Laverty, John R.

University of Queensland eSpace

833 
ORGANIZED MARKETING AND THE DEVELOP-
MENT OF THE PEANUT INDUSTRY 
[By J. R. LAVERTY] 
22nd October 1953 
The peanut industry is of relatively recent develop-
ment and this development is closely associated with 
the institution and operation of the Peanut Marketing 
Board. 
Although peanuts have been grown in Queensland 
since the turn of the century, it was not until 1920 
that they were grown by farmers in a big way. During 
the 1919-20 season several farmers of the South Bur-
nett area, particularly. Young Brothers, B. J. Johansen 
of Memerambi, and Sam Long, of Tingoora, planted 
areas of from 2 to 5 acres of peanuts. The crop proved 
to be of considerable commercial value and other 
farmers in the Memerambi district planted experi-
mental plots during 1920-21 season. Young Brothers 
increased their acreage from 5 to 40 that year. But 
the market was too restricted to allow any great 
expansion to take place until Mr. A. B. Abel, the prin-
cipal of the Marrackville Margarine Company, which 
had built an oil expression plant at Marrackville, Syd-
ney, came to the South Burnett, in 1922 and purchased 
the entire crop at prices of approximately 4d. per lb. 
for nuts in the shell and 6d. per lb. for kernels. Thus 
an assured market for a much larger quantity of pea-
nuts appeared, just at the time when the suitability 
of the South Burnett area for peanut growing had 
been demonstrated. 
Production increased rapidly from 61 tons in 1922 
to 75 tons in 1923 and 231 tons in 1924. d) The supply 
of peanuts had, by this time, exceeded demand and 
the merchants who had purchased the produce of a 
few farms at a satisfactory price were not prepared 
to pay what growers considered a reasonable price for 
the greater quantity offered in 1924. Consequently, 
the farmers refused to sell and a meeting of growers, 
held at Memerambi, decided to approach the Minister 
for Agriculture and Stock to obtain approval for the 
formation of a Peanut Board under the Primary Pro-
ducts Pools Act of 1922-1923. Mr. Muir was appointed 
a deputation on behalf of the meeting and instructed 
1. Statistics of the State of Queensland (1922-23): Peanut Board (1924), 
834 
to seek the support of the Councfl of Agriculture in 
this venture. Consent was given by the Minister and, 
as no ballot was requested by the growers, the Board 
was formed. To avoid delay in the commencement of 
Board operations, a meeting of growers agreed to 
forego an election of Board members, Messrs. W. Muir 
and C. F. Adermann being chosen by the meeting itself 
as representatives of the South Burnett area and Mr. 
R. M. Wise as representative for the rest of Queens-
land. 
The problem which faced the Board and the prob-
lem it was created to solve was that of marketing the 
growers' produce. Instead of individual growers, whom 
they were able to exploit, the merchants from this time 
forward would be compelled to deal with a growers' 
monopoly. But the Peanut Board soon found that com-
pulsory coflective selling was not sufficient, of itself, 
to solve marketing difficulties. The peanuts had also 
to be prepared for marketing and the Board, with the 
active and determined co-operation of the growers, 
launched into this aspect of organised marketing dur-
ing 1924. The Board purchased a deshelling machine 
from the Cooktown Peanut Company which had gone 
into liquidation and commenced operations in Mr. 
Muir's barn at Crawford. Much of the work, such as 
grading and culling, was done by hand by the farmers 
themselves, and the Board, by starting with the definite 
aim of supplying 'quality lines,' and delivering the pro-
duct throughout the year as the market required it, 
found the results of its first year's operations satis-
factory. Approximately 4d. per lb. was paid to the 
grower. 
Thus by 1924 the peanut industry was established 
in the Kingaroy district, largely, as a result of the 
adoption of the scheme of organised marketing envi-
saged by the Queensland Government. Three aspects 
of the task of organised marketing emerged during 
the first year of the Peanut Board's operation; namely, 
the treatment and storage of produce so that it might 
be supplied in the qualities and quantities demanded 
by the market throughout the year, and the principle 
of compulsory collective selling. 
The growth of the industry in the South Burnett 
area to the stage where organised marketing became 
necessary seems to have been due to a combination of 
835 
factors. Firstly, the market conditions were favour-
able to Australian growers, owing to uncertain trans-
port, freight charges and other post-war conditions; 
secondly, soils which grow peanuts best are found in 
the greatest quantities around Kingaroy where the 
farmers discovered the value of peanuts as a crop; 
thirdly, about 1919 the price of maize, which was the 
only cash crop in the Kingaroy district, was very low, 
and farmers were therefore looking for an alternative 
crop just when Young Brothers, Johansen, and other 
farmers demonstrated the value of peanuts as a crop; 
fourthly, the demand for peanuts was stimulated dur-
ing the early 'twenties by the erection of an oil expres-
sion plant by the Marrackville Margarine Company in 
Sydney (1921), and later by the establishment of other 
companies for the processing of peanut products; 
fifthly, the future growth of the industry was ensured 
by higher tariff rates on peanut imports fixed by the 
Customs Tariff Act of 1921; lastly, the initiative of 
the growers was such that it enabled them to take 
advantage of these favourable conditions and to over-
come the most pressing technical difficulties involved 
in growing and marketing peanuts. 
For two years after its formation the Peanut 
Board treated the peanut crop in Mr. Muir's bam, but 
larger crops in 1926 and 1927 forced the Board to 
lease additional storage accommodation and to transfer 
treatment facilities to the Railway's grain shed at 
Kingaroy. It was realised, however, that more perma-
nent arrangements would have to be made for the stor-
age and treatment of peanuts and the growth in pro-
duction indicated that such facilities would need to be 
larger and more efficient than those which were being 
used. It was decided, therefore, to build a block of 
silos, complete with treatment plant and machinery and 
that the Board would impose a levy of id. per lb. on 
peanuts delivered to it to cover the cost. The Queens-
land Peanut Growers' Co-operative Association Limited 
was incorporated and registered under the Primary 
Producers' Co-operative Associations Act of 1923-27 to 
act as a holding company for the growers, charged with 
the task of building, purchasing, holding and maintain-
ing growers' assets. To ensure co-ordination between 
this Co-operative Association and the Peanut Board 
836 
the rules of the Co-operative provided that its directors 
should consist of the current members of the Board. 
The block of silos was built in 1928 at the cost, 
including plant and machinery, of £58,000 which was 
met by a loan from the Commonwealth Bank of 75 per 
cent, of the total guaranteed by the Queensland Gov-
ernment. The balance was raised by the 1927 levy, 
supplemented by preference shares in the Association. 
(In practice the Co-operative Association is a non-trad-
ing non-profit making concern which pays no dividends, 
but acts merely as a holding company for the con-
venience of the industry). 
The industry made steady progress till the years 
1928 and 1929. Production in these two years was in 
excess of Australian demands and, as exporting was 
not profitable, planting was restricted in 1930 in an 
endeavour to bring the industry back to normal condi-
tions. In an attempt to extend its market. The Peanut 
Board decided to supply the Virginian variety for the 
roasting trade which, in effect, meant that growers 
would have to be persuaded to plant some Virginia 
variety nuts instead of all Red Spanish variety. To 
help facilitate this task the Federal Government placed 
an embargo on the importation of peanuts from 1929 
to 1930, but this proved ineffective. In 1930 the indus-
try was granted a more effective embargo for an in-
definite period. 
The 1932 and 1933 productions were small, due 
to adverse weather conditions and a lack of confidence 
on the part of growers. A shortage of peanuts resulted 
and the Board was compelled to arrange with the 
Federal Government for the importation of peanuts to 
ensure an adequate supply. At the end of 1933 the 
Federal Government lifted the embargo. 
By this time the peanut industry was centred in 
three areas of Queensland. The main area was the 
South Burnett with Kingaroy as centre. The head-
quarters of the Board and the main storage and treat-
ment facilities were located here. The second area was 
Central Queensland with its centre at Rockhampton. 
The third area was the Atherton Plateau. 
During the next five years the expansion of the 
industry was retarded by unfavourable seasonal con-
ditions and by marketing problems. This combination 
of factors resulted in poor returns and farmers were 
837 
loath to plant heavily. In addition, the effects of poor 
cropping methods were making themselves felt in 
lowered yields and the incidence of the disease, *crown 
rot,' was becoming more serious towards the end of 
this five year period. The Peanut Board v. the Rock-
hampton Harbour Board Decision of 1934 robbed the 
Board of its power to enforce its marketing scheme 
upon growers. The High Court decided by a majority 
vote that the Peanut Board did not have the right to 
enforce the compulsory acquisition of peanuts, and that 
growers could not be prevented from engaging in inter-
state trade in peanuts by the Board since the relevant 
provisions of the Primary Producers' Organisation and 
Marketing Acts (which had replaced the Primary Pro-
ducers Pools Acts) contravened the provisions of sec-
tion 92 and were therefore invalid. Since the effective-
ness of the Board's marketing scheme depended on 
complete control over the sale of all Queensland grown 
peanuts the scheme was sabotaged by a section of 
growers who continually sold outside the Board thus 
forcing the Board to accept lower prices. But in spite 
of these difficulties the industry continued to develop 
steadily. 
In 1939 the marketing difficulty was overcome by 
the passage of the Peanut Industry Protection and Pre-
servation Act which ensured the Peanut Marketing 
Board fairly rigid control over the planting, grading, 
treatment and marketing of peanuts in Queensland 
through the health provisions of the Federal Consti-
tution. This legislation was welcomed by the majority 
of growers. 
The outbreak of war marked the beginning of a 
period of rapid development. Already the growth of 
the industry had necessitated the building of additional 
storage space at Kingaroy in 1938 at a cost of £58,000 
of which £46,000 was advanced by the Commonwealth 
Bank under State Government guarantee. During the 
war the Commonwealth, at first, planned to comman-
deer the whole peanut crop for oil making purposes. 
This was not necessary since peanuts could be imported 
in sufficient quantities for the oil trade. The Board, 
therefore, challenged the acquisition order by recom-
mending that Queensland peanuts be used mainly for 
edible purposes and that, if the need should arise, a 
greater percentage could then be diverted to oil pro-
838 
duction. The Federal Government finally accepted the 
Board's proposal. From 1943 till the end of the war the 
peanut crop was sold by the Board under the control 
of the National Security Regulations. 
By 1947, peanut production had reached its peak 
and it seems that the industry itself had almost 
reached its greatest development. That year 1,116 
growers planted 52,000 acres and produced 23,164 tons 
of peanuts valued at £1,048,965/14/7. (2) From that year 
production has declined. In 1948 the greatest number 
of growers participated in the industry and planted the 
greatest acreage in its history, but since then the 
number of growers and the acreage planted have also 
declined. 
Expansion in the industry again created storage 
and treatment problems and new blocks of silos were 
planned at Kingaroy, the first erected in 1948 at the 
cost of £110,000 and the second completed by 1951. 
In both cases a loan guaranteed by the Queensland 
Government was used to pay the cost of construction. 
Production has fallen from a record yield of 23,164 
tons in 1947 to 4,190 tons in 1952, the number of 
growers from 1,490 in 1948 to 587 in 1952, and the 
acreage from 66,000 acres in 1948 to 13,000 acres in 
1952.^ 2* Several factors appear to be responsible for 
this decline. Bad weather conditions during the growing 
and harvesting seasons has been largely responsible. 
Incidence of crown rot disease has contributed. It was 
extremely prevalent during the 1948 and 1949 seasons, 
but its effect has been mitigated since that time, 
thanks to the officers of the Department of Agriculture 
and Stock. Soil erosion and exhaustion have also played 
their part. Peanut growing leads to exhaustion of the 
organic content of the soil and this combined with a 
lack of proper crop rotation reduces soil fertility and 
changes the natural crumb texture of the soil to dust 
texture which is extremely subject to both wind and 
water erosion. The work of the Department of Agri-
culture and Stock has begun to bear fruit in this field 
also. The lack of suitable labour is another factor 
which has operated to reduce the plantings of peanuts. 
Finally the lack of confidence on the part of farmers in 
the industry's future and the increasing returns offered 
2. The Peanut Marketing Board. 
.H. The Peanut Marketing Board. 
839 
by alternative occupations, such as dairying, maize and 
sorghum growing have led farmers to leave the peanut 
industry. 
There appears to be every prospect of revival of 
the peanut industry in the future if weather conditions 
during the growing seasons improve and growers' re-
luctance to plant peanuts is overcome. Peanut prices 
are now comparatively remunerative. The demand for 
peanuts is far in excess of Australian supplies and is 
increasing. The incidence of crown rot has been re-
duced and its effect on the yield lessened. Better crop-
ping methods have been demonstrated and accepted by 
many farmers. Finally the shortage of labour has 
ceased to be acute. Under these conditions one seems 
justified in forecasting a resurgence in the industry's 
vitality. 
The development of the peanut industry is in-
teresting because of the part played in that develop-
ment by organised marketing. There can be little doubt 
that the industry would have died in infancy had it 
not been sustained by a system of co-operative market-
ing under the tutelage of the Queensland Government. 
As I have already pointed out, the Peanut Marketing 
Board acquires all peanuts grown in Queensland, pro-
cesses, treats and grades them in readiness for market-
ing. The market is supplied with peanuts as it requires 
them, a practice which is made possible by the storage 
facilities of the Queensland Peanut Growers' Co-opera-
tive Association which the Peanut Marketing Board 
controls. Finally, the Peanut Marketing Board operates 
as a collective selling organization for the growers thus 
strengthening their selling position. However, the 
Board also has a responsibility to the consumer which 
the State Government expects it to observe, and this, 
together with the potential competition of imported 
peanuts, limits its monopoly power. The Board carries 
out this responsibility in its selling policy. Growers 
receive payments equal to the sale value of their crops 
less expenses incurred in the handling of the crop from 
the time it enters the silos until it is sold. The first 
payment, based on production costs and current market 
prices, is made shortly after the peanuts are delivered. 
Interim payments are sometimes made during the 
selling period. The final payment is made after the 
complete season's crop is marketed. 
840 
The Board has done much to popularise peanuts 
and peanut products. In the early years of the industry 
it successfully broke down a prejudice against the red-
stained Kingaroy peanut. It has co-operated with the 
Department of Agriculture and Stock in the seed selec-
tion and disease control, and has in numerous other 
ways benefited the peanut growers, even though it may 
have operated to the detriment of a minority. 
It appears to me that the part played by the Pea-
nut Marketing Board in allowing and fostering the 
growth of the Peanut Industry in Queensland, clearly 
indicates the necessity for organised marketing in Aus-
tralia if primary industry is to be diversified and its 
contribution to the national income increased. 


Organized marketing and the development of the peanut industry

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Organized marketing and the development of the peanut industry

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