Raptor Ag looks to leverage its scale and agronomic expertise, along with benefiting from long-term production contracts, to diversify hazelnut operations. Grower prices in Chile and Italy have been up to 260% higher than Oregon - a shocking difference. Raptor Ag sees hazelnut production contract pricing as an important tool to ensure industry success.
EDMOND, Okla., Nov. 2, 2023 – Raptor Ag, LLC, is pleased to announce major growth initiatives in its hazelnut operations. The company has agreed to form joint ventures in Chile and Italy – both major hazelnut growing regions – to duplicate the large-scale developments and exceptional yields Raptor Ag has achieved in the United States. One of Raptor Ag’s responsibilities in both joint ventures is to direct farming operations and manage agronomic strategies. In Chile, Raptor Ag partnered with AgroAgama – a Chilean farm management company formed by U.S. based Agama Partners – to form Raptor Ag Chile. AgroAgama already has approximately 600 hectares (1500 acres) of hazelnuts under management, giving Raptor Ag Chile an immediate foothold in the country. Raptor Ag Chile is currently completing diligence and investor pairing opportunities on approximately 700 hectares (1730 acres) of hazelnut orchard acquisitions, along with considering opportunities to lease or custom manage several thousands more hectares of mostly hazelnuts, with some other tree crops. “When it comes to hazelnuts in Chile, our agronomic team views the northern growing region of Chile as possibly the best climate in the world for maximizing hazelnut yields and the species’ genetic potential,” said Chris Eubanks, CEO and Partner of Raptor Ag. “The best growers in Chile are already achieving yields far higher than the average for any country in the world. And the orchards we’re looking to acquire, which all havegreat soil and water, come with existing production contracts. These contracts help moderate the risk and volatility we’ve recently seen in hazelnut markets. Quality farmland in Chile is also more affordable than the U.S. “Additionally, Raptor Ag, with assistance from AgroAgama, lobbied U.S. senators this summer to ratify the income tax treaty that was signed 13 years ago but had not been ratified by Congress. Within weeks of our lobbying efforts, the treaty was approved and cleared for ratification, which passed by a vote of 95-2. The president is expected to sign it. The treaty provides numerous benefits to U.S. companies doing business in Chile, including reducing or eliminating taxation by both countries.” In Italy, Raptor Ag partnered with Wollstone Capital to form Wollstone Raptor Ag. Recently, Wollstone Capital secured a 15-year off-take contract with a leading confectionary company for the development of 1500 hectares (3700 acres) in Italy. The contract will be implemented by Wollstone Raptor Ag. Prior to forming the JV, Wollstone Capital had already started ground preparation for initial plantings. “We also really like the opportunity in Italy,” Eubanks said. “Farmland affordability, no corporate income tax, and an educated workforce can provide a great business environment for hazelnut growers. The lengthy production contract also virtually assures profitability. For central Italy, we also believe the growing environment is better than Oregon – more direct sunlight hours, similar temperatures and a drier harvest season. “Raptor Ag has already seen consistent ‘paid’ yields up to 4500-5500 lbs/acre (4490-6175 kg/ha) in its Oregon operation and on farms in Chile, and there is no reason why we can’t duplicate that success in Italy. It appears the return profile for our investing partners - both current and future investing partners - in both Chile and Italy can be more attractive than U.S. hazelnut operations, even when grower prices rebound in the U.S.” Raptor Ag sees the off-take agreements with confectionary companies or other buyers as crucial to the future financial success of growers and expansion for the hazelnut industry. In the U.S., hazelnut growers sell their crop to processors, and the grower prices have recently been far below production costs – $.42/lb for Barcelona variety and up to $.54/lb for other varieties. Grower prices so far this year are not much better. Meanwhile, the contracts last season in Chile and Italy paid growers approximately $1.10/lb for Barcelona and $1.40/lb or more for other varieties. While Raptor Ag is committed to its operations in Oregon and is optimistic about the future, the current market situation has caused many growers to remove or abandon their orchards. “There are orchards all over Oregon’s Willamette Valley right now that owners or operators simply quit managing or removed, because everyone is currently losing money,” Eubanks said. “We believe the market will eventually rebound for U.S. growers, and it appears grower prices have already started improving a bit. But with rapidly increasing costs of labor, equipment and inputs, contract pricing is beneficial to ensure grower profitability, industry expansion, and for buyers to secure consistent supplies. So we believe the off-take agreements offered to growers in other production regions is a savvy business decision by confectionary companies and other hazelnut buyers.” Along with the announcement of Raptors Ag's plans for expanding in Chile and Italy, the company is also pleased to announce an additional $19 million raised over the past 12 months for expansion, primarily for its pecan operation. Raptor Ag was founded in 2016 and is now the largest hazelnut grower in the United States, with more than 1200 hectares (3000 acres) of hazelnuts under management in Oregon. In the winter of 2017-2018, Raptor Ag planted 404 hectares (1000 acres) of high-density, irrigated hazelnuts, which is the largest planting by a single grower in the North American hazelnut industry history. Additional plantings and acquisitions of established orchards followed. In 2021, Raptor Ag diversified into pecans in southern Oklahoma, establishing 421 hectares (1040 acres) of high-density, irrigated orchards, which appears to be the largest single-season planting by a grower in the North American pecan industry. By February 2024, Raptor Ag will have a total of 810 hectares (2000 acres) of pecan orchards developed. Raptor Ag has a talented team of full-time employees that include agronomists, horticulturists, geologists, soil scientists, hydrologists, fabricators and engineers, along with highly experienced farm managers and operators. The company has developed proprietary evapotranspiration models for hazelnuts, utilizes various irrigation and soil moisture monitoring technologies, developed proprietary hedging methods for both hazelnuts and pecans, invented new types of pruning equipment, implements precision ag and sustainability programs, operates its own drone for weekly remote sensing analysis, and more. For more information on Raptor Ag, including investment opportunities, visit www.RaptorAg.com or contact Chris Eubanks at [email protected]. |