To amend the Agricultural Market Transition Act to gradually reduce the loan rate for peanuts, to repeal peanut quotas for the 2004 and subsequent crops, and to require the Secretary of Agriculture to purchase peanuts and peanut products for nutrition programs only at the world market price, and for other purposes.

Amends the Agricultural Market Transition Act to: (1) reduce quota peanut price support levels through crop year 2003; (2) extend marketing assessment services through 2003; and (3) make nonrecourse loans available to all peanut producers at 85 percent of estimated market value as of crop year 2004.

Amends the Agricultural Adjustment Act of 1938 to eliminate peanut quotas as of crop year 2004.

Amends the National School Lunch Act to authorize the purchase at world market price of additional (excess of poundage quota) peanuts for the school lunch and other specified food and nutrition programs. States that such peanuts shall not be considered domestic edible use peanuts under the Agricultural Adjustment Act of 1938 or the Agricultural Market Transition Act.