Walnut Business Fundamentals: A Professional Perspective

Core Principles and Disciplines

In writing this article, I am working from a number of assumptions that may or may not apply to your situation. If they don't, you can stop reading and save yourself the time. If they do, please keep in mind that the views I share rest on observations and assessments distilled from countless trips, meetings, hours of reading, seminars attended and discussions with other growers, over a period of the last fifteen years in which I have devoted myself almost entirely to this business. I do not claim to be an expert in the field; still, sharing my various views on this business may offer the reader some insights.

Walnut Growing Is a Business Too

Walnut growing is not all that different from many other businesses, such as running a hotel, construction or textile manufacturing. The same is true of almost all agricultural activities. It involves clearly understanding the key elements, making countless decisions, choosing between options, controlling resources and activities, and observing the results over the years.

Some businesses are more transactional: results are shaped by short-term decisions and actions. Others are more strategic: results are determined by a series of decisions and actions taken over the long term. Walnut growing is definitely in the second category. But make no mistake: every move you make will affect the final result, even if it is not immediately visible.

Rule Number One: Walnuts Are "Unforgiving"

My journey with walnuts began with no prior knowledge of soil, water, electricity or chemistry. I had no engineering degree, so it took me much longer than others to learn many basic concepts. On the other hand, I had a few advantages:

• My lack of knowledge of basic engineering concepts forced me to learn them over a longer period and almost by rote. In fact, I have seen many overconfident people with more relevant training fail to take many fundamental concepts seriously enough and make irreparable mistakes.
• My analytical and inquisitive nature led me to question every piece of information that should be considered before making an important decision.
• Before I started planting, I learned the importance of planning and good organisation. Being a perfectionist in the preparation phase is far easier than being one during implementation.

These factors, perhaps without my even realising it, led me to what I have shared in countless discussions with fellow growers as the Number One Rule of Walnut Production: Walnut production is an "unforgiving" business!

"In walnut production, your sins (mistakes) are never forgiven."
— An instructor at the Advances in Walnut Production workshop at UC Davis

Tactical and Strategic Mistakes

For this reason, you should do your best to make as few Tactical Mistakes as possible, and avoid Strategic Mistakes at all costs.

• Tactical mistakes: Errors that cause lost time or reduced yields during a given period, but that can be recovered from.
• Strategic mistakes: Wrong decisions in fundamental areas such as site, variety, rootstock selection or the assessment of water requirements. Getting out of these is usually impossible or extremely expensive.

Every important decision should be made only after you have a good understanding of the underlying facts and potential consequences. Don't leave it to chance. Try to build up reliable sources of information, perhaps an experienced grower, and discuss the concepts with them before making these important decisions. Sometimes waiting an extra year to make a better decision can save you years of work, or the future of the entire project.

The Importance of Being Humble

Another important lesson I have learned in walnuts is humility. I have seen many walnut investors with no agricultural background try to increase their orchard size without even seeing how their operation was going. My advice is to prepare a phased master plan. Each phase should have a specific orchard size and, initially, a duration of about 2 years, which can later be reduced to 1 year.

By observing the results of your preparation and management, you will see that you improve with every step and do not repeat the mistakes you made at the start. As you do a better job, any time lost between these phases will easily be made up for by improving results.

Financial Discipline: It's a Marathon, Not a 100-Metre Sprint

Like any business, a walnut plantation requires other skill sets, such as financial management. Remember: this is a marathon, not a 100-metre sprint. Don't believe or rely on overly optimistic plans. Things that delay your cash flow are likely to happen. Have funding buffers to cover the gaps and maintain them. However tempted you may be to spend that money on new plantation plots, hold yourself back. I have seen too many failed projects go under.

Always check and re-check your cost, productivity and selling price projections. Talk to others and compare your scenarios with theirs. Don't be embarrassed to ask about the underlying assumptions, learn from other people's mistakes, and keep taking steps to build a more reliable financial plan. This is a never-ending process.

Factors Beyond Your Control

In a long-term project such as walnut production, keep in mind that various changes in your trading environment may occur that are completely beyond your control:

• Import restrictions
• Exchange rate fluctuations
• Customs duty rates
• Agricultural support policies

All of these can have a significant impact on how your assumptions play out.

Conclusion: Farming Is a Business, Not a Peasant's Trade

Finally, always keep this in mind: farming is not just an activity carried out by peasants; when done properly and as a primary business activity, it is a business that can be very profitable.