Nut orchard – business case

The degree of complexity: is 1-2 (on a scale of 1 to 5).
The volume of primary investments is 5-8 thousand USD per 1 ha.
License – not needed.
Specialization: in the form of nuts (walnuts – the most profitable option), their variety – depends on the natural and climatic zone, has its own specifics.
Business franchise: possible.
The given business is combined with: green tourism, sheep breeding, other agricultural activity, sale of seedlings of nuts. Cideratum in the walnut garden before closing the tree crown can be: pumpkin, garlic, beans (primarily beans), vegetable and berry crops.
The payback period is from 10 to 15 years (3-5 years provided the use of the inter-row area). It is necessary to take into account that the trees will begin to bear fruit 4-7 years after planting (depends on the variety, the age of the seedlings), and in full force – in 5-20 years.
The time to break-even point: from the 5th year from the moment of landing.

  • I. Is the “play of candles” worth?

The advantages of business are obvious:

1. Uncomplicated: walnut trees – in care, the goods – in simple conditions of storage and transportation.

2. A small amount of initial investment (the main costs go to seedlings, land, special equipment, and after receiving the first harvest – to rent / purchase a warehouse for storing goods).

3. Business can be inherited: once well-thought-out business will function and bring profit up to 100 years (average life of walnut trees). And the age of some walnuts reaches 300-600 and even 1000 years, throughout the whole life they continue to bear fruit. This type of business is considered passive, because it does not require updates and innovation.

4. A wide sales market and a high demand for the product in combination with low competition. Almost all soils of Ukraine (more than 80% of the land fund) are ideally suited for walnut, and it can grow only on 7% of the territory of the globe. Only growing in California (USA) walnut is superior to Ukrainian in taste. Therefore, Ukraine has great potential for this type of business.
On the other hand, the market is not limited by the geography and volume of orders, and the need and popularity of walnuts in the world grows from year to year.

5. Wasteless business. The product (commodity) in it are:

• Core (calibrated: whole and crushed), flour and oil from it – for food, oil – also for the perfume and pharmaceutical industries; do also honey, sugar extracts from the milk-wax ripeness; jam from green walnut; nut butter;
• Shells – in the pharmaceutical industry, in the form of fertilizers, as biofuel;
• Nut fetal septum – in the pharmaceutical industry,
• wood – is considered a valuable breed because of its high dynamic strength and minimal tendency to cracking, goes for the production of high-quality furniture, parquet, wooden parts of hunting weapons, interior decoration of houses and cars;
• Leaves and peels – for pet food, for fuel briquettes, for young leaves – for phyto-tea;
• branches and roots – for biofuels;
• Seedlings – for sale. For example, companies engaged in green tourism, buy walnut trees to ensure clean air and get rid of different types of insects on its territory.

6. High return on investment (when drawing up a business plan for 20 years): 400-450%.

7. Possibility of supporting business by grants, loans from banks.

Walnut is one of the few cultures for which businesses willingly give loans.

For this business, grants of the EU programs, USAID for the restoration of land are suitable, as the walnut garden is optimal for the restoration and protection of lands.

8. In addition to economic benefits, walnut farming attracts the ecophilosophy, according to which a person lives in harmony with nature.

  • II. Volume and potential of the market

Walnut more than 1000 years ago, brought to Ukraine from Central Asia, Greek traders, so it is called the Greek.
The rankings of the world leaders of walnut production in 2018 are as follows: 1 – China (forecast for 1 million tons in 2018), 2 – the USA (590 thousand tons), 3 – the European Union (115,000 tons); 4 – Chile (120 thousand tons); 5 – Ukraine (113 thousand tons).

According to forecasts, the total world production of walnut in 2018 will be at the level of 2.1 million tons per year. At the same time, production in China will decrease by 6% due to adverse natural conditions in the leading regions (spring frosts in Yunnan province and drought in Shanxi province). And imports of nuts into China will rise sharply to 70,000 tons due to stable demand for nuts in the Chinese food industry.

Of all the nuts produced in the United States, only a quarter (25.4%) is consumed in the country, the rest are exported to China, Hong Kong and Vietnam.

In the European Union, the harvest of nuts is collected in France and Romania and Spain, but this is not enough, so the import of nuts to the EU is forecasted at 260,000 tons.

In Chile, almost all the output is exported to the European Union and Turkey.

In Ukraine, walnut production in 2018 will grow by 5% compared to the previous year due to higher yields. In our country, most walnuts are produced by small private farms that do not use fertilizers and labor mechanization (combines), inactive invest in their gardens. Produced goods are sent to intermediaries who already in turn sell nuts to domestic and foreign wholesalers. However, since 2009 in Ukraine the area of commercial walnut gardens is constantly growing, which today make up 1/4 of the total area of the walnut plantings of the country.

The cost of production of nuts per hectare is at the same level as the cost of cereals, while the profit from the sale of nuts is much higher (data of the Ukrainian Institute of Nutmegenous Crops). From 1 hectare, 5-6 tons of walnut are collected (the figure depends on the variety, the conditions of care).
Survival of certified, frost-resistant nuts seedlings 95-99%.

  • III. Scope of activities

The purchase of harvesters for harvesting, cleaning from the shell and packing of nuts is suitable for planting areas from 30 hectares. The same amount of activity Ukrainian experts point out as the lower limit for effective large-scale business. And farmers argue that a good profit can be obtained on a land area of 0.5 hectares.
The area of 100 hectares can bring up to $ 0.6 million in profit annually.
To store the goods you need a warehouse – a dry, well ventilated and cool room.

While you wait for the first harvest, you can:
1. to buy nuts in the villages and in the private sector of settlements where people give their own and collected wild-growing nuts for low cost;
2. to cultivate in inter-row spaces other crops (pumpkin, garlic, vegetable and berry crops, beans).
It is necessary to provide for:
1. year-round protection of the site from vandalism and theft;
2. Seasonal work on soil fertilization, pest control.
It is also recommended to provide the garden with a watering system.

In the structure of the initial costs, about half of this is for seedlings. When choosing seedlings, you need to consider many factors:
1. the variety must be adapted to the conditions of the given climatic zone, it is advisable to take seedlings in areas close to the planned garden;
2. The shell of nuts should be of medium thickness to protect the kernels from birds;
3. Early-ripening varieties can begin to bear fruit and for the 3rd year of life, but they have less life;
4. Seedlings are more stable and durable than seedlings, but the harvest will have to wait longer.

Depending on the type of fruiting of the selected variety, it is necessary to determine the density of planting. Densely planted nuts with terminal fruit can be suppressed.
Starting to bear fruit, 1 walnut tree will give about 10 kg of harvest, and only after 5 years of fruiting will increase the yield to 40-50 kg.
Buying seedlings experts of the Ukrainian Walnut Association recommend in Ukrainian licensed nurseries on the basis of an agreement for the purchase and supply of seedlings, having pre-ordered the required variety and quantity.

  •  IV. Where to grow

The most favorable areas for planting a walnut garden in Ukraine are Vinnitsa, Zakarpattia, Ivano-Frankivsk, Lviv, Kirovograd, Poltava, Ternopil, Kharkiv, Khmelnytsky, Chernivtsi, Cherkassk, located in the forest-steppe zone with a temperate climate.
The plot under the garden is chosen taking into account:
1. Depth of groundwater (no more than 2.5 m);
2. The absence of solonchak soils (the soil must be turfy, loamy or sandy loamy).

  • V. Portrait of a potential client

Nuts are a very popular product, with their sales there are no problems.
But for the sale of goods at a high price it is necessary to conclude contracts on permanent (annual) purchases directly from:
1. large confectioneries;
2. grocery stores;
3. Foreign wholesale buyers.
There are 2 main foreign markets for Ukraine:
1 – Muslim countries (which especially in Ramadan need products of vegetable origin, which have a great energy value);
2 – The European Union, where the energy snacks are in fashion, as a trend of healthy nutrition: it is fashionable to use nuts as the main source of proteins, proteins and amino acids.