmet product, and then we sell to all different kinds of markets with raw redskins [shelled peanuts] as well.”

The peanut industry has faced tough times after the elimination of quotas, as market swings have been dramatic. “Prices up one year and down the next; and the farmer can’t make a long term decision,” said Pope. For example, as she says that a farmer would struggle when deciding whether to buy a new harvester or not, because that new equipment will have to be financed over at least five years.
Despite constant and drastic swings in the market, Royal Oak Peanuts, the small-town, family-owned company, was born directly after the termination of quota and has continued to succeed since.
Creation and how Royal Oak achieved success
Royal Oak Peanuts is located in the midst of the peanut capital of Virginia. They face competition with well-known peanut companies that have been around “forever and a day,” says Pope as she goes on to name, “Ferides, a great company, Virginia Dinner, HUBS, Appomattox, (and) Virginia Favorites.”

“I never really had anybody to criticize me,” says Pope. “I think people wondered why we would choose to do this when there are so many other peanut companies in the surrounding area, but we are completely different from any of these other big companies that are well known because we actually use our own product off of our farm.”
Instead of buying peanuts in a bulk order and then processing and producing them like large companies do, Royal Oak Peanuts grows their own peanut crop. Where most companies do not know where their peanuts were grown and who grew them, Royal Oak Peanuts controls all of their crop through planting season, harvesting and processing, the final product whether cooked or raw.

Royal Oak Peanuts process and produce Extra Large and Super Extra Large gourmet peanuts that are grown and hand-cooked in small batches on their own farm in Southampton. “Super Extra Large peanuts are by grade 411 kernels per pound or less,” says Pope. It took only a year for Royal Oak Peanuts to move from an idea to reality. But how did they succeed as a small-town, family-owned and family-operated company? Simple: the Pope family took advantage of a close community to build a foundation of possible customers.

“We decided to create a mailing list of people that we knew,” says Pope. “So we comprised the list of family, friends, relatives, and we came up with approximately 300 names that we thought might be interested in purchasing peanuts from us.”
“We also did a catalogue, and I mailed that catalogue to those two to three hundred names that we had and people just started calling in and ordering and then sending Christmas gifts to other people. So our mailing list kept growing, and then people realized we had a website.”
There was a snowball effect created as the website was launched in 2002 and the word was spread about Royal Oak Peanuts.
Stephanie joined several women-owned organizations, one being the National Association of Women Business Owners, where she was able to learn from other women in the business arena. “I would go there and talk with other women business owners and learn from them,” she says. “A lot of them were lawyers, accountants, marketers, and they would basically tell me what I was doing right, what I was doing wrong, and answer any type of questions that I had.”

To continue the company’s success and increase their consumer base, Royal Oak Peanuts attends three to four retail shows each year, as well as the Fancy Food Show in New York City. At these retail shows, customers are able to buy products from their designated booth for retail price without having to pay for shipping and handling. “That has been a great educational learning experience in seeing what all is out there as far as packing, what the current trends are, what we need to strive (for) as our next step as growing as a company, and what is acceptable in manufacturing and processing,” says Pope.
Retails shows prove to be a catch-22 as they help to spread a company’s consumer base while costing thousands of dollars to attend. The Fancy Food Show can cost any where from $7,000 to $10,000 and it is very time-consuming, says Pope.
“To be a small company like we are, it’s a very big step to take in hoping its going to pay off,” she says.

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