Peanut Butter and Globalization

How a surprising discovery on the label of my Peanut Butter jar led me to some interesting insights

Last week I bought a jar of Peanut Butter that was on sale at the local supermarket. The price was half of what a jar of the well-known American Brand costs. While the labelling and the colors belonged to the private label of the supermarket chain I bought it in, I was surprised to discover in tiny print that this Peanut Butter was made in India of all places.

Peanut Butter is a primarily a staple of the American cuisine. According to this survey, over 91% of American households consume Peanut Butter.

In fact, peanut butter is so popular in the US that when once there was a case of a company knowingly supplying Peanut Butter infected with Salmonella to a school lunch program, a Senator attacked the company by asking “What is more sacred than Peanut Butter?

Another great example of how sacred Peanut Butter is in the US, can be found in this story from the Wall Street Journal: The Players of NBA finalists, the Golden State Warriors, were ordered to cut all sugary foods from their menu during flights, the players agreed to everything except that their beloved Peanut Butter and Jam sandwich will be taken away from them.

“Take Away Our Cookies and Our Ice Cream, But Stay Away From Our Peanut Butter!”

That is why in my mind, Peanut Butter is immediately associated with the United States, and seeing the words “Made in India” on a Peanut Butter label, definitely piqued my interest. So I decided to look into this a bit more.

To my surprise I discovered that India is actually the world’s second largest producer of Peanuts, well ahead of the US and about half of what China, the world’s largest peanut growing nation, produces.

That gives a reasonable explanation to the fact my Peanut Butter jar was made in India.

I found more detailed information on the website of India’s governmental agency in charge of handling exports of agricultural foods:

  • India exported over 5,000,000 tonnes of ground nuts in 2015.
  • Major export markets for India’s peanut industry are southeast Asian countries.
  • Due to the abundance of nuts in India, nut oil is the dominant kind, rather than vegetable oil.

Ok, so now I understand why it is actually not that surprising to find Peanut Butter made in India. But what about the business side of things?

“The domestic consumption of Peanut Butter in India is very low”

An article in Times of India revealed that the state of Gujarat is India’s Peanut Butter hub. I instantly also noticed the name of my jar’s manufacturer being mentioned in this article. The article also mentioned that domestic consumption of Peanut Butter in India is quite low, which means they have that while they have the supply abundantly, demand can only be found by exporting the produce.

The US, however, is not one of the countries India imports its peanuts to. As per the Agricultural Marketing Research Center, it is actually a net exporter of peanuts.

Back at work, I continued biting chunks off my Indian peanut butter sandwich with great pleasure. Now I feel I know much more about how I found this half-priced peanut butter from India and how it ended in my mouth. I hope you also enjoyed learning a little about the food we eat and the economic forces behind it.