Peanut shortage sending peanut butter prices up

By RAY HENRY and SARAH SKIDMORE | October 12, 2011 | 4:15 PM EDT

ATLANTA (AP) — Consumers should be prepared to shell out a bit more for peanut butter soon.

Another hot, dry summer in key producing states and competition from more profitable crops like cotton have significantly shrunk the U.S. peanut crop this year. The tight supply means consumers will soon pay more for yet another grocery staple.

A federal survey released Wednesday shows U.S. farmers are expected to produce roughly 1.8 million tons of peanuts in the U.S. this year. That's down roughly 13 percent from last year.

Peanut butter producers already have plans to hike prices for peanut butter significantly in the next few weeks. Those who package nuts for snacks say they are watching their competitors to determine whether price hikes will be necessary.