Heartland Nuts ‘N More

Cooperatively marketing improved varieties

Overview

Heartland Nuts ‘N More is a 35-member formally incorporated cooperative headquartered in Valparaiso, Nebraska. The co-op produces, processes and markets pecans and black walnuts from growers in Nebraska, Iowa, Kansas and Missouri. Relying on over thirty years of research and experimentation, Heartland’s focus has been on improving nut varieties and finding high-quality cultivars; their mission statement is “To produce and harvest the best-tasting, premium-quality orchard-grown tree nuts, including black walnuts and Northern pecans.”[1]

History

While Heartland Nuts ‘N More was founded in 2003, its story starts over two and a half decades prior. In the 1970s, researchers at the University of Nebraska—Lincoln forestry department had an interest in developing alternative “cash crops” for landowners. Toward this pursuit, they worked to develop a less-bitter, higher-yielding black walnut cultivar. Then, an extension agent from the Lincoln area with a personal enthusiasm for growing black walnuts helped promote the idea of growing these nuts as a potential value-added crop for farmers and ranchers in his county.

More directly, the cooperative has been an outgrowth of the Nebraska Nut Growers Association which had been going to the state fair in Lincoln selling bags of black walnuts and pecans for planting. As yields in the state started to increase, a network of growers developed to address the need to process and distribute the nuts beyond the farm stand.[2] This group of growers formed a steering committee, conducted background market research, and officially incorporated as a cooperative with 32 original members. Then, with help from the Nebraska Cooperative Development Center and a key member of the UN-L forestry department, the group was able to secure vital grant funds to help start the business. As quoted in an online article by the Nebraska Cooperative Development Center, board member Larry Martin acknowledged that “If we hadn’t received those grants, we probably wouldn’t have started up at all.”[3] These grant funds helped supplement start-up capital derived from member loans to the cooperative, most of which were in the amount of a few thousand dollars.

Operations

Heartland Nuts ‘N More exclusively processes grafted cultivars of black walnuts and pecans. Growing these improved varieties results in several advantages over wild nut trees: it speeds up the time until the trees bear nuts (about 6-7 years instead of around 14 years) and results in sweeter, milder-tasting nuts, with more nutmeat.[4] For example, the walnuts grown by Heartland are larger and have a thinner shell, resulting in nuts that are 35-36% nutmeat as opposed to the 6-8% more typical of wild varieties.[5] Improved handling techniques also lead to a better product. Instead of allowing their walnuts to fall off the tree and letting the husk turn black, Heartland’s growers harvest the nuts while they are still on the tree, preventing the nuts from becoming bitter. Additionally, compared to more southerly walnut-producing areas, Nebraska’s shorter growing season (about 3 months) allows producers to grow nuts that retain more of their oils and don’t dry out.[6]

During the harvest, which goes from late September into October, a mechanized shaker is used to drop nuts from the tree onto a plastic tarp. Then, co-op members bring their nuts to the hub site in Valparaiso, NE where the nuts are hulled, then cracked. The 5,000 square foot processing facility also doubles as the co-op’s retail store. Inside are machines that crack walnuts at a rate of 300 lb. per hour, and pecans at 500 nuts per minute. Another machine separates nutmeats from the shells, and yet another separates walnuts according to light and dark colored nutmeats. Once the nuts are sealed in 4oz, 8oz or 16oz packages, they are kept in cooler storage until they are shipped out. Most of the co-op’s business is from black walnuts: In 2009, they processed between twenty and twenty-five thousand pounds of walnuts compared to just four thousand pounds of pecans.[7] A marketing agreement between the cooperative and its members helps ensure that it will be able to obtain sufficient product for processing.

Marketing & Value-Added Products

According to a 2007 article in Nebraska Magazine, Heartland Nuts ‘N More has ridden “the wave of the ‘locavore’ movement” in marketing their nuts.[8] While customers from around the country can order Heartland’s black walnuts and pecans by printing out and sending in an order form from the website, only a small percentage of sales are direct-to-consumer. Most nuts are sold wholesale to local institutions such as the University of Nebraska dining services or to local businesses like Bakers Candies, a Nebraska-based confectioner.[9] A significant amount of product is also sold to retail grocers in Omaha and Lincoln.

Selling to these more urban, upscale grocery stores like Whole Foods, Ideal Foods and Open Harvest has meant portraying their nuts—particularly their walnuts—as locally-grown specialties that taste better than other varieties. Growers have noted that area consumers are sometimes reluctant to buy their black walnuts, perhaps from previously having tasted sub-par nuts that had been harvested too late. In order to give their products a good name, grower-members have manned stands in grocery stores trying to get customers to try their pecans and walnuts.[10] The co-op has also advertised in magazines and members have conducted promotional events at community festivals in order to increase visibility.[11] Heartland’s online presence promotes their product by emphasizing how its particular varieties and handling techniques give rise to a “sweeter and lighter tasting” walnut, also noting that walnuts’ high levels of anti-oxidants make them a healthy option.

Heartland initially connected to these local markets via numerous small-scale face-to-face interactions. According to a source familiar with the co-op’s beginnings, “They were not out to try and get a contract for thousands of pounds of nuts to Betty Crocker…They were looking at home use, consumer use—more of a grocery store situation.” The co-op hired a marketing coordinator who spent a lot of time connecting to particular retail outlets such as bakeries and grocery stores. Emphasizing the “story” of the locally-grown, non-bitter walnut variety was vital to find buyers that would pay a price above commodity wholesale price. After all, Heartland’s goal is not to compete on price with huge nut industry leaders like Diamond Foods. In fact, a cooperative development professional familiar with the company believes that their current price points are likely too low.

The products that Heartland Nuts ‘N More offers require limited processing. According to their website, they offer three types of nut products, each of which come in 4oz, 8oz, and 16oz bags as well as in bulk: black walnuts ($12.00/16oz), northern pecan halves ($13.00/16oz), and northern pecan pieces ($12.00/16oz). Sales tend to increase in the fall due to increased baking during the holiday season, leaving the co-op in search of more consistent year-round markets. Additionally, they have recently considered taking steps toward increasing their product line to include more non-nutmeat products. Husk by-products, for example, can be made into an intestinal cleansing pill, while the juices may be used as a wood or tanning stain. The shells are also used for blasting and polishing—a major aspect of Hammons Products Company’s operations in Stockton, MO.[12]

Challenges

As stated above, Heartland Nuts ‘N More has been heavily dependent on grants in starting and maintaining its operations. In 2006, for example, they received a USDA Value-Added Producer Grant to upgrade their processing building, purchase equipment and acquire a computer and office supplies to help the business get started.[13] In 2008, the cooperative obtained a $25,000 grant for a project entitled “Increasing Rural Income Through Cooperative Nut Processing and Marketing” which allowed them to purchase additional equipment.[14]More recently, they secured a grant to help them update their brochures in order to improve their marketing efforts.[15] While these grants have been instrumental to the co-op’s development, they can be a double-edged sword.

The cooperative development professional familiar with Heartland’s history has observed that being so successful at acquiring grants can distract from focusing on the bottom line and cost of production issues: “The down-side…is that they became so dependent on grants that they forgot they were trying to run a business.” Specifically, he cited an example in which the cooperative had hired a marketing manager funded by a grant. When the grant ran out, there was no one to keep up the co-op’s marketing activities, so the board had to scramble to replace the services of the marketing manager. Failing to account for grants coming to an end can shift a huge weight onto the cooperative’s grower-owners: “The problem is they didn’t plan for what was next when the grant ran out. Now the marketing person’s gone, the processing person’s gone and they’re doing it all themselves again.” Additionally, failing to consider the taxes due on grants received can be a recipe for accounting problems down the road.

A related challenge is the general lack of time that grower-owners are able or willing to dedicate to marketing and processing given that the cooperative has often functioned without paid staff. This is especially difficult since many of the growers are retired husband-wife teams for whom growing nuts is not their principal financial endeavor. Compounding the difficulty is that the co-op’s grower-owners range across four states, often making it difficult to recruit members to volunteer their time to go to Valparaiso to assist with processing activities.[16] The cooperative development professional interviewed noted the difficulty of not having paid management: “They’ve done all the grunt work themselves, right up through incorporation to running this business. And, here we are several years later and I can tell you that…they’re just flat tired…They don’t have a good process in place for this effort to carry on if they want to get off the board.” Budgeting for paid management can help ease the burden of day-to-day issues for the grower-owners.

In facing these challenges, Heartland Nuts ‘N More benefits by being well-connected to a variety of public and private organizations. As described above, partnering with the University of Nebraska and its Cooperative Development Center helped get the business off the ground in the first place by way of grants and technical assistance. As of 2011, the cooperative was working with the Nebraska Forestry Service to develop hazelnuts as a viable crop for growers.[17] Heartland is also a member of other cooperatively-oriented organizations such as Buy Fresh Buy Local® Nebraska which helps guide consumers to locally-grown foods. Additionally, they have been members of GROW Nebraska™, a non-profit that helps provide market access and entry for Nebraska entrepreneurs and operates several retail stores featuring local products.[18] Very importantly, Heartland Nuts ‘N More growers benefit from the research and agronomic guidance from the non-profit that gave birth to the co-op—The Nebraska Nut Growers Association.

Future Expectations

Key growers for Heartland Nuts ‘N More appear relatively sober about the Nebraska-grown black walnut and pecan industry. One noted that “Obviously if there was a lot of money in this, there would be others in it."[19] In a 2010 Columbus Telegram article a grower claimed that his sales of walnuts to the co-op don’t begin to cover his expenses, while another acknowledged that “it's kind of silly at this point to mess around with a pecan when corn is $5 a bushel.”* For many of the growers, it appears that walnuts and pecans are an intriguing side-project. According to one grower, his orchard is “a little family project to give us a reason to get together.” Others view it as a way to conserve soil on land not suitable for row crops, trying to turn a small profit on their endeavor. What is certain is that few growers’ economic well-being hinges on the success of their nut crop or that of the cooperative—many growers are retired professionals. This may explain some of the challenges that the cooperative faces as a business entity. What Heartland Nuts ‘N More does provide, however, is a way for those with the time, money, and interest in tree nuts in the upper Midwest to recoup some of the expenses inherent in pursuing their hobby. Growers may not get rich, but the existence of Heartland provides more of an incentive for a first-time grower to take the plunge and plant that first tree.[20][i]

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[1]Heartland Nuts ‘N More, accessed May 21, 2013,

[2] “Heartland Nuts ‘N More,” Agricultural Marketing Resource Center, accessed February 28, 2013,

[3] “Heartland Nuts ‘N More,” Nebraska Cooperative Development Center, accessed May 21, 2013,

[4]“Heartland Nuts ‘N More,” Agricultural Marketing Resource Center; Heartland Nuts ‘N More,” Nebraska Cooperative Development Center.

[5]“Heartland Nuts ‘N More,” Nebraska Cooperative Development Center.

[6] Ibid.

[7]“Heartland Nuts ‘N More,” Agricultural Marketing Resource Center; Heartland Nuts ‘N More,” Nebraska Cooperative Development Center.

[8]Hachiya, Kim, “The Nut Farmers’ Cheerleader,” Nebraska Magazine, Spring 2007, accessed March 6, 2013,

[9]“Heartland Nuts ‘N More,” Agricultural Marketing Resource Center; Heartland Nuts ‘N More,” Nebraska Cooperative Development Center.

[10]“Heartland Nuts ‘N More,” Agricultural Marketing Resource Center.

[11]Hachiya, “The Nut Farmers’ Cheerleader.”

[12]“Heartland Nuts ‘N More,” Nebraska Cooperative Development Center.

[13]“Heartland Nuts ‘N More,” Agricultural Marketing Resource Center.

[14] “Twenty-seven value-added ag projects share $800,000 in grants,” Nebraska Department of Economic Development, accessed May 22, 2013,

[15]“Heartland Nuts ‘N More,” Nebraska Cooperative Development Center.

[16] Ibid.

[17] Ibid.

[18] Ibid.

[19]Hachiya, “The Nut Farmers’ Cheerleader.”

[20]Ellyson, Tyler, “Local nut growers add to holiday,” Columbus Telegram, November 23, 2010.Lexis Nexis Academic (20101123-CU-HLT-Local-nut-growers-add-to-holiday-1123-20101123); Hachiya, “The Nut Farmers’ Cheerleader.”

* Corn is now closer to $7/bushel.

[i]Authored by Brady Williams, University of Wisconsin-Madison, College of Agricultural and Life Sciences Agroecology Program. June 2014. This work was conducted through the UW-Center for Integrated Agricultural Systems as part of a USDA - NIFA project entitled “Developing Native and Native-European Hybrid Hazelnut Germplasm and Agronomics for the Upper Midwest”, Donald Wyse, PD, University of Minnesota with Lois Braun, University of Minnesota; Tony Kern, Northland College; Mike Demchik, University of Wisconsin – Stevens Point; Larry Godsey, University of Missouri Center for Agroforestry; Jason Fischbach, University of Wisconsin Extension; and Brent McCown, Michael Bell and Michelle Miller, University of Wisconsin - Madison.