A Case Study about why high value crops are critical for the Rio Grande corridor
The Four Daughters Pecan Farm began as the unofficial county dump after the county closed the dump to the west of the land that was to become the pecan orchard. For that reason, everyone would pull up and dump their junk. Consequently, it took a year of cleaning the area out before the Mechenbiers could begin the planting of trees.
But Mike Mechenbier and his family had a vision for this 850 acres which lies on the west side of I-25 just south of Belen. “We need high value crops on the irrigated land that runs along the Rio Grande,” says Mike. “There’s a lot of political pressure for that water, so we need to make the most of it.” Mike is concerned that lower value crops like alfalfa just don’t pencil out to provide a living wage for farmers to sustain their operations. Given the development pressure along the Rio Grande corridor, we need to make farming a viable business to give opportunities for young farmers to provide local food and keep these working lands working.
The pecan orchard is just one high-value crop Mike notes. Chile or high-value produce would also work. Hemp is certainly an option right now as well, but that may be a bubble as it is a new market. With people’s interest in local, healthy food, the demand for high value produce is great. And given that it currently costs $20-25,000/acre for a piece of farmland that is leveled and has water rights, you have to produce a crop that not only provides a living wage, but also pays the numerous direct costs, including equipment depreciation, and the overhead of the land costs.
New Mexico pecans are important to the nation’s nut industry, with New Mexico routinely in the top tier of pecan-producing states. In 2018, New Mexico produced 90 million pounds of pecans, according to the National Agricultural Statistics Service of the USDA.
The Mechenbiers began planting trees on 50-60 acres per year since 2006. There’s been a lot of experimentation with varieties over the years given the risk of starting a pecan orchard so far north. They currently have approximately 400 acres in trees which is a total of 22,000 trees. The cold-hardy varieties they’ve tried include: Pawnee, Lakota, Western Schley, Bradley, and Kanza (a newer variety). The challenge has been that the varieties they have purchased from California have either died in late or early freezes (like the Bradley) or pollinated too late (like the Lakota). The Mechenbiers are hoping that the Western Schley and Kanza will be able to survive and pollinate at the proper time.
“It’s been a steep learning curve,” says Emily, Mike’s youngest daughter who became the pecan orchard manager in 2012 after graduating from NMSU with an MBA. “No one’s tried to grow pecans this far north in New Mexico so we are learning as we go. The people (like the Salopeks) in the pecan industry down in Las Cruces have been great sharing what they know, but those practices don’t always work up here.” Emily notes that they’ve learned over the years how to time the zinc applications or when to turn the sprinklers on to protect the trees from freezes.
Not all of the 850 acres has been leveled and there is an additional 200 acres in alfalfa and corn until they can transition more land to trees or other high value crops. Mike is quick to note that they have had some good luck with production because the orchard is on the top of the valley. Because the cold air will settle in the valley, warmer air is pushed to the top of the bowl which means the orchard is a few degrees warmer which can make a difference with spring frosts. Given the numerous other issues that can influence site selection, not every piece of land along the Rio Grande is a good site for pecans. However, there are other high value crops to explore.
In 2015 the Mechenbiers received a $107,100 grant from the USDA Rural Energy for America Program for a 564-panel solar system they installed to power irrigation pumps that cost $428,402 to construct. While the Mechenbiers expected to save $25,000/year in electric bills, they have not broken even yet on this investment, because they also invested in two wells to augment river water so they haven’t had to use the pumps as much as they had originally thought. Instead of taking four years to break even it will likely now take eight years.
Mike says that on average it takes until year 10 for a pecan stand to break even and you begin to make money after year 12. Pecans start really producing in their seventh year and reach full production in year 12. “This year we are anticipating that our trees for the entire orchard will average 1,250 lbs/acre in the shell,” says Mike. Once the trees mature and the Mechenbiers address their pollination issues, they expect in the next two years to reach a yield of 2,500 lbs/acre. With wholesale prices at $2/pound, gross income will be $5,000/acre. After harvest, the Mechenbiers ship their nuts to Las Cruces where they are cleaned and stored and then the brokers come to bid on the pecans.
While there is a lot of investment in the trees and weather like hail and freezes can wipe a crop out, pecan trees can continue to produce well even after 100 years. The key to continued productivity says Emily Mechenbier is good pruning. As the tree matures the upper and outer branches shade the lower ones which are the most productive branches. Pruning the upper and outer branches allows more light to reach the lower branches to continue their productivity.
Gross Profit for Pecans and Alfalfa
So what is the gross profit per acre for pecans? Mike’s found that pecans average a $3750/acre net when reaching full maturity and production and that net can go up to $5,000/acre. In contrast alfalfa nets about $200-300/acre while using the same amount of water as the pecans. Both operations deal with the high cost of depreciation in the equipment.
Mike also notes that there is a lot of equipment to invest in for pecans and you need at least 400 acres to justify all the equipment purchases such as shakers, mechanical brooms to sweep the nuts into windrows, a harvester that blows off leaves and picks up nuts and puts them into trailers, and transfer trailers for shipping. In contrast, the minimum numbers of acres that justify alfalfa equipment would be 25-30 acres. But, if you were to run an alfalfa operation of 400 acres you would have comparable equipment investment costs because of balers, rakes, swathers, and front end loaders, but the gross profit per acre is much higher for pecans says Mike—as much as 11 times higher gross profit.
The Mechenbiers have worked to reduce input costs (one key factor in increasing the gross profit per acre) by seeding a cover crop of Bermuda grass and clover with some other mixes as they establish each new section of the orchard. The cover crop increases soil health which reduces soil temperatures and improves water retention in soil which means less irrigation water is needed. Likewise, their investment in the solar system will also help improve the gross profit because of reduced irrigation costs.
The Mechenbiers are also pleased to see the organic matter increasing for the orchard with these management practices. The native soil is sandy, but with mowing the cover crop and letting it feed the soil organisms they have begun to build top soil. One of their goals is to increase the earthworm population in the soils says Emily.
Like all agricultural operations, labor is a critical investment as well. With pecans, there is more labor needed than an alfalfa operation, but Emily notes that she has six workers who get everything done and having the right equipment helps to make sure the labor is used effectively.
While there have been challenges with a hailstorm and a flood that took out part of the orchard in 2018, the pecans are performing well and the return on the investments are on track–with greater returns coming in the future once trees are matured.
“The long-term goal for the farm is to have all 850 acres in trees,” says Emily. When asked if starting a pecan orchard is a risky venture, Emily notes, “Farming is risky. Every farmer knows that. The hailstorm that took our crop could have just as easily wiped out a chile crop. It’s hard work, but every morning when I come to work and look out across the pecans, I’m always so amazed at what we’ve been able to accomplish. To remember what it looked like before and to see what it looks like now, and what we hope to be able to do in the future is what motivates me.”