Civil unrest and global pandemics have a tendency to eat away large chunks of what were at one time safe retirement accounts, leaving many prospecting retirees wondering if they will be able to retire as planned. With stocks markets volatility to the ever increasing media rollercoaster ride, investors are looking for safer alternatives for retirement investment options.
But it seems a new trend is emerging in the financial investing sector, agriculture. Agriculture is not new to investors, however it is a more difficult investment strategy if your not already in the “field” ,pun intended.
Over the past decade the agriculture sector as an investment vehicle has become more friendly to interested investors. Farm focused REIT’s along with Commodities trading have been the traditional investment vehicles, however new types of REIT’s are allowing smaller investors access to more specific farm investments. With partial farm ownership, new investment companies are allowing investors to access crops like citrus and tree nuts orchards as intermediate and long term investment vehicles.
But the new money in crops like pecans isn’t only by smaller investors, large investors are also taking notice in the growth of health foods like the American pecan industry. Private equity funds recently built National Pecan, now under the Diamond Foods LLC family, one the largest shelling operations in the world with orchards all across the southern US from Georgia to New Mexico building a vertically integrated “farm to fork” supply chain.
Many other farmers of row crops and competing tree nuts are also moving into pecans, as a long term investment. Pecans are not an overnight investment as most pecan orchards take from 7-10 years to come into commercial production, and another 3-5 years to reach peak production. However when the pecan tree does reach peak production, if properly maintained the orchard can stay in peak production for over 100 years, making it a very attractive intermediate to long term investment.
Pecans have only recently become a more attractive investment, as pecans have been largely overlooked and unorganized as an industry. Only in the past decade has the American pecan industry successfully pooled their efforts to market pecans globally; and only in the past 4 years have they created a marketing order to undertake marketing and research. As marketing efforts beginning to yield result and increase demand, pecan orchard values have continued to outperform other farmland acreage, while providing strong dividends.
Many high income families near rural areas have also invested in pecans, planting their own orchards and hiring farm managers to manage the orchards, or working with local pecan farmers to manage the orchards on a profit sharing basis. Areas outside of Atlanta and Macon, GA, fields outside of Dallas and Austin, TX, and once empty desert near Tucson, AZ and Las Cruces,NM are now planted with Pawnee, Cheyenne, and Western Schley pecans trees soon to be in production. As more and more investors are nearing retirement or already in retirement, pecans continues to see new investments as the stability and growth in the industry is expected to continue for the foreseeable future. Production of pecans is such a long term investment that increasing the crop size by just 10% to meet increasing demand takes some time. Annual row crops like soybeans, corn and wheat have much higher volatility to oversupply, leaving perennial crops like pecans a much safer investment.
