Yes, mature walnut farmland is extremely profitable. An acre of mature walnut farmland can generate upwards of $4000 a year for its owner ($10,000 per hectare). Compare that to a typical $300 per acre profit ($750 per ha.) for growing corn or soybeans. There is an exponential difference.
Why don’t all farmers grow walnuts if they are so much more profitable? Few farmers can afford the wait. Orchards take a long time to become profitable and most farmers need to earn an income every year.
An orchard owner needs to be extremely well-capitalized and willing to put in years of work with no profits before finally seeing the fruits of their labor. Most farmers and investors want to see a return this year; they are not willing to wait.
All things come to those who wait.
– Violet Fane, writer & poet
Profits are a function of (1) annual costs, (2) the walnut’s price on world markets, and (3) the yield per acre of your plot. We’ve prepared cash flow projections for a new walnut plantation with three different yield scenarios and three different price scenarios, allowing you to simulate different scenarios.
According to these projections, yearly profits could range anywhere from $4,700 to $12,600 per acre once the orchard has matured.
Again, this depends on world markets and yields (which depend on the weather). According to our cash flow projections, payback occurs anywhere from 6-12 years.
In developed countries, all owner-operated orchards expand through bank financing, purchasing and planting additional acreage through mortgage loans. In Argentina bank financing is unavailable for long-term capital-intensive projects such as a commercial orchard. Combine that with an underdeveloped capital market and the principal limitation that every major operator faces is financing.
We choose to grow by inviting investors to purchase plots within our development. If it were not for our investors we would likely be growing on a small 100 acre plot, paying 2-3 times the annual maintenance per acre, selling our production to a local walnut bundler, and receiving undermarket prices for our harvest. Through our association with 60+ investors, together we have 640+ acres planted with 4400 more planned, our costs are the lowest in the sector. We process and export our production directly, and receive the highest market price for our walnuts.
As we add new investors, our company and our existing investors continue to reap the benefits that come with the economies of scale of a larger operation.
There are two charges. Every month we collect maintenance expenses, which go towards the maintenance of your orchard and cover all the annual work outlined in our Orchard Cultivation Program. The cost of our supervision and management of your orchard plot is included in these expenses.
Even with our supervision of your plot, through economies of scale we are able to operate an investor’s orchard plot for much less than the investor would pay to do the same work on their own.
Once your plot begins to produce, we also charge a 5% fee for the sale of the harvest. By grouping the harvest of all investors together and selling directly to foreign buyers without any intermediaries, we are confident that we are obtaining the best price possible. Even with our 5% fee, investors will sell their harvest for more with Chandler Orchards than if they sold it to a walnut bundler or processor independently.
Investing in an orchard is one of the safest long-term agricultural investments, with most risk in this business comes from the weather. The riskiest year is the first one, when the young walnut trees are transported from the nursery and planted in the orchard. The young trees are susceptible to frost damage that could injure or even kill them in extreme cases. That’s why Chandler Orchards guarantees all trees during this critical first season, replacing, at our expense, any and all trees that do not perform for any reason.
Once trees are mature, even the worst climate events do not put your orchard at existential risk. They may end up reducing the year’s harvest, however. Even then, with annual orchard expenses around $1200 per acre, a yield of just 900 lbs for the year means breaking even. Mature acre plots regularly yield upwards of 5000 lbs per year, making this scenario almost impossible even taking into account extreme weather.
Give me a worst-case scenario.
In our cash flow projections, we’ve outlined an extremely pessimistic scenario showing the evolution of an orchard plot that suffers a once in hundred years “winter kill” frost event in the first year along with deadly autumn frost and hail storm in the fourth year. Even if market prices drop 25% from their historical averages, the investor will still be earning a 21% ROI by the 10th year.
Chandler Orchards is Argentina’s leading managed walnut grower. With more than 60 investor-growers and 640+ acres (260+ hectares) planted, we have a proven business model that generates value for our investors.
What does managed walnut farmland mean for investors?
- You receive walnut farmland inside our 5000 acre (2000 hectare) master-planned development. We sell you the land with access to wells, electricity, and a modern drip irrigation system, all included at no additional charge.
- Your orchard is planted and cultivated by a professional team of agricultural engineers with decades of experience in walnut growing.
- We are financially responsible for the success of your orchard during the first critical season. Any trees that fail – for whatever the reason – are replaced at no cost to you.
- Your small orchard achieves the same economies of scale as the largest corporate growers. All 5000 acres (2000 hectares) share the same team & equipment and contribute equally towards costs and overhead.
- You do not need to buy equipment or hire employees. Monthly costs are prorated equally among all investors and amount to less than $100 per acre (less than $250 per hectare).
- At harvest time, you receive the best price for your walnuts, since your production is sold together with that of other investors. Chandler Orchards’ investors are able to export their production to the highest paying international markets, while small independent orchards can only sell to local walnut handlers & bundlers.
- While most farmland takes years to sell, should you ever need to sell your orchard, we will sell your plot within a few short months to our existing pool of investors for a small 3% commission.
The smallest plot we offer is 1 acre. For a total investment of $15,000 the investor receives the land with the soil prepared for planting, 142 two year old walnut trees planted, use of a community well, a modern drip irrigation system, windbreaks, along with all the necessary infrastructure. See everything included in our turnkey planting system.
Yes! Any number of investors may share title to a 1 acre plot, but local zoning laws prevent us from subdividing into plots smaller than 1 acre.
Yes, we can arrange for a payment plan, but payment in full must be received before the end of July. Contact us for more details.
In a well-managed orchard it can take 4-6 years, but it depends on the weather. Even the most experienced growers can’t control the weather.
If there are no serious weather events in the early years of a walnut tree’s life, it will begin to produce in 4 years. Serious weather events (drought, sunburn, night frosts, hail, etc.) will reduce the harvest of a mature walnut tree, but can actually damage or even kill a young sapling.
After a tree begins to produce its first harvests, it will take another 4 years to reach maturity and reach its maximum production. This is a special time in the life of a walnut tree, since each new harvest can double or triple the production of the previous year.
In 7-10 years, the new Orchard will have reached its maximum production and will provide a lifetime of production for its owner.
“The best time to plant an orchard was 20 years ago. The second best time is now.”
– Chinese Proverb
Walnuts are the leading tree nut consumed in rapidly developing medium income countries (especially China), with a 27% market share. In the last 10 years world walnut consumption has grown by more than 50%, about 5 times the growth rate of the world population.
The almond, for example, fetches a similar price, but produces less than half the yield of the walnut per acre/hectare, making it much less profitable over the long haul than a mature walnut orchard.
The pecan fetches a higher price, but can only be marketed to buyers in North America, with the U.S. and Mexico accounting for over 85% of world consumption, leaving growers at the mercy of US/Mexico trade policy.
The walnut on the other hand enjoys large markets throughout Europe, Asia, the Middle East, along with North & South America. No single country accounts for more than 40% of walnut consumption, helping to shield walnut growers from the effects of tariffs and trade conflicts.
Although no one would consider cutting down a producing orchard, after 60-100 years as walnut trees age, they may begin to reduce their annual production. The walnut tree, however, is also highly valued as timber. The value of walnut lumber can easily equal the profit of 10 harvests, giving the orchard’s heirs access to a large amount of capital should they decide to exit the business in the future.
There are a number of advantages to growing walnuts in the Southern Hemisphere in general and Mendoza in particular. Since 93% of walnuts are grown in the Northern Hemisphere, growers in the Southern Hemisphere are paid more for their harvest since supplies of northern walnuts begin to dwindle around the March/April Southern Hemisphere harvest.
While northern growers scramble to be the first to market and avoid the supply glut, southern growers face no such pressure. In March/April, walnut buyers prefer to buy the fresh Southern Hemisphere harvest over Northern Hemisphere walnuts that have been stored for months in freezers.
Mendoza’s climate is ideal for walnut production. Walnuts need 700-1300 hours of cold sub-45°F (7°C) temperatures to reach their full potential. With an average of 1300 hours over the last decade, even future climate change leaves Mendoza as a prime planting location for walnut growers.
Mendoza has an abundant water supply as well. With an abundant aquifer at a depth of just 300 ft. (100 m.), walnut growers have ample access to the large quantities of water needed by a walnut orchard.