Brazilian Peanut Guide

1. Integrated Processing Firms (owns the farms and processing facilities) -> Buyer's market

2. Growers -> Processing Firms -> Buyer's market

3. Growers -> Buyer's Market

The Brazilian peanut industry has a rather distinct value chain where the processing firms equally play a significant role as the actual growers. Processing firms contribute valuable inputs in the production phase in the form of resources (ie: fertilizers, materials) and the growers allot a portion of their harvest volumes to these processing firms as a form of payment. The remaining volume will then become the individual profit for the grower.

Beatrice, Terranuts Amenco, Copercana, and Coplana are among the largest processing firms in Brazil

Another common value chain is the integrated processing firms that possess their own farming facilities and are directly involved with the production, distribution, and even sales. Many of these processing firms also removed the need to deal with middlemen and engage with importers directly in a way making the importers the "middlemen" in the chain.

In the processed peanut value chain, however, the role of brokers is fast diminishing with the exception of Terranuts whose entire volume are distributed through brokers while Coplana restructured its value chain by investing in their own export sales team to handle their entire sales operation.  

Brazil exports around 40% of its peanut crop annually. Peanut production is centered around serving the domestic market first. Virtually all exports are as peanut kernels, and very few peanuts are exported in-shell.

After peanuts are harvested, they are cleaned and processed. Thereafter peanuts are kept in storage (warehouse facilities) until orders are received. 

The harvest to export order summary is as follows:

Harvest -> Washing -> Mechanical Dehusking -> Gravity table -> Grading & Densimetric table -> Sorting by color -> Packaging -> Storage -> Aflatoxin levels analysis -> Shipment 

Peanuts are nitrogen-fixing legumes and are popular in a crop rotation system. Due to its short growth cycle, it can be grown with other annual crops within the same year. In Sao Paulo, it is often grown in rotation with sugarcane.

Brazil has made rapid advances in the mechanization of peanut production.  Brazil produces mostly runner-type peanuts. Runners are better suited to mechanical harvesting than some other varieties. The Brazilian runner types are also cultivated specifically for the Brazilian domestic market. Peanuts are popularly used in the production of confectionery, and sweets containing peanuts are popular. Brazilian runner-type peanuts have uniform, medium-sized kernels. The peanuts that are exported are often also destined for the confectionery industry.

Peanut production has been increasing at a steady rate of 8% per year over the last 5 years, to 720,000 mt in 2022/23.

The state of Sao Paulo in the Southern part of Brazil accounts for 95% of the total peanuts produced. The two main peanut-producing regions within Sao Paulo are Alta Mogiana and Alta Paulista. 

Minas Gerais, to the North of Sao Paulo, is the second largest producing state, at around 4% of the national total. 

The rest of the country's peanut production is scattered.

In Sao Paulo, where more than 90% of the country's peanuts are produced, the optimal planting months are between October and December. The harvest takes place from late February until April. The peak availability of peanuts is from May to July when peanuts have gone through the process of being cleaned and dried and are available in the market. These are also the peak export months for peanuts from Brazil.

Most of the states in the Southern Hemisphere follow a similar seasonality. 

In the Northern Hemisphere, peanuts are planted from late February until early April. The harvest takes place between May and July.

Russia accounted for an estimated 39% of the total exported volumes of Brazilian peanuts in 2022. Russia was followed by Algeria (14%), the Netherlands (9%), the UK (6%), and Poland (3%). The rest are distributed to countries all over the globe, such as South Africa, Colombia, Mexico, Australia, Canada, Vietnam, and Japan.

Brazil's peanut exports to Russia were only slightly impacted by the Russia-Ukraine conflict. Peanut kernel exports to Russia in 2021 were 103,585 mt, and decreased slightly to 97,400 mt (est.) in 2022. Exports to Ukraine were more severely impacted, and in 2022 could be only half of the 22,250 mt which were shipped from Brazil to Ukraine in 2021.

Russia, Ukraine, and other CIS countries are considered the most attractive markets due to their less stringent aflatoxin level requirement and high prices. 

Source: ITC Trade Map

Brazil was the world's 4th largest exporter of shelled peanuts in 2021, with a value of USD 330 million.  

Argentina is the world's largest peanut exporter and a major competitor for Brazilian peanut exports. The 2 countries' harvest and peak export seasons coincide as well. 

Globally four major peanut types are cultivated: Runners, Valencia, Virginia, and Spanish. In Brazil, the runner type is the most commonly cultivated. Runner peanuts have been improved to suit the production and processing needs in Brazil. Runner type peanuts are well suited to mechanical harvesting and processing. This type of peanut has also been improved to give uniform maturation and higher yields.

The runner variety kernels are mostly uniform in size to a pod, which makes them perfect for evenly roasting. Also ideal to make peanut butter, confectionery and snacks. 

Domestic transportation and infrastructure comprised of highways, railways and ports are well established. 

More than 90% of the country's peanuts are produced in the state of Sao Paulo. Being a major commercial hub, the state of Sao Paulo has a well-developed infrastructure. The major peanut-producing regions are around 600 km away from the Port of Santos, from where most peanuts are exported.  Inland transportation from the processing facility to the Port of Santos are often delivered using trucks. 

Exporters must be registered with the Secretariat for Foreign Trade (SECEX) and have an export registration number. Registration as an exporter and obtaining an export number is done through the National Persons Register (CPF) or the National Tax Register (CCG).

A certificate of origin is needed for exports and can be obtained from the Chamber of Commerce. This document contains product specifications and is also used for taxation purposes.

Aflatoxin is one of the most common concerns regarding peanuts and many exporters make effort to abide by the standards of importing markets making this issue less recurrent but other minor quality-related issues such as burnt grain, inconsistent color patterns, and split or peeled peanuts are recurring more often recently.  

The tolerance limit for splits on a batch of raw peanuts is 5%. For other forms or defects, it is 1%. Suppliers will usually carry responsibility for shipments exceeding the tolerance limit.

Apart from the usual phytosanitary requirement, an aflatoxin level measurement is mandatory to determine which market the peanuts are suitable to be exported to. EU markets require 4~8 ppb (part per billion) while most non-EU markets require 5~10 ppb. 

The Brazilian Ministry of Agriculture, Livestock, and Food Supply (MAPA) is the entity responsible for conducting, scheduling, and implementing inspections for peanuts. All applications for inspections are processed online while lab analysis must be conducted physically. Lab results together with other export-related documents are deposited online.

Quality inspection is repeatedly done throughout the processing and packaging stages.

The first inspection is conducted upon the arrival of harvest, visual examination is done to evaluate the husk. During periods of prolonged rain, peanuts soaked in wet soil can get too mouldy for processing. Otherwise, the harvested batch undergoes cleaning and pre-selection, an aflatoxin assessment is then conducted multiple times once the batches are warehoused. Before the shipments are loaded a phytosanitary certificate will be issued.

A 3rd party inspection is occasionally required and the importer must bear the cost for this inspection.

Any issues regarding quality will be investigated to determine the party who will bear the responsibility. Freight operators are often held accountable especially for issues concerning split grains. Normally a loaded container will depart from the warehouse with a 2~3% occurrence of split grain. 

The logistic chain has a total of 6 handling operations, and over the course of these operations, the occurrence of split peanuts will increase to 5~6% upon arrival.