NOTES FROM THE MANAGER, DEWAYNE MCCASLAND
January 29, 2014
Subject: PPI Pool State of the Union
In previous correspondence I indicated that the Pool payments would take longer than anticipated when the Pool was first set up. This was due to a much larger total U.S. pecan crop than was predicted and the fact that the large shellers quit buying before all the pecans were purchased from the growers. (In essence they ran out of money before the pecans ran out). Another fact is that China in 2012-13 purchased over 100 million pounds and of this current crop they have purchased less than one half that much leaving much more availability of pecans.
How does that affect you? The nutmeat market for pieces is still flat line at a value of less than $3.75 per pound while the market for large halves is above $5 per pound. That is over $1 per pound difference in value between pieces and halves. Normally there is less than $.30 difference in those values. In addition the native halves are not in demand because of the amount of pieces floating around the industry.
Last year the a crop size was 375 million and this year the crop size is around 200 million, a person would think that the reduction of 175 million in volume would increase the selling price. This variable had very little effect on the price. Why?– because the total availability in both years is over 500 million each year.
In Oklahoma alone there were over 12 million pounds carried over by growers, accumulators or speculators from the 2012-13 crop into the current crop. At least 2 million pounds of that quantity is still in storage.
When the industry has more pecans available than the consumption level, the art of marketing that crop becomes extremely dubious. Your Pool pecans are located in this market condition somewhere. PPI and Navarro Pecan Co. are working diligently trying to maximize your return in an orderly manner, although the market is not responding like we would prefer.
Last season many growers who joined the POOL either could not get a quotation on their pecans or at least only had a bid of less than $.60 per pound. The Pool has made payments of about $.45 per pounds average depending on quality and size.
How do all these market facts effect your pecan payments?
The balance of the current year’s crop may have difficulty in finding a willing buyer. PPI has a second pool in force to assist growers in marketing their crop. This pool will be much smaller and have a good chance in being paid off at the same time that the first pool gets paid.
Statement from the Manager:
I believe that marketing by the Pool method is the way pecans will be sold now and in the future. In the past this has not been the case because shellers had the financial capacity to purchase the total crop at a reasonable price. Today that is not the case. By pooling a grower has less chance in missing the available market and does not have to contend with being a “self-marketer” which takes time and effort away from what he does best and that is grow and harvest the pecan.
PPI has been in business for 36 years. You can name on one hand all the other pecan marketing or shelling entities that have been in business that long under one name. There is a reason PPI has survived—the members have recognized the necessity of keeping your co-op alive and thriving.
TO MAKE PECAN PRODUCERS, INC. STRONG YOU AS A MEMBER MUST HAVE TRUST AND PATIENCE so that the system will have time to function.
Pecan Producers, Inc
pecan marketing pool