The US pecan industry, like most other US agricultural commodities, has been negatively impacted by the US-China trade war leading to a massive drop in the in-shell pecan market price index. However, demand for pecans continues to rise both domestically and around the globe. So why has the price of pecans paid to growers dropped so significantly you might ask. The most notable reason is how the pecan market is currently structured. With the exception of the small portion of growers who actually retail their product to consumers, the pecan market operates quite differently than other nut markets leading to a zero-sum game between growers and shellers each year forcing each other’s interest to be at odds with one another and not aligned. The typical US pecan will be traded multiple times before finally getting to its customer which by that point the grower nor the buyer has any knowledge of each other or the price paid for the product throughout the supply chain. The US pecan shelling industry currently has to endure enormous capital requirements in order to purchase, store, shell, pack, market and deliver the pecan to its customer whether that be an ingredient buyer from the baking industry, or a re-packer in the snack food industry. The capital requirements for the shelling industry are quite prohibitive and therefor create a large barrier to entry for new players as well as an incentive for the sheller to purchase the product as cheaply as possible, while attempting to keep the spread between supplier and buyer as large as possible in order to turn a profit. This model however is not working. Over the past 30 years the number of pecan shellers has declined by a significant amount. While we don’t have any official reports, the number is somewhere around 70 shellers that have closed their doors due largely to the speculative role that the shellers take as a result the inefficient structure of the pecan market. So, what is the answer to this market inefficiency. Some believe the answer is grower owned pecan Co-Op’s. When looking at other nut industries such as the almond, walnut, or pistachio industry this model is well understood and highly utilized. This model allows for the grower and the end consumer to have a much closer relationship, as well as giving the industry far more control over product safety, while putting the grower in control of his or her market. In this model, the shelling industry becomes merely a service provider in the supply chain, as opposed to the marketer, the bank, the speculator, and the sheller.