Pecan Producers, Inc. (PPI) has secured financing for a marketing pool that will significantly benefit the pecan grower. With this financing PPI will provide a grower an advance per pound of nutmeat yield on delivery. The payment will be made after the pecans have been delivered and graded to determine the yield—this process will take about 5 days from initial pickup of the pecans. Other payments will be made as the sales of the shelled nutmeat occur. The following will give you a summary of how this program will work.​

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? 

  1. To answer the most important question which is:  are you going to receive another payment?  The answer is yes.
  2. When are you going to get that payment?  The answer to that question is a little more complicated.   We do not know.  The first obstacle to paying a grower is paying the lending agency.  Before any payments are made the Texas Farm Credit has to be paid. PPI started with about $5 million borrowed (in order to pay you the first two payments PPI had to borrow the funds) against the crop and PPI has made payments of over $3 million.  Payments are made weekly and the remaining balance is steadily going down.   After TFC has been paid PPI will accumulate funds from ongoing deliveries and accounts receivable to make payments to growers.  When all this will happen is undefinable.
  3. The following statement was in a previous communication.  “The quantity of pecans delivered to the pool and the number of lots within those deliveries posed an accounting problem that is greater than our existing data base could handle.”  This problem has almost been solved.  There are a few glitches that will have to be found and corrected but for the most part PPI has a good sound database program that will be able to better serve the member now and in the future. 


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

  1. The full truck-loads of pecans will be picked up by PPI and delivered to a specified warehouse indicated on the Bill Of Lading.  Less than truck load lots will be accumulated to make a full load.
  2. Individual lots of the pecans will be sampled and graded to determine the quality and yield of the lot.
  3. The shipping grower will be sent pertinent information pertaining to the lot along with the first payment.  The information will include the net weight received excluding any moisture over 5%, the net edible yield, and information showing that PPI has taken into possession the pecans for the benefit of the grower.
  4. PPI will then send the grower a FIRST PAYMENT that is determined to be appropriate for that marketing period.  (i.e.  If the lot graded 45% fancy nutmeat the grower would receive $.45 per pound delivered.) Each grower will be asked to sign a “Release of Lien” and return that document to PPI to assure the pecans are lean free.  It is noted that the grower is not required to pay truck load freight, warehousing, insurance, or any other fees that might be associated with any particular lot of pecans delivered to PPI except those costs that go beyond the scope of regular marketing.
  5. As the pecans are shelled and marketed over the following few months additional payments will be made.  No guarantees are made about timing of any following payments.   At this point it is undecided whether two or more payments will be made to finish the marketing process.  Several items must be factored such as the size of the marketing pool, the eventual value of the pecans, and the markets into which these pecans are sold.
  6. All pecans stored and marketed by PPI will be insured, placed in a secure warehouse, and secured by a third party to assure the grower that his product remains in good condition.

This Marketing Pool is put together with the intent of assisting the grower in receiving a better price for any given lot of pecans.  NO GUARANTEES are expressed or implied except that there will be a good faith effort to perform this service.

pecan marketing pool