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The 'Nuts' and Bolts of Retained Ownership

Posted Nov. 1, 2002

When we hear the words "retained ownership," folks most often are talking about keeping their calves through another stage of production through a stocker-growing phase, or finishing phase. In this article, however, the commodity being referred to is pecans.

Many of you can probably remember hunting up the ol' flailing pole about this time of year and heading to the creek bottom with a few buckets, tow sacks (burlap bags for the younger generation) and maybe even a tarp to gather what pecans the varmints had not already harvested for you. If you were lucky, someone packed you a red-rind sandwich, a homemade fried pie and a Chocolate Soldier soda pop. At the end of the day, you might have had a few hundred pounds of pecans in the back of the pickup to show for a hard day's work. The next morning, or after the final harvest day, the pecans were delivered to a favorite feed store and sold for something less than $.25 per pound.

Today, pecan harvest is much more mechanized. Heavy, metal tree shakers powered by hydraulics have replaced the flailing pole, and PTO-driven mechanical harvesters can make a few hours work out of the days it took with buckets and tarps. However, once the pecans get in the bag, there is considerable resemblance in how they are marketed today compared to how pecans were marketed back then.

There are many opportunities available to help ourselves receive a better price for the pecans we produce, and I have visited with many of you about some of these opportunities. The fruit may not be on the low limbs, but it is ripe for gathering. It will take some forward thinking and effort to get those nice plump ones in the top of the tree. There are several programs and grants available for producers to establish value-added cooperatives. The shelling sector of the pecan industry is ripe for investment. Attractive tax incentives are already in place.

If adding value is too much of a stretch, there are other things producers can do that may increase their bottom lines. Selling pecans in truckload lots (about 44,000 pounds) gives a producer more market options. For smaller producers, truckload lots can be achieved by teaming up with other small producers. Also, the timing of the sale may generate a higher price. Remember, however, that any time the potential for profit increases, the risk of loss also increases there are few sure deals.

Everyone in the pecan business remembers what the price of pecans was last winter. The Noble Research Institute harvested about five loads of pecans from our Red River Farm pecan orchard. We basically had two lots improved, which graded 44.42 percent, and native, which graded 41.01 percent. The market was near $.80 to $.90 per grade point. The decision was made to send the pecans to cold storage. Eight months later (August 2002), the pecans were sold for $1.50 per grade point. What did it cost to store the pecans? Table 1 depicts costs for the eight months.

The Noble Research Institute was able to receive an additional 16.5 cents per pound for our pecans by having at least one truckload and by delaying the timing of sale by eight months. Some long-time producers have relayed stories of days gone by when they lost money by retaining ownership of their pecans. It is not a sure bet you will have to determine if the wait is worth the risks.

I strongly believe the survivors in production agriculture will be those producers who retain ownership through a value-added process and market the food they produce as close to the consumer as reasonable.