A peanut glut "threatening to hand American taxpayers a near $2-billion bailout bill over the next three years" is the subject of a dispatch by Reuters:
U.S. farmers look set to keep producing more peanuts than Americans can consume, leaving taxpayers on the hook.
First, the U.S. Department of Agriculture (USDA) is paying farmers most of the difference between the "reference price" of $535 per ton (26.75 cents per lb) and market prices, now below $400 per ton. A Nov. 18 report to Congress estimates such payments this year for peanuts exceed those for corn and soybeans by more than $100 per acre.
Secondly, government loan guarantees mean once prices fall below levels used to value their crops as collateral, farmers have an incentive to default on the loans and hand over the peanuts to the USDA rather than sell them to make the payments.