Farmworker shortages are a mounting concern for Western growers, but Agriculture Capital has resigned itself to insufficient labor.
The number of skilled farmworkers is likely to continue dwindling, which is why the investment firm is taking a comprehensive approach to reduce its dependence on them.
“We recognize we’re not going to have the harvest labor in the future and we need to adapt,” said Tom Avinelis, the firm’s principal.
The first step involves planting firm blueberries that ripen uniformly and easily detach from their stem, decreasing damage from machine-harvesting.
Those plants are then carefully pruned to encourage strong canes and upright growth, which also eases mechanical harvesting.
Harvesting machines — which commonly shake bushes to knock off blueberries — are being perfected to avoid losing and injuring the fruit.
Manufacturers are also experimenting with gentler harvest techniques, such as dislodging the berries with blasts of air.
Finally, computerized sorting machines equipped with advanced infrared optics detect bruised or defective fruit, diverting it for processing while the highest-quality blueberries are packed for the fresh market.
“It’s all about systems management to baby that fruit any way we can,” said Avinelis.
Since 2014, the investment firm has bought roughly 4,000 acres of farmland in Oregon and 5,000 acres in California that it’s dedicating to high-value crops.
Most recently, the firm converted a Christmas tree seedling facility near Silverton, Ore., into a fresh blueberry packing plant, with plans to double the building’s footprint by next spring.
Apart from decreasing its reliance on labor, Agriculture Capital’s mechanically oriented approach to blueberry farming addresses another problem: Competition from foreign producers who pay lower wages.
Harvesting blueberries by hand for the fresh market can cost from 65 cents to $1.20 per pound, depending on the season, Avinelis said. To compare, machine-harvesting blueberries delicately enough for this higher-value market costs from 17 cents to 30 cents per pound.
Blueberries grown on Agriculture Capital’s own farmland will supply roughly half the capacity of its Silver Mountain Packing Co., so the company expects to help other growers adopt its cultivation practices.
“We see this as investing in the entire blueberry industry,” Avinelis said.
Of the investment firm’s farmland in Oregon, about 1,400 acres are planted to blueberries and the remainder are devoted to hazelnuts.
“We feel both these industries have tremendous potential,” he said.
For now, Agriculture Capital is selling its hazelnuts to other packers. Eventually, it will probably build its own facility in line with the firm’s vertically-integrated philosophy, Avinelis said.
There’s a great opportunity to sell more hazelnut kernels domestically. Consumers in the U.S. eat only one-fourth as many hazelnuts per capita as their counterparts in Europe, he said.
The industry should also become less dependent on Chinese consumption of in-shell hazelnuts, he said. “We’ve got to diversify our market.”
In addition to its facility in Oregon, the investment firm owns three citrus packing plants in California, one of which also has the ability to pack peaches, plums, nectarines and pomegranates.
While Agriculture Capital is a relatively new venture, Avinelis has more than three decades of experience in the farm industry.
His family’s company, Agricare, also manages extensive farmland in Oregon and California.
Seeing the need to build efficiency through vertical integration — but reluctant to take on massive debt — Avinelis formed Agriculture Capital with partners from the finance industry.
Institutional investors contributed an undisclosed sum to several funds upon which Agriculture Capital has drawn upon to buy farmland and facilities.
Working with investors is different than borrowing money from banks, as they’re more intensely interested in monitoring details and “key performance indicators,” Avinelis said.
“I think it’s made us better investors in the industry. It forces you to do a better job of financial planning analysis,” he said. “You look at it really analytically.”