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Nut Trees – Increasingly Desirable Agricultural Assets

Touch the Soil News #757 (feature photo – Pastachio nuts on the tree – Paolo Galli CC SA 3.0)

When the health and nutrition community recognizes certain foods as healthier or health supporting, chances are the financial investments in those commodities will follow.

Case in point. Gladstone Land is a company whose business model is based upon owning agricultural land in that produces fruit, vegetables and nuts – no livestock, corn, soybeans or hay. It is not an accident that Gladstone follows land that produces foods most important to health.

Nuts are a rising star as relates to healthy eating and Gladstone Land just announced (7/17/2017) that it has purchased 327 acres of almond orchards and 327 acres of pistachio orchards (645 acres total) for $13,600,000 – that’s over $21,000 per acre.

The farmer that owned both of these orchards and sold them to Gladstone Land is going to turn around and lease them back and pay rent to Gladstone Land. The lease agreement is for 10 years with an option for an additional 5 year extension.

It is not unusual for a farmer, strapped for cash, to sell land and rent it back. Gladstone tells investors that it typically tries to get a rental payment from farmers at around 5 percent of the cost of the land. This means that the farmer who sold the 645 acres will be paying a rent on his former orchards of about $680,000 a year.

Nut orchards are heavy users of water. It is no secret that water for agriculture – that uses 70 percent of all fresh water uses – is facing a future of less than abundant water. Is there opportunity for smaller scale urban nut farmers?

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