An ounce of information
Article by Pnut King
Published on 10/09/2026 in Peanut Market News
A peanut quotation is only the starting point of what a shipment will cost. Two offers at the same price per metric ton can produce very different outcomes once freight, duty, port charges, testing, financing and quality losses are counted. Importers who compare quotes on price alone often discover the gap only when the invoices arrive.
This guide explains how to build a landed cost calculation for bulk peanuts, which components to include, where hidden costs tend to appear and how to use the result when choosing between suppliers and origins.
Landed cost is the total expense of getting peanuts from the supplier's gate to your warehouse or production line, expressed per metric ton or per kilogram of usable product. It includes the purchase price and every cost incurred afterwards, plus the cost of any product you cannot use.
The word "usable" matters. If sorting removes part of a lot, or a portion is downgraded, the cost per kilogram of acceptable kernels is higher than the invoice suggests. A sound calculation therefore ends with cost per unit of product that meets your specification.
The Incoterm in the quotation decides which costs are already inside the price and which you must add.
FOB (Free on Board): The price covers goods loaded on the vessel at the origin port. Ocean freight, insurance and everything after are yours.
CFR (Cost and Freight): Ocean freight to the destination port is included. Insurance, import duty and destination charges are yours.
CIF (Cost, Insurance and Freight): Freight and basic insurance are included. Duties and destination costs remain yours.
DAP or DDP: The seller covers delivery to a named place, and under DDP also import clearance. These offers are convenient but need careful reading, because the supplier's margin on logistics is built in.
Never compare an FOB quote with a CIF quote without adjusting for freight and insurance. Convert every offer to the same basis first.
| Cost Component | What to Include | Common Oversight |
|---|---|---|
| Product price | Contract price per metric ton, adjusted for quantity tolerance | Ignoring weight tolerance on the invoice |
| Origin charges | Inland transport, loading, export clearance, inspection | Assuming they are inside every FOB quote |
| Ocean freight | Container freight, surcharges, fuel and peak-season charges | Using an old rate rather than a current quote |
| Insurance | Marine cargo cover at the agreed value | Under-insuring against actual invoice value |
| Import duty and taxes | Customs duty, VAT or GST, levies | Applying the wrong tariff classification |
| Destination charges | Port handling, terminal fees, documentation, clearance | Missing storage and demurrage exposure |
| Inland delivery | Trucking or rail to your facility | Forgetting unloading and handling costs |
| Testing and compliance | Laboratory analysis, inspection, certification | Treating testing as an overhead rather than a shipment cost |
| Finance and banking | Letter of credit fees, interest, transfer charges | Leaving out the cost of capital during transit |
| Quality losses | Rejects, sorting yield, claims | Assuming every kilogram is usable |
Treat it as a checklist. The actual items will differ by origin, destination and contract.
Ocean freight is one of the more volatile elements. Rates can change with season, route demand, fuel and port congestion, and surcharges are often listed separately from the base rate. Ask your forwarder for an all-in quotation that spells out each line, and confirm how long the rate is valid.
Container loading capacity varies with packing format, bag weight and the container type, so the payload per container is a figure to confirm with the supplier rather than assume. A partly filled container raises cost per ton, so check that your order quantity matches practical loading.
Transit time also carries a cost. Longer voyages tie up capital and increase the risk of moisture problems if packing or container conditions are poor.
Import duty depends on the tariff classification, the origin and any trade agreement that may apply. Peanuts can fall under different classifications depending on whether they are in-shell, shelled, blanched, roasted or prepared, so confirm the correct code with your customs broker before calculating. Value-added taxes and other levies may be recoverable in some jurisdictions and not in others, which changes whether they belong in your landed cost.
Regulatory compliance also has a price. Pre-shipment and arrival testing for aflatoxin, phytosanitary inspection and any destination-specific certification should be built into the model as normal shipment costs.
Several costs are easy to miss because they do not appear on the supplier's invoice.
If containers are held at the port or outside the free time because of missing documents, a failed inspection or slow clearance, charges accumulate daily. Accurate paperwork from the supplier is therefore a cost control measure as well as an administrative one.
Differences in kernel size, defects or foreign matter change how much of each lot you can use. If one supplier's peanuts need an additional sorting pass, include that labour, machine time and yield loss. A lower price can easily be cancelled by higher waste.
Moisture changes, handling and short loading can cause differences between invoiced and received weight. Agree on the weight basis and tolerance in the contract, and track actual arrival weights over time.
Most peanut contracts are priced in US dollars, but importers whose revenues are in another currency carry exchange-rate risk between contract and payment. Hedging costs, bank charges and interest on funds tied up during production, shipping and credit terms belong in the calculation.
Payment terms change landed cost even when the invoice price is identical. A letter of credit adds bank fees but reduces counterparty risk, while open account or deferred payment improves cash flow at the price of added exposure. Advance payments tie up capital for the full production and transit period. Convert each arrangement into an approximate monthly financing cost using your own borrowing rate, then add it to the model so offers with different payment structures can be compared fairly.
Peanuts rarely go straight into production on arrival. Include warehouse rent, handling, pest control and the cost of holding stock until use.
For each offer, work through these steps:
Convert the quoted price to a common Incoterm.
Add freight, insurance, duties, taxes and destination charges.
Add testing, inspection, financing and inland delivery.
Divide the total by the quantity of acceptable product you expect to receive, not the quantity invoiced.
Written out: landed cost per kilogram equals total shipment cost divided by usable kilograms. Keep a template that your team updates with current freight and duty information, and revise it whenever one of these inputs changes.
Once each offer is expressed on the same landed basis, comparisons become more reliable. An origin with a higher product price but shorter transit time and lower freight may come out cheaper than a distant option. A supplier with a tighter specification may deliver lower cost per usable kilogram despite a higher quote.
Run numbers for several scenarios, including a freight increase, a currency movement and a modest rejection rate. This shows how sensitive each option is to change, which is valuable when negotiating payment terms or volume commitments.
Look beyond one shipment. Review actual landed costs against your forecast after each delivery, identify where the variance occurred and adjust the model. After a few cycles, the calculation becomes a dependable purchasing tool.
An accurate landed cost depends on four habits: standardise the Incoterm, request itemised freight and charge quotations, include quality and testing costs and measure cost per usable kilogram. These steps take time to set up, but they prevent surprises and support firmer negotiating positions with suppliers.
FOB covers only the goods loaded at the origin port. Landed cost adds freight, insurance, duties, port charges, testing, inland delivery and financing, so it reflects what the peanuts actually cost at your door.
Demurrage, laboratory testing, financing during transit, sorting yield loss and inland handling are commonly missed. Weight shortages and re-inspection fees also appear in disputed shipments.
Update it for every new quotation and review it after each shipment. Freight rates, currency rates and duty rules can all shift between orders.
Yes. Cost per usable kilogram is a more honest measure than cost per invoiced kilogram, particularly where sorting yield or rejection rates differ between suppliers.
They simplify the arithmetic, but you should still check what insurance and delivery terms are included. Compare them against FOB offers only after adding your own estimates for any missing items.
With over 17 years of experience in the peanut industry and numerous awards recognising his contributions, he founded Agrocrops in 2008, a leading global peanut company. His passion for peanuts drives his commitment to improving the industry for all stakeholders and promoting sustainability.
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Published on 09/10/2026 in
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