Although I’m leery of using peat, I still love the convenience of pots that can be plunked in the ground and left to decay. Last year I was sent some seedlings in pots that were labeled biodegradable. I tossed them in the compost heap, where they remain to this day, totally in tact.
Peat pots don’t dissolve immediately, but they do eventually break down. Even so, it’s better to loosen or remove the bottom of the pots, before sinking them in the ground, so that the roots of the tender seedling don’t have to work so hard to branch out.
Another thing to consider is that peat has a tendency to wick water. Since the top of the pot is usually above the surface of the soil within it, part of the pot remains above ground when you plant it in the garden. That slight lip will try out fast and then it will pull water up from the buried portion – away from the plant’s roots.
On the Other Hand
One time when it makes sense to leave a lip above ground is when you are planting young seedlings in a windy, exposed site. However I wouldn’t use peat pots. Instead, use small paper bags. Dig your hole and place the bag in it. Add soil to the bag and plant the seedling inside the bag, leaving a couple of inches sticking up, above ground. The bag will serve as a wind break and provide a bit of heat retention, but we all know what happens to a paper bag when it gets wet. The bag will disintegrate within a couple of weeks, if not days. But in the mean time, the seedling has had time to settle in to its new surroundings.