Marketing for the small pecan grower
Over the past few years, the U.S. pecan industry has seen continual growth and strengthening in the export market. Some credit has to be attributed to USDA programs that support American producers and businesses. Specialty Crop research grants and state Block Grants, crop insurance, and Foreign Agricultural Service marketing programs have all helped to strengthen the pecan industry. The USDA has continued to expand markets for American goods abroad, worked aggressively to break down barriers to trade, and assisted U.S. businesses with the resources needed to reach consumers around the world.
The National Pecan Growers Council started aggressively promoting U.S. pecans internationally in 2011, participating in a number of food shows around the world. At these types of events, foreign buyers have been able to talk directly with pecan growers, become more knowledgeable about U.S. pecans, and are now contacting growers directly to purchase their pecan crop. They are also contracting entire crops for the next year, a practice few growers had experienced in the past.
But while China’s interest in pecans has soared in recent years, prices paid on the domestic crop have been volatile and unpredictable. While large growers were readily able to take advantage of this new market and the higher prices it offered, many small growers and homeowners with yard trees have seen the gap in prices between exported nuts and small, native and seedling nuts widen the last few years.
The differences in price can be attributed to a couple of reasons. Large growers are often able to ship directly to a Chinese buyer at a premium price, or in relation to the domestic market, sell large uniform lots directly to a sheller. Many small growers depend on accumulators, local buyers, truckers, or brokers, thus sacrificing middleman costs in the price they receive for their pecans. Large producers are able to deliver large, uniform lots of high-quality pecans, while small growers, weekend pickers, homeowners, etc. typically are selling small volumes of mixed, nongraded, variable shellout nuts, which affect the price they will receive from a buyer.
Throughout the native range of pecan production, there are many pecan orchards and native groves located on small family farms. Management is generally limited to fertilization and some weed control for most of these native groves, with much of the acreage being involved in livestock production. The decision to harvest is often determined by the market value and the size of the crop. Yard trees and small orchards are harvested and sold during years with heavy production and good prices. Many of these pecans are sold to accumulators in lots of less than 1,000 pounds. Some pecans are sold retail from homes and farmers’ markets. As you would expect, managed trees have yields that are typically higher, more consistent, and usually have better nut quality than unmanaged trees. Prices received for machine-harvested pecans are usually higher than hand-harvested, since the pecans are cleaned to improve quality and sold in volume directly to shelling plants.
Marketing a pecan crop is a planned strategy to gain the highest possible profit following the production of the crop. Let’s take a look at some of the factors that contribute to the price you will receive when you sell your pecans. Prices are affected by nut size, variety, percentage marketable kernel, kernel quality, kernel color, moisture content, lot volume, geographic location, and the time of the season you are selling the crop. Whether you are managing 5 trees or 5,000 trees, successful marketing of the crop starts with producing high yields of high-quality nuts.
This is achieved through meticulous attention to the wide range of inputs necessary to grow healthy pecan trees. Proper fertilization, irrigation, pest management, crop thinning if necessary, followed by good sanitation before harvest. Removing cattle at the appropriate time in grazed orchards, followed by herbicides, mowing, and limb removal. You need to maintain a healthy foliage well into the fall, after shucksplit has occurred in all varieties.
But this is only the first phase in marketing the high-quality nut you have just produced. After the pecans are harvested, the first postharvest problem the grower will encounter is excess moisture. A pecan producer has several options to deal with this excess moisture. A grower can harvest the nuts as soon as possible, quickly clean the nuts, and sell them to an accumulator at a higher than optimum moisture content. The accumulator will assume responsibility for drying the nuts to acceptable moisture content for storage, but the grower can expect to be docked on the price paid for such nuts.
A second option is to delay harvest and allow the nuts to field dry to a lower moisture content. This can be a problem in the Southeast, where heavy dews and frequent showers can cause the nuts to cycle up and down in moisture content, often leading to deterioration of the kernel quality.
Finally, the harvested pecans can be mechanically dried using supersacks or trailers with attached blowers. Temperatures should never exceed 100 degrees Fahrenheit, as temperatures above this tend to create off‐flavors, darkening of the nutmeat, and a general loss of quality.
After the nuts are dried and cleaned, you need to know exactly what you have before you try to market the crop. Each lot of pecans should have a representative sample removed that will be sized, shelled, and graded. The yield is calculated from the percentage of marketable kernels (by weight). Check the moisture content and grade the kernels for color and quality. Information for pecan grades is available on the U.S. Pecan website (USPecans.org). The use of grading and yielding provides assurance that the price you receive for your crop reflects the actual value of your nuts.
Usually, the first option a grower considers to sell his crop is to sell directly to the consumer. This is called “direct marketing” and is used by large and small producers. On-farm sales, roadside stands, farmers’ markets, mail order catalogues, and online stores are all examples of direct marketing options. While these selling avenues can be time-consuming to establish, it will allow you to develop a large customer base that returns year after year to purchase pecans from you. Growers often receive higher prices for their product by directly marketing the pecans to consumers, but they must undertake additional, often time-consuming, marketing duties for this increased revenue.
A grower in the pecan industry can vertically integrate to increase their income on the crop. But this will require the grower to take on additional responsibilities or to hire someone for that segment of the operation. Examples of vertical integration would be shelling your own pecans and producing value-added products. Advantages of vertical integration would include increased profit potential, a greater control over product quality, and access to more segments of the market. Vertical integration will increase the complexity of the operation and will require growers to consider how to maintain product volume to operate processing facilities. Consideration will also have to be given for additional management and capital needs, as well as determination of their desire and ability to market additional processed pecan products. Marketing retail products and working with consumers presents many new challenges producers may not anticipate.
A third option would be to consolidate your crop with other small growers. Larger-volume producers or groups enjoy greater bargaining power than do growers with small production volumes. This bargaining power may make it possible to receive higher prices than a small individual pecan grower could receive.
Finally, you must maintain the quality of your harvested pecans until they are sold. Properly dried pecans in the 4-4.5 percent moisture range will only remain edible for a few months at room temperature, before starting to develop rancidity as the unsaturated fats are oxidized. Refrigeration at 32-35 degrees will allow pecans to be stored up to a year, but storage at subfreezing temperatures is best for long-term storage. Shelled kernels will deteriorate more quickly than pecans stored inshell. Uncracked pecans provide a great defense against mold growth and kernel deterioration.
Remember, buyers are generally eager to pay a premium price for a high quality, graded pecans, but a low-quality nut may not find a buyer at any price.