ALBUQUERQUE — New Mexico's pecan growers pumped more money than ever into this year's pecan crop, and both producers and processors are hoping the market and consumers won't play Grinch when it comes to buying the nuts during these troubled economic times.

The harvest is under way in Southern New Mexico after colder weather arrived earlier this month, causing the orchard leaves and pecan shucks to dry.

Harvesting machines and equipment are humming along orchard rows, shaking the nuts from the trees and gathering them up off the ground.

But New Mexico's pecan industry experts and growers say high fuel and fertilizer costs this year made the season's pecan crop one of the most expensive to produce, even while the crop is smaller than in years past because of the tree's natural bearing cycle.

Add to the equation the worry by pecan buyers and shellers that market and consumer demand could be affected by the shaky economy, and you could say this year might be a lot tougher than expected for pecan growers.

"This is one of the most expensive years for pecan producers in history. Though it was a smaller production year, the costs that went into this year's crop (were) phenomenal," said Richard Heerema, extension pecan specialist with New Mexico State University.

Production is low across the state because of the alternate bearing pattern of the crop, where a heavy production year is followed by a light yield the next. New Mexico is in an "off year," which means a smaller crop, Heerema said.

New Mexico is expected to produce 45 million pounds of pecans this year, placing it second behind Georgia for the second year in a row, according to a U.S. Department of Agriculture forecast released Dec. 11. New Mexico's pecan crop on average is worth around $100 million.

Georgia is in line to produce 65 million pounds for the top spot, and Texas is predicted to come in third with 30 million pounds, according to the USDA statistics.

The 2008 forecast production for New Mexico is down 39 percent from last year's 74 million pounds and 4 percent from the last "off year" in 2006, which had 47 million pounds, according to Heerema and the USDA.

The rankings provide little solace for growers who, like other farmers around New Mexico, have seen the prices for fertilizer and fuel to power irrigation pumps and tractors rise sky high this year.

Diesel prices were up 60 percent since 2007 and a whopping 200 percent since 2003, Heerema said, and fertilizer prices rose 90 percent since 2007 and 160 percent since 2003.

Phil Arnold, a pecan producer and buyer for San Saba Pecan in Las Cruces, said production costs have farmers caught in a tough situation without an alternative because they cannot skimp or simply switch to another crop when things get tight.

"Fertilizer cost is directly related to petroleum. You have to use a fuel source to produce fertilizer, so the cost is passed on. But you cannot reduce the care that you give to these trees," said Arnold, president of the Western Pecan Growers Association. "If you cut back on water and fertilizer in an off-crop cycle ... the tree won't set up for a heavy year."

Since pecans are not a subsidized crop, Arnold says the pecan market is influenced by the economy. Right now, the market is at a standstill, he said.

"This is the slowest pre-holiday season I've seen as a buyer. You've got growers trying to make money or hopefully break even, and then you've got shellers that are worried about ... being able to move the product they buy."

Paul Koenig, general manager for Young Pecan Company's shelling and processing facility in Las Cruces, says they will use pecans held in cold storage from last year's plentiful harvest and combine them with this year's nuts to cover customer needs.

"With the big lot harvests coming in, it will give us enough to cover our customers, but we're not sure what's going to happen to our sales as far as (nut kernel) meats. Meat sales have been very slow," Koenig said.

He said right now it's difficult for his company — an ingredient supplier — to know what price to pay for pecans when they don't know how much their customers are paying for them.

"Fuel cost is affecting us also. And our material costs, everything from cardboard boxes to plastic bags to put stuff in, everything has gone up this year," he said.

The small pecan shelling company Mad Nuts in Mesilla Park lowered shelling service prices for pecan customers with small quantities because "everyone is having a hard time financially right now," said co-owner Michelle Maese. "Customers are coming in, but it's slow. I lowered my prices to just change the breaking point to keep prices reasonable for everyone."

The 2008 crop is expected to be smaller than last year's in most areas of the "pecan belt" — a 15-state growing region in the southeastern and southwestern part of the country — mostly because of the alternate bearing pattern.

Mesilla farmer John Clayshulte Jr. is waiting to sell his pecans in hopes of a higher price in the coming months.

"We're in wait-and-see mode. The market is pretty unstable right now, and prices are ... maybe $1.35 a pound, which is not as good as last year. So we store them in cold storage by the end of February and then see what the prices do," Clayshulte said. "Next year it should be a whole lot cheaper (to farm). And it should be an 'on' year, so we should do all right."




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