US peanut butter shortage possible after FDA revokes license of New Mexico-based processor that owns 90% of 2012 organic peanut harvest, industry officials warn

Nevin Barich

MCLEAN, Virginia , November 28, 2012 (USA Today) – Could the United States be facing an organic peanut butter shortage? The New Mexico processor that owns 90% of this year's organic peanut harvest has had its production license revoked by the Food and Drug Administration. Now supermarkets are bracing for a possible shortage.

Sunland Inc. voluntarily shut down its peanut butter plant in Portales, N.M., on Sept. 24 after an outbreak of salmonella that sickened 41 people, mostly children, was linked to peanut butter produced there. It had hoped to reopen its peanut shelling facility this week, but the FDA announced Monday that it was shutting the company down.

An FDA audit released earlier this month found salmonella in 28 locations in the plant and examples of improper handling, unclean equipment and positive salmonella tests that the company ignored.

The company said in a written statement on Nov. 15, "At no time in its 24-year history has Sunland Inc. released for distribution any products that it knew to be potentially contaminated with harmful microorganisms."

The agency's ability to close the plant without a court order was part of its new authority under the Food Safety Modernization Act, which became law in January 2011.

With this year's organic Valencia peanut harvest just finished, the company has "millions of pounds" of peanuts in its barns that it can't grind because of the shutdown, and the peanut butter that was already made had to be destroyed, said Sunland spokeswoman Katalin Coburn.

"We've essentially destroyed everything that was in the market and in our inventory," she said. The one bright spot is that the newly harvested peanuts have a long shelf life in temperature-controlled barns and will keep for a year, she said.

In the Seattle area, PCC Natural Markets anticipates that demand will exceed supply. "We have not been contacted by our organic peanut butter suppliers regarding a shortage but expect that will be the case in the near future," said Diana Chapman, the natural food market chain's director of sustainability.

Some stores are probably feeling the pinch already, said Leslie Wagner, executive director of the Southern Peanut Growers in Canton, Ga.

"Since Sunland has been shut down for two months and all the products have been recalled, we have strong reason to believe that the market impact has already been felt in terms of availability of organic peanut butter," Wagner said.

Natural foods behemoth Whole Foods Market says it is "business as usual" in its stores because it gets its organic peanut butter from several suppliers.

"This hasn't affected our supply so far," spokeswoman Liz Burkhart said from the company's Austin headquarters.

Over the long term, the shutdown of the Sunland plant could cause some temporary disruptions, but "we do not anticipate it affecting the overall supply of organic peanut butter," said Patrick Archer, president of the American Peanut Council in Alexandria, Va. "There are several other processors who will fill the void in the market."

Where they'll get their peanuts isn't clear.

The shortage shouldn't hit the nation's lunch sacks too hard. Organic peanut butter is just 1% of the peanut butter market, Wagner said.

Last year Americans ate conventional peanut butter 7.6 billion times and organic peanut butter 251 million times, according to market research firm NPD Group of Port Washington, N.Y.

Exactly how much of the organic peanut butter market Sunland controlledisn't known, but Wagner said it is the largest manufacturer.

Chapman at PCC Natural Markets suggests other nut butters. She said, "Alternatives including almond, sunflower, cashew, walnut, pecan and coconut."

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