Pecan Investments

For the first time in 120 years, pecans are priced high enough for consideration as a sound investment. Interest in pecan orchards is at an all-time high. From the mid-1960s until the late 1990s, investors purchased pecan orchards because of great IRS tax advantages. One could purchase a bearing orchard, then use tax credits and rapid (5-year) depreciation to write off the cost of the orchard. Tax advantages are no longer the drawing card — it is prices. Pecans for sale at $6 a point and $3 a pound make orchard investments pay.

Here are a few things to consider when planning an investment in a bearing pecan orchard. First, good orchards are usually not for sale. When one begins to look, we find there are very few premium sites.

Pecans are all about water. Mature trees need 1 acre-inch (27,000 gallons) per week from April to July and 2 inches per week from August to October. In the irrigated West from San Saba, Texas to Arizona, 2 inches are needed all season. The water needs to be free or low in dissolved salts and low in sodium. Salinity or salty water cannot be corrected via chemicals; it can be blended and salts can be leached if clean water is available.

As one moves east to west and rainfall decreases, salinity issues increase. Salinity levels vary with location and climate.

Pumping depth is a third factor to consider. Surface water is great, shallow water less than 400 feet is okay, and deep well may be essential — but the pumping and pushing cost could be significant. At least 4 types of irrigation are in use: flood, sprinkler, micro-sprinkler and drip. Each has its advantages and disadvantages and need to be understood. The purchase of a pecan orchard without irrigation or the potential for irrigation with these volumes is not a sound investment. Rainfall is a great advantage from the Southeast to East Texas — but irrigation is still needed for all pecans.

Pecan soil is second in importance. High volumes of water are needed and the soil must drain so that 25 percent of the soil space is air. Without good drainage, soil and the root zone becomes saturated with water and several critical, negative issues result. First without soil air, young roots die and no water is absorbed. Second, without air adjacent to young roots, essential mineral nutrients are not absorbed for there is no active transport of the ions. Third cytokinin, a growth hormone produced in root tips, is reduced. Soil air also aids in excluding the absorption of salts.

So, a good pecan soil also needs to be deep to increase the water-holding capacity. Shallow soils will need frequent or constant irrigation to meet water absorption needs. In general, a 12-inch soil can bear 400 pounds of pecans per acre, 24-inch 800 pounds, and 36 inches 1,200 pounds. Some leading pecan orchards adjacent to major rivers have well-drained soil that is over 20 feet deep. Soil pH needs to be understood as well. Acid soils will need lime and high pH soils will have zinc and iron absorption limitations. Soil texture needs to be understood; sandy soil drains fast but have low fertility, and need frequent water and fertilization. Clay soils have high water- and nutrient-holding capacity, but drain slowly and could have saturation issues.

Soil structure is important, too; sodium at high rates and without calcium deflocculates clay which essentially disrupts soil structure, internal water drainage and irrigation infiltration rate. Loam soils are made up of variable soil texture and, with good structure, are ideal pecan soils.

The southern U.S. is ideal pecan climate — warm days and nights is ideal. Some winter chilling below 45 degrees F is needed — 400 hours or more. Early winter cold fronts with extreme swings in temperature can be deadly for young fast-growing trees or mature trees which have been stressed by over-cropping or insufficient management or poor soil or no irrigation. Late spring frosts can kill male catkin flowers and female nutlets.

Rainfall is a blessing in that it is clean and free. Rainfall is a major reason for the outstanding production of pecans in the Southeast. However, rain and high relative humidity result in serious fungus diseases, especially pecan scab. Fortunately, resistant varieties, wide row spacing, and good fungicide management make pecan production feasible in high rainfall areas. Rain at harvest can be an issue — growers need to shake, harvest, clean, dry and market pecans by Dec. 7, and the China market is even earlier. So, rainfall in October or November can limit harvest speed and efficiency.

These are the three top concerns one should study when planning to invest in pecans. Other factors such as flooding, root diseases, ice storms, hail, roads, barns, electricity, wildlife, theft, bankers, prices, and much more also play a part in determining the potential for an orchard