Farmers Investment Co., owner of more than 6,000 acres of pecan trees in Green Valley and Sahuarita, will close its processing plant in the face of growing costs, putting about 130 people out of work.
The announcement came Wednesday, the same day employees on three shifts were given the news. Included in the closure is The Pecan Store, the iconic shop that opened in 1981 and sells gift tins, baskets and other pecan-related items.
Processing will continue locally into December; the store will close in the first quarter of 2022, with shipments going out through February.
The company cited high tariffs, low-cost competition from Mexican pecan processors, and the financial impact from COVID-19 among reasons leading to the decision.
“There’s not a single factor here,” spokesman David Steele said.
Processing will be done at South Georgia Pecan Company in Valdosta, Georgia.
“We’re going to focus on the farm, growing the best quality pecans in the world and let someone else, exclusively a processor, do that work,” Steele said.
The 140 remaining workers mostly include farm employees.
“We’re still going to be growing and cleaning and processing pecans and shipping them to be shelled,” he said.
FICO, owned by the Dick and Nan Walden family, operates farms in the Santa Cruz Valley and San Simon, on Interstate 10 about 10 miles from the New Mexico border.
After processing operations end, the plant will remain an in-shell cold storage and shipping facility, according to FICO.
Steele noted that the pecan market has been tough for several years, and COVID made the business all the more difficult and costly.
“It’s hard keeping an operation running in this,” he said of the pandemic.
“Europe, which is a big part of our market, basically shut down, which had an impact on prices. Our customers weren’t buying what they were before,” he said.
Then there were the tariffs. Three years ago, the Trump administration imposed the first big round of tariffs on Chinese goods, launching a U.S.-China trade war.
When China slapped “retaliatory tariffs” on a range of U.S. products, including pecans, “that cut off a significant part of our market. Other places that grow pecans were able to fill those markets,” Steele said.
The tariffs started out at 7 percent and reached 57 percent, Steele said. They currently are 24 percent for U.S. pecans and remain at 7 percent for other nations.
He said 15 to 20 percent of the total U.S. pecan market once went to China. Today, it’s a fraction of that.
Steele said China, long a big market for FICO, was able to buy pecans cheaper elsewhere. Locally, the tariffs dealt a blow on a smaller level when the popular Pecan Festival was canceled in 2019; it was canceled in 2020 and 2021 due to COVID. Steele said they will look at options “when things recover” and that no decision has been made on the future of the festival.
Steele said a tight labor market didn’t make things easier.
“It was getting hard to find people to fill critical positions, that was certainly a factor,” he said.
Steele said the savings that come with outsourcing processing would be difficult to quantify.
He said FICO continues to make investments in the operation, including a pipeline to increase groundwater recharge and completion of the second phase of the new pecan cleaning plant.
Laid off workers, most of whom are full time, will get a severance package, according to FICO.