Selling your pecan crop
It's the moment you have waited for all year long, turning your pecan crop into cash. Unfortunately, there are 'forces' out there that are working against you and there are unscrupulous individuals and companies that will take all your pecans and give you very little in return. Let's see what we can do to get more cash for your pecan crop.
Receiving a fair price for your pecans starts before the leaves appear on your trees in spring. You can't expect top dollar for your crop if you don't produce top quality pecans. I hear stories from pecan buyers and shellers who pay a fair price for a load of pecans, then discover the shell-out rate is only thirty percent. So, if these buyers gave a grower $1.50 a pound for in-shell pecans and only thirty percent was usable product, they have $4.50 invested in their pecans. That isn't including their cost for storage and shelling, which will more than likely escalate their investment to around $6.00 a pound. They made no money, and that's why you hear stories of pecan growers receiving .40 to .80 per pound. These buyers have been burned time and time again. Therefore, YOU make up your mind that you are going to do everything possible to produce a crop with a shell-out rate of fifty percent or better. That means you have to water, fertilize, apply zinc...the whole nine yards. Fact is, you cannot make a profit selling pecans for less than a dollar a pound.
Commercial Pecan Buyers
These folks have their rules, and if you are going to sell your crop to them, you have to follow their rules. Many commercial buyers will not buy less than two thousand pounds of pecans at a time. They want them clean, free of debris, and bagged. Query area pecan shelling facilities as to whether they buy pecans or know someone who does. If you have a substantial quantity of pecans, they will usually come out and pick them up. They probably will not just drive up to your farm, glance at your pecans, and 'shoot you a price.; Pecan prices are generally derived by a formula called a 'price per point' which is based on your shell-out rate, the pounds of edible nut meat. Other factors influencing this price structure are the color of your nutmeats and the size of the nut. Even though we sell our crop retail straight to the consumer, I have always kept a watchful eye on the wholesale market. It's been my observation that if the market price per point average is $1.50, most growers are receiving between a dollar and a buck thirty-five per pound of in-shell pecans. I personally suggest you know what your shell-out rate is PRIOR to selling your entire crop to a pecan buyer. This puts you in a position to haggle with them when they quote you a lesser price than what the market rate is. Don't lose sight of the fact that these are YOUR pecans. You don't have to sell to the first horse trader...er ah, I meant commercial buyer that comes along.
If you decide to get into a 'forward contract' agreement with a commercial buyer, you will have to sell your crop to him. However, when entering into such a contract, you will know how much you will receive for your crop. Producers of large volumes of pecans tend to use forward contracting more than do producers with smaller production. A forward contract is a written agreement between a producer and a pecan sheller relating to the delivery and acceptance of pecans at some future date. Forward contracts specify what the producer will deliver. The shellers promise payment for the pecans, either by specifying the price or how the price will be determined. Shellers usually initiate forward contracts to assure themselves of enough pecans to supply their customers. Producers benefit from forward contracts by having an assured access to a market, the potential for increased operational efficiency, and reduced price risk.
We chose to sell our pecans directly to the consumer early on in our pecan adventure. We discovered that commercial buyers simply weren't interested in purchasing small quantities of pecans. The first year that we produced a respectable crop, I put a sign down by the road and ran a newspaper ad in the local paper. We had one customer that year. I then realized I was trying to sell pecans to folks that already had a pecan tree in their back yard or lived next to someone who did. Selling pecans in pecan country is like a West Texas farmer trying to sell cotton to his neighbor. "Nope, got cotton over at my place, too."
We turned to Ebay and found instant success, followed by the realization that the Ebay and Paypal fees were more than the fertilizer and water costs to produce our crop. So I built a website, then another, and another...you can read our story 'The Rise of the Southern Star' for all the details. Back to selling your pecans. If you choose to market them straight to the consumer or even a retail outlet, you will have to work hard to establish your customer base. Check with area bakeries and candy shops, your local grocery store, and anywhere else that may be interested in buying pecans. If you have a brother-in-law that lives 'up north' where pecans aren't available, plan a visit and spend some time trying to establish some connections with retailers in his area that might need your product. You will have to hussle to make this direct marketing idea work. The internet is a great place to market your product and you can do so with or without your own pecan website. There are numerous classifieds sites such as Craig's List, and if you search long enough, there are even 'virtual farmers' markets and such. It's not for everyone, and if you're producing thirty or forty thousand pounds of pecans every year, quite frankly, it's not the avenue you want to take. This method of marketing your pecans will become a whole different business that will require much of your time to be successful.
Become the Middle Man
If you are producing a sizable pecan crop and you wish to eliminate the middle man, you might consider becoming the middle man. Most commercial pecan buyers are also pecan shellers who have created a wholesale market for their pecans. They can move tons of shelled pecans through their facilities by selling to large food service companies, wholesale and retail outlets, and even exporting pecans to foreign countries. You must take into consideration the expense of purchasing pecan shelling equipment, operating a shelling plant, and the time involved. This marketing channel, called verticle integration, presents an opportunity to enhance your profits as a grower as well as additional income from shelling.
Your first order of business is to produce top quality pecans that will receive a premium price. Do your homework before the nuts begin to fall and have several options you can turn to when your crop is ready to harvest. When harvest season is at hand, know what the current average market price is. Finally, when Joe Blow Pecan Buyer offers to give you pennies on the dollar for your premium pecans, tell him, 'No, thanks...I know where I can do better.'