Commodity Focus: Pecans and Other Tree Nut Opportunities for Farmers
Pecans are quickly growing in popularity. Labeled as “America’s tree nut,” the pecan offers many health benefits and is a staple in southern cooking. Grown in the southern half of the U.S., 15 states from California to Virginia and Florida to Texas produce about 80 percent of the world’s pecans. This up-and-coming nut offers some attractive opportunities for farmers.
Federal Marketing Order
In the first few months of 2016, voting was set up for a U.S. pecan industry Federal Marketing Order (FMO). The order would create a program that would set prices, determine pecan grades and market pecans. The efforts of the marketing order would be paid for by those in the industry and overseen by the USDA, and the group’s primary goal would be to benefit the pecan industry. In early May, the pecan FMO passed by an overwhelming majority, according to the American Pecan Board. For anyone looking for opportunities as a pecan farmer, the FMO means a more level playing field as standards are set and producers and processors get a voice in the industry.
State Opportunities
Three states—Georgia, Texas and New Mexico—produce over 75 percent of all U.S. pecans, according to pecan data from the Agriculture Marketing Resource Center (AgMRC). Georgia is the leading producer of pecans, producing 76 million pounds in 2014. According to statistics from the USDA National Agricultural Statistics Service, (NASS), the costs of Georgia farm land is on the low end of average at $3,270 an acre in 2015, down .9 percent from the prior year. Consequently, a land loan for a pecan orchard in Georgia would be much lower than pecan land loans in, say, California or Virginia.
Opportunities in pecans are not the equivalent of planting a money tree, however. For one, a large orchard is more desirable; small tree nut orchards have the same mechanical equipment costs as large orchards, according to the AgMRC information, meaning a small orchard would experience reduced profitability due to equipment costs. Additionally, like most crops, pecans take knowledge and effort to realize a profitable harvest year after year. Pecans take five to 10 years after planting to bear nuts, so it’s not an endeavor that is going to see an immediate return. However, planting a pecan grove now could be a sound farming diversification move to ensure profits down the road.
As the land loan specialists, AgAmerica Lending is positioned to help the country’s ag producers grow and prosper with any commodity. From corn and cattle loans to tree nut farm loans and vegetable farm loans, we help farmers and ranchers succeed using our custom loan packages featuring low interest rates, long amortizations, and an outstanding 10-year line of credit.
