July 7, 2015

Pecan Management LLC, which is a feeder entity into National Pecan Company, has raised $425,000 in equity, according to an SEC filing dated June 25. The capital was raised from various investors and will be directed into National Pecan. Private equity firm Blue Road Capital, which was designed to invest across the commodities and agriculture supply chain and whose maiden investment was National Pecan Company, was named director in the filing.

The capital was raised in an industry where there is great demand growth for pecans.

Blue Road’s Approach

Blue Road founding partner John Duryea was among the featured speakers at the Global AgInvesting Conference in New York in April. Duryea at the conference described the firm’s approach, which involves investing directly in assets as opposed to participating in auctions. Secondary commodities with a natural hedge to water, such as pecans, are an area of focus.

Blue Road is most interested in the supply chain, which Duryea described as midstream agriculture between production and consumption, to borrow a phrase from the energy sector, he noted. While Blue Road Capital mostly pursues private equity exposure to the supply chain the firm occasionally will backward integrate into growing something out of the ground as long as the firm generate approximately 10 to 12 percent rates of return. Duryea noted at the land level there’s an opportunity for a “terrific real asset local return” if you execute right.

“There’s lots of private equity like profits that one can make,” said Duryea at the conference.

Pecan Crops

Rising demand for pecans amid troubled conditions for another nut crop — walnuts — has made the case for pecans more compelling. Persistent drought conditions in California have compromised walnut production, driving prices higher while the quality of the nut has suffered, reports suggest.

“Pecans have been priced at or just below the price of walnuts. And as a result, we’ve seen a significant shift in consumption of pecans,” said Dan Zedan, president of Natures Finest Food.

Pecans offer farmers more diversification than other nut crops as they are produced across multiple states, unlike California-focused crops such as almonds, walnuts and pistachios, for instance.

Gerelyn Terzo