In the agricultural industry, timing is everything. Crops follow cycles, markets fluctuate and financial decisions must align with both. But not all crops run on the same cycle. Some specialty crops have unique or extended timelines, making traditional financing options more challenging to work within. Pecans are one of these crops.
The financial challenge of pecan farming
Unlike traditional row crops such as corn or soybeans, pecans have an unusually long cash cycle – a challenge that requires a capital partner with deep industry knowledge.
A pecan tree's cycle begins in April, emerging from dormancy and growing until harvest in November or December. However, the financial cycle doesn’t quite match up. The pecans grown and harvested in one year won’t reach consumers until late the next. This extended timeline creates a dilemma: farmers wanting to take their pecans to market directly must invest in the next season’s crop before seeing revenue from the previous one.
“At the end of the year, we’re harvesting a crop, which will be processed, shelled and stored, before being packaged and delivered to retailers,” explained Jose (Pepe) Guevara, CEO of Pecan Grove Farms. “But that means we won’t get paid until August or September – a full 18-24 months after our initial investment to grow that crop.”
This cash cycle is long compared to other crops, making it difficult to secure traditional agricultural loans. Many lenders prefer straightforward crop loans where a farmer grows, harvests, sells and repays within a single season.
FarmOp Capital recognized this challenge and customized flexible credit options to suit the needs of Pecan Grove Farms and pecan growers like them.
How FarmOp Capital changes the game
FarmOp provides a specialized financial product that adapts as the pecan crop moves through its lifecycle. Initially structured as a crop loan, the financing transitions into an inventory-backed loan once the pecans are harvested and stored. This flexible model allows pecan growers to hold onto their pecans, process them and add value before selling – instead of having to sell immediately to cover operating costs.
“Without FarmOp, we would have to sell our crop immediately to an accumulator or sheller, forfeiting the opportunity to add value through processing,” said Guevara. “Instead, we can store the pecans or shell them for premium markets. That value-added capability is a new functionality we’ve been able to develop thanks to FarmOp.”
This flexibility is crucial in an industry where value-added products generate higher returns than raw pecans alone. FarmOp’s approach allows pecan growers to take advantage of this additional value, helping them grow even faster.
A trusted partner for growth
Beyond financial support, Pecan Grove Farms values its relationship with FarmOp for another reason: trust.
“They’ve taken the time to truly understand our business, tailor their product to our needs, and build a relationship based on trust,” Guevara said. “In many ways, they are the canary in the coal mine for us. If FarmOp hesitates on a financial move, it makes us reconsider whether we should be making it at all.”
This trust works both ways. FarmOp’s willingness to invest in Pecan Grove Farms sends a message to other financial institutions and investors, helping to further substantiate the company’s reputation.
“If FarmOp is working with our company, it’s just another validation of our business model.”
For now, a partnership with FarmOp ensures that Pecan Grove Farms and other pecan producers can keep pace with their goals and ambitions. By providing innovative, flexible capital, FarmOp enables Pecan Grove Farms to grow its business and shape the pecan industry's future.
“FarmOp has fueled our ability to expand, add value and reach the next level of investment,” Guevara said. “They didn’t just provide us with financing – they gave us the opportunity to become something bigger.”
Wondering if a partnership with FarmOp Capital is right for you? Find out more.