Resources for Pecan Growers to Overcome Financial Challenges

With the start of the fall season just around the corner, pecan growers are looking forward to the 2023 harvest. Growers have had to contend with extreme heat, disease pressure from pecan scab, bacteria in the more humid climates, and damage from insects. And that’s on top of a historically unpredictable market where interest rates and commodity prices are concerned.

It’s a lot to manage. Pecan growers need support to navigate the market and overcome obstacles that stand in the way of earning a profit. Working with financial experts can help growers find financial solutions to manage their money, no matter what challenges the market or Mother Nature throws at them.

Take the guesswork and uncertainty out of your profitability equation

Pecan growers have to juggle several variables to manage a successful crop and return a profit, but there are tools available to take some of the burden out of that task. Building and adjusting your financial plan is a good place to start.

Having a sound financial plan immediately gives growers an advantage when it comes to enhancing profitability because that plan provides a 360-degree view of your operation and usually reveals opportunities to make your dollar work harder for you. To build your financial plan, consider these tips:

1. Do your research to create financial flexibility. Perhaps the biggest benefit of putting together a financial plan is that the activity gives you a better idea of your operation’s financial health and how to leverage your assets to your benefit. Doing a bit of research as part of your planning can help you make better decisions with more confidence, and the end result is often seeing an increase in profits. For example, growers who research options to pay for production costs—like managing an insect infestation—without tapping into their operating line, gain flexibility to leverage their operating line for other priorities.
2. Reevaluate your financial plan as crop plans shift. A financial plan is not something you should set and then forget until next year. Financial planning is more like a muscle in your body; the more you use it, the more active you keep the skill, the stronger and more useful your plan will be. Any time your conditions change—be it because of the weather, increased (or decreased) disease pressure, increased (or decreased) operational costs—you should take a look at your financial plan and adjust accordingly.
3. Understand cash flow mechanisms and the true cost of borrowing.
   Interest rates have been trending upward since early 2022. In July, the Federal Reserve increased rates again to a 22-year high, which makes the cost of borrowing money significantly higher. In some cases, growers have seen their interest costs more than double in the last 18 months. Pecan growers need to consider all their options to find lending that aligns with their cash flow. It’s also critical to look for ways to create financial flexibility, such as taking advantage of a promotional offer or securing fixed-rate offers from retailers.

Another area that can influence profitability: how are you managing your capital? Many growers prefer to use cash, but that may not always be the most strategic way to leverage your capital. Working with financial experts can often reveal new or unexpected strategies to increase your ROI.

Take advantage of the knowledge within your circle of influence and work to build proactive relationships with folks who have strong financial skills. In today’s market, having access to the best products isn’t enough. You also need to factor in the most economical ways to pay for those products, which can be technical and complex, especially for growers who prefer to spend their time and energy in the orchard with their crop rather than in the office with their books.

This is where financial guidance from a third party can help create some advantages for pecan growers, including:

• Get expert-level perspective on the interest rate environment. Rising rates make the cost of borrowing money even higher. Working with financing professionals can help pecan growers secure the most attractive terms and competitive rates to save on interest.
• Avoid hidden costs. The market is full of opportunities for growers to save money, but you have to do the research and know where to look for those cost-saving incentives. Many growers focus on interest rates, but often, you’ll save more in interest costs if you look beyond the rate and secure terms that align with your cash flow. For example, interest can add up depending on how your rate accrues. Review the fine print to understand how the stated APR is impacted by promotional benefits and to identify whether your interest rate accrues daily or monthly. This careful review can help you save in the long run.
• Take the uncertainty out of your profitability equation. Financial experts can present solutions to firm up some variables that might influence your ability to earn a profit. For example, shopping for a fixed-rate option to pay for your inputs will help control one area of your production costs and create savings, which you can leverage for other priorities.

Between weather impacts, disease pressure, and pests, pecan growers have a lot of variables to contend with to produce a profitable yield. Most of these variables are beyond your control, but you can manage your money in ways that offset these challenges and still come out on top.