Recorded September 9, 2020

SPEAKERS

JASON FISCHBACH, Roger Smith

JASON FISCHBACH  00:00

This is a podcast about new crops. You’re gonna love it. Join us on the cutting edge, a podcast in search of new crops for Wisconsin.

Roger Smith  00:11

The interesting part about this business is I tell people over and over again that there we haven’t even come close to reach a saturation point where we’re gonna have to lower our prices. I honestly don’t see prices going down for the next 20-30 years.

JASON FISCHBACH  00:45

Welcome to the cutting edge, a podcast in search of new crops for Wisconsin. I’m JASON FISCHBACH, your host today and this is the third part in our chestnuts series and today we’re gonna focus on processing and marketing chestnuts with Roger Smith, who runs Prairie Grove chestnut growers. Okay. All right. Roger, do you want to introduce yourself and how you’re involved with chestnuts?

Roger Smith  01:11

My name is Roger Smith. I live in Columbus Junction, Iowa, southeast Iowa. I’d been a chest, start planting chestnuts in 2003. And I started the, well I took over the marketing arm. We have a group of 68 growers in three states, Illinois and Missouri, Iowa took over the marketing arm and processing arm in 2014. And we have grew from marketing 25,000 chestnuts to close to 100,000 chestnuts.

JASON FISCHBACH  01:48

Pounds of chestnuts, not individual.

Roger Smith  01:50

Yes, yeah. Yeah. Pounds of chestnuts. Well, my background is in marketing. I worked for corporate America in the marketing avenue for over 30 years. And I find it challenging and interesting to do the marketing.

JASON FISCHBACH  02:08

So maybe let’s talk a little bit about your production side. And then we can get into the the Prairie Grove. So you’ve been growing since 2003. Are you primarily growing Chinese chestnuts or what kind of?

Roger Smith  02:19

Yes, we’ve been growing primarily Chinese chestnuts on my farm and most of the growers that I deal with are Chinese chestnuts. I have a one grower that has some European, and I got a spattering of American chestnut trees, maybe half a dozen with throughout the growing area. Okay, so but it’s, it’s 99% Chinese.

JASON FISCHBACH  02:48

Tell me more of the history of prairie Grove, how it got started, who is involved, who are the leaders and maybe a little bit because you’re not actually a formal cooperative right?

Roger Smith  02:59

No, this is a brokerage company. It’s not a we’re run as a co operative, but it’s basically a brokerage company.

JASON FISCHBACH  03:07

Okay.

Roger Smith  03:09

It started, like I said, to start in 2014, Tom Wahl, a local grower here, he started the chestnut industry in this area back in the 1990s. And because of that, he would buy chestnuts from the people that planted the trees. So they had a market. But the problem Tom had, his facility isn’t big enough to handle the volume and he didn’t want to expand. And so we we had a meeting with all the growers in 2013. And trying to decide what we were going to do, there wasn’t any interest in forming a co-op. So I agreed to, to try it. And I bought a building downtown and refurbished it, build a walk in cooler and created some processing tools. And we got started that way,

JASON FISCHBACH  04:08

When growers start harvesting their chestnuts, and they’re gonna sell to you. What are they doing post harvest processing and what do you do? What’s it what’s involved in chestnut processing?

Roger Smith  04:21

Okay, generally the harvest starts somewhere around the 15th, the 20th of September. I send out a newsletter in August to all the growers and all the people that are interested, listing my ground rules for delivering chestnuts and they I’m not going to go over as many as I can here. But basically I asked the growers to harvest chestnuts every day because they are a waterbased nut. And if you leave them on the ground for more than a day, they’re going to shrink. The animals are gonna get into them. There’ll be bite marks. So we try to minimize the damage to the chestnut and increase the weight. I stress to the growers that they harvest daily, they’ll get more money for their chestnuts because they’re going to weigh more. So I ask them to harvest every day, I asked them to clean the chestnuts, it’s easy to do, you can rinse them off, put them in a bucket, and float them take all the twigs and the dirt and the chaff off of it. So the chestnuts come in clean, when they do come in. And I asked them not to freeze the chestnuts, I’ve had instances where they, they want to hold the chestnuts and put them in a freezer, and if you freeze the fresh chesnut they’re no good. So anyhow, they bring them in to my processing center. And what we they bring them in and totes and buckets. What we do is we label each they transfer them into my totes, we label each tote with their name, and grower number. And then we, what I found works best, we sort the chestnuts through my sorting machine. And then we clean them, we kind of do it in reverse order. Because if I clean them before they get into my sorting machine, they tend to because they’re moist, they tend to pick up dust in the air through my machine, and I have to clean them again. So we sort, then we clean most of the chestnuts don’t have to be cleaned, it’s an eyeball thing. And if there’s no dirt on them, I don’t clean them. And then we after we run them through the sorting machine. we weigh everything. We catalog that for the grower, then we bag them in 25 pound bags. If they’re going to be shipped through the mail post office, we put them in 25. or excuse me, we put them in 10 pound perforated plastic bags. Then we put them in our walk in cooler. And our business plan is to sell fresh chestnuts. And so we don’t hold the chestnuts for very long. If they’re, if chestnuts are in my cooler for over five days. It’s an odd experience. We’ve got customers. Well, a backup here. Is there any questions you have about the processing before I get into the marketing end of it?

JASON FISCHBACH  07:42

Yeah, so you know, in the hazelnut processing that we’re doing there was we harvest the nuts off directly off the shrubs, they never touched the ground. But in in Oregon, they’re swept off the ground and there was some E. coli issues. So this must have been five, six years ago, and it totally up ended their whole industry, because they had lots of like, collection nodes where people would bring neighbors would work together to get them cleaned. And then there was just issues of, you know, all this stuff coming off the orchard floor. So you know, so that’s kind of carried over for us into the hazelnut world here in the Midwest. And I’m just curious. So what do you have to do from a licensing standpoint or food safety? Like are you doing a sanitation step as part of that cleaning like a disinfectant solution or something? or How are you handling all that?

Roger Smith  08:25

Well, we we haven’t done that yet. That’s something that as we get larger, I’ve going to put in place you know, knock on wood, we’ve been doing this for six years, we’ve never had an issue.

JASON FISCHBACH  08:42

Right.

Roger Smith  08:42

And like a lot of nuts, we the customers, most of the the most common method of eating a chestnut is roasting. So they’re cooking the chestnuts. That’s not to say somebody doesn’t eat a fresh chestnut. But that’s that would be rare. So we haven’t incorporated anything like that into our our processing center yet but certainly that’s something that our next step will be to do something like that. I will say we’re on city water, and it is, you know, chlorinated. Although, you know, the chestnuts need a little bleach if you’re gonna  if you’re going to sanitize them.

JASON FISCHBACH  09:26

Sure.

Roger Smith  09:28

We haven’t done that.

JASON FISCHBACH  09:30

Gotcha.  So the is the sizing and cleaning, considered food processing that you would need to license. You know, in hazelnuts as soon as we crack a hazelnut we have to have a food processing plant license. But I suspect if you’re not peeling them or roasting or just washing you would you wouldn’t, right?

Roger Smith  09:49

Yeah, we we first of all, we don’t sell any chestnuts that are cracked or damaged. You know? We we eyeball everything when when we process them and then when we bag them, we try to take all those out. And so we’re not selling the edible chestnut, we’re selling the edible chestnut with the outer shell on it.

JASON FISCHBACH  10:14

Alright, so let’s go into marketing, I was looking on your website. So now now is the time for people to be ordering chestnuts is that kind of how you’ve got your business setup where you start taking pre orders here in the fall and then ship as they come in?

Roger Smith  10:27

Well, I got, I have three methods, three different methods, I use to market to chestuts. The first method is for people to come down to my processing center. And they can purchase chestnuts where my plant is, and that that has evolved over time. That went from about 100% my first year to now represents about 20% of my sales are people stopping in and purchasing chestnuts that way. The second method is sending. My second method is delivering chestnuts to different areas of the Midwest, where I gather orders before time, and then I I deliver in a band at a specified time and place. And that has evolved to about 50% of my business.

JASON FISCHBACH  11:29

And that’s mainly to like ethnic communities. I think Tom was talking about Bosnians and others.

Roger Smith  11:34

Yeah, that’s mainly ethnic minority. Almost all our I would say 95% of my sales are to ethnic minorities. They’re either Bosnians, they’re Greeks, they’re Italians, they’re Chinese, they’re Koreans, they make up the bulk of, of my sales. And, you know, that’s, and I’ll wind us up later on. But the the interesting part about this business is I tell people over and over again, that there, we haven’t even come close to reaching a saturation point where we’re going to have to lower our prices, I honestly don’t see prices going down for the next 20-30 years, I there is just a long time. It takes such a long time to ramp up production, and the interest. And the interest in chestnuts keeps on growing. And we’re not even doing any advertising yet. And we haven’t even touched the you know, the, what I call the white Caucasian market, most of those people don’t even know what a chestnut is. So there’s a lot of room for growth here. But right now, our our marketing is to ethnic minorities that I outlined earlier. And we can’t even supply all the needs they have, what we found is I can deliver the, I deliver the chestnuts for a dime more. And it’s a lot easier for me to deliver them than to have people come down there to my plant to buy chestnuts for a couple reasons. Number one, my supply changes day to day. And I asked people to call me before they stop down because there’s days we have nothing to sell. And then the next day we’ll have 10,000 pounds of chestnuts in. So it varies considerably, considerably from day to day. And the second thing is when people come down, they want to talk to me. And we, we have about seven people that work for me. And when we’re busy, we’re busy, and it’s very time consuming when people come down there. And I you know, I I’m not trying to discount that I don’t like people coming down there. But it’s it makes it a little bit harder to run the whole process. And when I deliver the chestnuts I can talk to them there. And there’ll be a group and I can answer one question that everybody else has. So it just streamline streamlines the process.

JASON FISCHBACH  14:08

Right.

Roger Smith  14:08

Then the third third method that we developed in the last four years to sell chestnuts is online sales. And one thing we did that really helps us as we advertise Chinese chestnuts and I would say the bulk of my chestnuts that I sell online is to the Chinese community all over the United States we sell in 46 states. We’re not allowed to sell in Washington, Oregon and California. They have specialized rules and we’re not set up to we’re not set up to sell on them states. And it grows every year. We pretty much send everything through the post office right now. We get we what we sell on the internet is a little higher price because there’s more work involved in packaging. And then transporting the packages to the post office. We sell, we only ship on Mondays, because there’s a lot of variability in delivery times through the post office. So if we, if we ship on a Monday, about 80% of the chestnuts, will get there on Wednesday or Thursday, and then 10% on Friday, and the rest the rest of them on Saturday. And occasionally, we’ll get some held over to the next Monday, the internet, part of our sales is really growing, it went from 5% to last or two years ago, it was over 20%. And we’re, we what I do, that’s kind of unique, I’ll pick out at the end of the season, I got so many orders, I can’t fill, I’ll pick out five people and I’ll just send them free chestnuts made. And there may be a pound or two apiece, and I don’t charge them anything. That’s kind of my way of getting the word out. And, you know, treating people to the experience of a chestnut. And hopefully, they’ll talk to their friends. And the next year, you know, we’ll get increased sales from that. But one of the biggest issues with sending chestnuts through the mail is shrink with chestnuts because they’re waterbased nuts. And so when we sell 20 pounds, we sell 20 pounds to a box, I put 20 and a half pounds in the box. And if it takes more than two days in the mail, well they’ll lose a half a pound. And we got complaints that the weights weren’t right. And so we went to a perforated plastic bag. And now we we market everything through the post office and in that kind of a bag. Now the problem we see is, if we take this over two days, there may be a little white mold that shows up on the surface of the chestnuts. And so we communicate to people that they can either wipe it off, they can mix a little bit of water and soak them in that and then rinse them off. Internal mold is a lot different than outside mold. And that’s this isn’t a big problem. But it’s the you know, it’s like anything, you solve a problem and another problem comes along.

JASON FISCHBACH  17:23

Right.

Roger Smith  17:24

And so that’s an issue we have to deal with we put a we put a little flyer in the box when we send it telling people how to clean their chestnuts before eating. So hopefully, you know that we aren’t getting a lot of negative feedback since we went that way. Gotcha.

JASON FISCHBACH  17:45

So when a customer gets a 20 pound box, could you kind of talk through because you know, most of your customers obviously have some familiarity with chestnuts but you know, the rest of the population maybe doesn’t. Can you just kind of give an overview of how customers should be handling these chestnuts when they get them how to prepare them, cure them, take care of them.

Roger Smith  18:07

Well, in the flyer we put in or in conversations I have over the phone with them. I tell people they need to refrigerate chestnuts. If you don’t refrigerate them, they’re going to dry out and you’re going to lose weight and they’ll begin to, after you know over time over a couplw, if you leave them out for a couple weeks, they’re going to dry out they’re going to be hard to eat. So I tell people you can if you’re going to eat something in the next few days, you can leave them out. They’ll age that way and when chestnuts age they turn the carbohydrates into sugar. And makes, that’s what makes the chestnuts sweet. And so you there you do want a little aging before you eat them. So I tell people to refrigerate them and then when they get ready to cook them because they’re a waterbased nut you have to score the nut you have to take a knife and put an X on the nut before you cook them. And like I said most people roast them. Some people put them on a cookie sheet in the oven they have to score the nuts that way at 220 degrees for like 20 minutes. Or you can put them in a microwave, you have to score him first you can put a pound in a bowl takes about a minute to cook them that way. Then through to over time when you need more chestnuts, youe can take out of the refrigerator. Let them age for half a day or a day after you take them out of the refrigerator and start the process all over. After the chestnuts have been aged two to three weeks. You can freeze them in the shell that way, but you can’t freeze the chestnut before the age. The way you tell if they’re aged. If you take the chestnut between your forefinger and your thumb and it’s spongy, there’s an air pocket in there. That means they’ve been aged If it’s still hard as a rock, that means that hasn’t been aged. And so you can cook what a lot of people do. As soon as they get the chestnuts, they will cook, they will cook and peel the chestnuts and put in the refrigerator what they’re going to eat in the next 30 days, and then they freeze the rest of them. If you have cooked the chestnuts, then you can freeze them. And the longer you, the longer you freeze them, the more they’re going to convert the starch and the carbohydrates into sugar. And the sweeter they’re going to be, I found that with my own experience,

JASON FISCHBACH  20:41

so just pull them out of the freezer and let them thaw out and they’re ready to eat or just do anything.

Roger Smith  20:45

Yep. You let them thaw out. It doesn’t take long, you know, let them thaw out for about an hour. And, you know, you can re cook them or you can eat them, you know cold like that. Either. Either way,

JASON FISCHBACH  21:01

The supply chain is given the demand that you’ve got, Is there like a big glut of new production coming in soon, or how’s the supply looking for the next, you know, 5 to 10 years?

Roger Smith  21:12

Well, since 2017, I would say in our area, which is I call a 200 mile radius from where we’re at into Illinois, up to the Minnesota border down the middle of Missouri, over to western Iowa. In our area since 2017, I think there’s there’s 5000 trees being planted every year or more, there is a lot of interest in chestnuts, I see the the our area being the focal point of chestnut production going forward. I don’t see any type of this much planting of new trees anywhere else in the United States. I mean, people are planting new trees across the country, but not to the extent they are in the Midwest. I think one reason for that is we have the we have the climate, we have the best soil. We have young people that maybe have 10 acres or more, and they’re looking for a way to get some income off of that and the chestnut certainly works. One thing that really helps the chestnut market is that it’s very intensive the first three years after you plant a tree to keep the tree alive, you’ve got to water it, you’ve got to make sure it’s the weeds are are kept away from it. Keep the animals away from it. There’s a lot of work. It’s not like planting a walnut or an oak tree. There’s a lot of maintenance to a tree for the first three to five years. And then it takes about 10 years for you to break even in this business. You’ll start getting chestnuts on the fifth year, but you really don’t get enough to pay for your time until about the eighth to twelvth year some somewhere in that timeframe. So I always tell people, it’s a 10 year payback. you’re investing a lot of money and it takes 10 years to get it back.

JASON FISCHBACH  23:22

So the size of the chestnuts are you finding that there’s a certain market preference for, I see on the website you sell small medium large extra large, is there a?

Roger Smith  23:32

Well that’s a good question because when I first started I did I didn’t know if I was going to be able to get rid of all the sizes. The most common size that people want is the medium and large. And after the first year I priced them both the same because they’re so close that if I run out of one size I can interchange with the other size and people are happy. The medium to large chestnut is the easiest sized chestnut to roast and I mean that because when they roast them they want all the nuts to be cooked at the same time. And with that size of chestnut you can roast them over an open fire and they’re all going to be complete. They’re all going to be completely cooked at the same time. Now the small chestnut, when you roast them they tend to burn because there’s not as much mass to them. And the large the extra large chestnuts don’t tend to roast evenly. When you get into that size of chestnut the shape is different. Some are round, some are  oblong, oblong, some are more even larger than an extra large. You get all kinds of variability and they don’t roast evenly. So the bulk of our customers want the medium to the large chestnut. What we found is there’s ethnic groups that love the small chestnut. They think they are sweeter. And the reason they’re sweeter is because there’s not as much mass and they convert the sugar a lot faster than the other size chestnuts. The other size chestnuts will be just as sweet, but they’re going to, like the extra large would take two to three weeks of aging in order to be comparable to the small chest not. So there’s people that like the small chestnut. And then the eth, we found ethnic minorities, specifically the Greek community that like the extra large chestnut, it tends to keep longer. We tend to get more chestnut when you consume it. So and from their perspective, you’re getting more chestnut meat per serving. A lot of we don’t do much with grocery stores, I haven’t got into that. But when we started, we probably sold 75% of our chestnuts to grocery stores. But what we found is the there’s an avenue to the consumer that we tapped into, we can charge more for the well we can charge more for the consumer. We don’t have to go through a grocer. One of the one of the issues with grocers is we sell them 1000 pounds, and they sell them over 10 days. The last few days, the bags may not weigh 25 pounds is so they want me to reimburse them for the shrink.

JASON FISCHBACH  26:33

Right.

Roger Smith  26:34

And with the customer, you don’t have to get into that because when you sell them 25 pounds, they get 25 pounds.

JASON FISCHBACH  26:41

Right.

Roger Smith  26:42

So we we’ve went from 75% to about 5% of our sales now is to grocery stores. For the price, price reasoning. And for the negative feedback reasoning.

JASON FISCHBACH  26:57

Yeah, makes a lot of sense.

Roger Smith  26:58

So, I try to keep my finger in the grocery business. Because I know, down the road, when we get more volume, we’re gonna have to have everybody involved in order to sell all the chestnuts. And so I eat some of my profit by selling to a few grocery stores. But that’s not something I do on a wide scale.

JASON FISCHBACH  27:20

So the harvest comes in September, October, are you, have you pretty much cleared everything out in a couple of weeks a month? Are you you know are sold out by the end of the year? How’s that work?

Roger Smith  27:32

Well, we start taking orders in August. We we don’t sell many chestnuts until October because we don’t get that many in until about October 1. And we try our our business plan is to sell fresh chestnut. We’re not in the holiday market. And so I hope my goal is to be sold out by the fifth of November, every year. And so far we’ve met we’ve met that.

JASON FISCHBACH  27:57

Yeah.

Roger Smith  27:58

And I’ve got a we got we advertise we have 1800 customers or more. I got people I can call it as maybe bought a bag. I’ll call him and ask him if they would like another bag because we were our supply is a little heavier than what we thought. And I I very seldom get turned down. So we don’t have we don’t have any problem getting rid of the chestnuts. Since I’ve been doing this and our goal, again is to be sold out by November 5.

JASON FISCHBACH  28:26

Do you think if you had supply during the holiday season, you would sell more? Is there? Is there an interest there if you had the supply availability or can you even store them fresh long enough in good enough condition to meet that market?

Roger Smith  28:39

Well, I think yeah, I think there’s interest there. I the only thing they know about chestnuts, that group of people know about chestnuts is the Christmas song Chestnuts roasting on an open fire. And if you’ve ever been to New York. And if you’ve ever been to New York City, on almost every street corner, they roast chestnuts. And that was my first experience with chestnuts. You can buy chestnuts in New York City just about anywhere in the metro area. And you know, all types of people are buying them. So I know there’s a market for them. It’s just a matter of advertising. And you know, we may even have to do roasting seminars to have like tasting test taste tests for people to experience it. I mean that it’s not going to be a simple because they don’t have a history of eating a chestnut but I’m fully confident that we can mature that market if our supply gets big enough and we can do some advertising. But right now we don’t have to do any advertising and honestly, I don’t think we’ll have to do any advertising for at least 20 years. That’s something way down the road.

JASON FISCHBACH  28:40

Yeah. How much do you know about what’s going on in other parts of the country like what’s happening in Michigan?

Roger Smith  29:56

I belong to the chestnut growers of America. We meet once a year, we have about 100 members. And we go over production issues, marketing issues are our strong point. One of the things we we put a lot of time in the last two years is what you talked about earlier, the cleaning of the chestnuts when they come in. Because we’re all small right now, but it’s going to get bigger. And I’m sure the, the FDA, or whoever that policing authority is, is going to come down and mandate we do some things different. But with, with that said, the people in Michigan grow a different type of chestnut that then we grow in Iowa, and Illinois and Missouri. It’s what I call a older hybrid. It’s they produce a lot bigger nut, I would say 75% of their nuts, from my understanding are the extra large, chestnut and their marketing plan is different than mine, they market to they actually have a hulling machine where they can capture the chestnut inside the shell. And then they they sell the chestnut and the chestnut flour to companies that way. They also wholesale chestnuts in the big metro areas. I don’t know if they do a lot of retail selling that. I think they do some but I get the feeling that it’s more wholesale and more processed nuts. And that marketing plan works for them. Their chestnuts from people that know chestnuts tastes different than ours. We compete in Chicago with them in some areas. And the feedback I get is people think our chestnuts are sweeter. And so I don’t want to be biased. I’m just giving you feedback on what our customers tell us. And so there must be something to that. But they produce a good chestnut. I don’t mean to say they don’t have a good chest that they they produce good chestnuts. And they’re the people that buy there’s obviously love the taste of them. And so it just comes down to our preference and people just like you buy Do you buy wheat bread or whole white bread? or some other kind of bread? You know, it’s all in the preference of the customer?

JASON FISCHBACH  32:32

Yeah, right. So how about? Oh go ahead.

Roger Smith  32:35

Okay, and they grow a lot of chestnuts in the Ohio area, that’s kind of where the industry, the chestnut, the Chinese chestnut industry started back in the 1980s. I’m not sure their climate is conducive to production as ours is in the Midwest, but they sell a lot of chestnuts. They’re all Chinese, Chinese chestnut as far as I know. And we have customers to interchange between theirs. And ours. And from everything I’ve heard they, their taste is very similar to ours. But their growth areas aren’t  anywhere near to what ours is here. And then you got you got chestnuts in California, that’s a whole different market. And they they use different hybrids in California and Washington State out there. They sell pretty much on the west coast. You know, and like I said earlier, we’re not allowed to sell into California because of quarantine issues with fresh produce.

JASON FISCHBACH  33:39

Yeah.

Roger Smith  33:39

But their, their land is a lot higher priced out there. They’re a little slower getting into the chestnut business. I see that business in California expanding. Right now there are a lot of walnuts and almonds out there. But I see it being some of that being converted into chestnuts. In time I see that be being a bigger market but not right now. And then you have a scattering of chestnut growers through Pennsylvania and the Carolinas and Florida. And I when I say scattering, there may be you know, half a dozen growers in those states. It’s not that major. And they have their markets on the east coast. The East Coast market is huge. And I just started getting into that a couple years ago I I can’t begin to say we can sell all our chestnuts in New York City if I wanted to.

JASON FISCHBACH  34:33

Sure.

Roger Smith  34:34

But you know, we’re we’re based in the Midwest and my clientele is in the Midwest. There’s a lot of room for growth on the east coast. And they they will pay a lot more per pound than the people in the Midwest are paying right now. So that’s a big market that we haven’t captured yet, but it’s on the horizon. And I see that being conducive to keeping our pricing strong because I you know, I tell People that our prices may be a little high, but we sell throughout the United States, and we can get rid of them. And so, you know, I don’t raise my prices 50 cents a year, I raised them maybe 10 to 20 cents a year. And we’ve been doing that since I started. And so we’re slowly getting up to, you know, what I think is reasonable price for our chestnuts.

JASON FISCHBACH  35:25

Just going back a little bit on the processing side and working with the growers, when they bring in a batch of hazelnuts. I’m sorry, I keep keep mixing the two up because I work with hazelnuts out here. When they bring in a batch. Yeah, of a chestnuts. Will you go and do a grading process in you know, pay them for just the good chestnuts? Or how do you handle that, that’s something that we’ve always kind of struggling with is how to how to grade the hazelnuts.

Roger Smith  35:55

There is a lot of variability between the growers. And I have to say, once a grower has been with me a couple years, I don’t have any problems, I get my message across. We, the growers that are new or in their second year, it’s not uncommon for nuts to come in a little dirty or a little out of shape, or to have animal bites on them. And what I do is I, I warn them the first time that their chestnuts aren’t up to my standards. And what we’ll do with those chestnuts, I have an outside rack, we’ll put them on an outside rack, we go through them, we clean them, and we sorted out the bad ones. So I give them feedback. And the second time it happens, I dock them a price. And I haven’t had to do the third step. But the third step is if they continue to do it, I reject the chestnuts. And as much as I would hate to do that, you know, because we can sell every chestnut we get, but they’ve got to be in good condition. That’s kind of what how we have, we’ve had people hold chestnuts in their basement and bring them in and they have a little mildew smell to them. And I,you know, I tell them that they need to keep turning them if they’re going to do it that way. And they need to bring him in a lot sooner. And some of these people tend to be an hour away. So they, they try to make all their chestnuts sales in two trips. And so what we do with them, will we, we put them in cold water. And we let them sit there for a period of time, maybe 20 minutes, and then we rinse them off outside. And I’ve, well what I’ve learned over time is if you do that, and sort them, the mildew smell goes away, I’ve checked the inside of the chestnuts and they don’t seem to be damaged. And so that’s one that’s one issue we’ve had with some people. We’ve had people that that don’t store them and refrigerate them and let them sit out and that they come in warm I those folks I have to reject the chest. If they come in and they’re really hot. They make me really nervous. And you know, I just can’t sell a chest not that’s not in good shape. And they understand for the most part, that doesn’t happen a second time. But there is a learning curve the first year, definitely a learning curve. But most people understand when they’re getting $3 a pound I pay the growers about $3 a pound for their chestnuts that if we’re bringing 100 pounds, that’s $300 it’s worth their time to make sure they’re in good condition. Because you know, there is quite a bit of revenue. And in going back into the poundage, you know we have 68 growers, I would say the average grower brings out about 1000 pounds a year, we’ve got a half a dozen growers that bring in over 5000. And then we have a smattering of maybe 10 or 15. growers are just getting started that may bring in two or 300 pounds. So there’s a lot of revenue to be gained. People understand what my position in the market adjust not. And quite honestly, it hasn’t been a problem once I get past the second year.

JASON FISCHBACH  39:18

Gotcha. Okay. And do they get paid based on the sizing? Or is it just a flat rate per pound?

Roger Smith  39:24

No, I  pay. Eventually I’m going to go to a flat rate pricing. But right now, because of the volume we have, we sort by size and I pay roughly $3 a pound for the medium large and extra large and I pay roughly $2 a pound for the small chestnuts because the small chestnuts are the hardest ones to sell. I don’t I don’t have any trouble selling them but I have to discount them $1 to get you know to merchandise them. So that’s the that’s why they’re $1 less. I pay the growers. And quite frankly, when I started this, I wasn’t even paying $1 a pound for the smalls, I was paying about 220 a pound for the rest of the chestnuts, and now we’re paying $3 a pound. And $2 a pound for the small. So we’ve increased our prices about 75% since I’ve started, and the growers recognized, you know what I’m doing for them, and it’s a two way street, and we have a good relationship. Them and me and, you know, everybody’s excited about this market because they, you know, I keep preaching that I just don’t see an end in sight. And right now, like I said, we’re paying $3, who knows, in five years, I may be paying, you know, 3.30 to 3.40 a pound just depends on what I can gauge the market to be, but I don’t see it going down.

JASON FISCHBACH  40:50

Right. Yeah. And you’re not even selling to the majority of the population. Right?

Roger Smith  40:55

No, we’re not less we’re not so you know, people in my hometown, I may sell to a couple people. And they don’t even know what a chestnut is they come down there and and, you know, the biggest mistake people made I made this too is to eat the chestnut  right off the tree. And the first year I did that, I’m thinking to myself, who eats these things, because they had a real bland taste to them. And so then after talking to some of my buyers, my customers, I found that you have to let them age and so that most of the chestnuts, you want to have them age at least seven days, maybe a little longer. And the longer you age them the sweeter they come.  Right now the chestnuts I consume. I freeze them. And I take them out in January. And it’s like eating candy. You can’t believe how sweet they are.

JASON FISCHBACH  41:46

I gotta get online and get get an order in here.

Roger Smith  41:50

Well, I just shut my online sales down last night.

JASON FISCHBACH  41:54

Oh, no.

Roger Smith  41:55

Because you’ll have to text me, you’ll either have to text me I’ll put, but I’m getting so many orders. Because it’s going to be a short season this year. That storm that went through Iowa and Illinois in August. It blew a lot of the chestnuts right off the tree. And so and so it was heartbreaking. And I went from thinking where we’re gonna have a normal crop to now, it’s probably going to be about a half a crop.

JASON FISCHBACH  42:24

Gotcha.

Roger Smith  42:25

So every year is different.

JASON FISCHBACH  42:28

Yeah, yeah. One other question here on the production side. So if you know if I’m a grower and I got a harvest every day, how long are they are the plants shedding? Nuts so is it like a two week process? I gotta be out there. Is it a week? How long is that window usually?

Roger Smith  42:44

Well, let’s say a normal person has 100 trees. Those trees will bear chestnuts over six weeks. One, you’ll have two trees together, one will start on the 15th of September and the other tree will start on the October first. It’s amazing how bad it is. And so you harvest every day, if you got 100 trees, it’s going to take you six weeks, you won’t get done until the 25th of October.

JASON FISCHBACH  43:11

And that’s because these are all seedlings. So every tree out there is different. There’s no clonal.

Roger Smith  43:15

Yeah, they all have their own DNA. And it can be the you know, the same variety. But the difference in the variety is just like growing up in a family. You got three, three or four children and they’re all different the same way with the chestnut trees.

JASON FISCHBACH  43:29

Gotcha. Okay. So this isn’t really something that an absentee landowner can just show up on a weekend, do their harvest and go away. This is something, they got to be on the farm. Pretty much.

Roger Smith  43:38

Yeah. And we are, quite frankly, we harvest twice a day we harvest in the morning, and then we go out at night. Almost everybody that harvest uses a nut wizard, I would say 95% of our growers use a nut wizard. And so it’s fairly simple to walk around the trees, harvest the chestnut kick the burrs to the center of the tree, so you don’t have to go over them again. And that, quite frankly kicking the burr to the center of the tree when you’re harvesting at the end of the year tells you which trees are the highest producing because the evidence is sitting right there.

JASON FISCHBACH  44:14

Hey, just curious. Um, what are you using for sizing? In hazelnuts we’ve gone to the drum sizers. Is that something similar that you’re using? Are you doing roller sizers? or?

Roger Smith  44:25

Yeah, we’re, we’re we have what we started with 35 gallon drums that we.  Okay. We, we we put holes in according to the size. And I just build a new sorting machine because I’m getting so much volume I can’t keep up the machine I got now will produce about process about 200 pounds an hour. The one I’m building will process about 1000 pounds an hour. And it’s stainless. It’s stainless steel but it’s still on the roller  concept. Yeah, okay.

JASON FISCHBACH  44:59

So how How, how big are you able to get? Is there going to be a point where there’s going to need to be other processing nodes that are doing the cleaning and sizing and then maybe bring them in for sizing? I mean, you’ve got to have some incredible refrigeration storage already, right?

Roger Smith  45:16

Well, we’ve got a, we’ve got a 17 by 16 foot walk in cooler. And like I said, we don’t keep much in there over a week. So we’re rotating in and out of there. But what I see happening in our operation is you can buy these huge reefers, and put a condenser on them. And you can back them, right I got a dog, you can back right up my dog, we can wheel, we can wheel stuff right into that. And it makes it a lot simpler, as a lot more capacity. That’s the route I see going. I think, with my current facility, we can process up to a million pounds after that, I’m going to have to build another kind of kind of building.

JASON FISCHBACH  46:00

Gotcha.

Roger Smith  46:01

But but that we are, you know, we’re looking to upgrade, quite frankly, it’s a privately owned company. And I’m trying to make a cash flow. And try not to get ahead of myself, in the last two years have been a challenge. You know, last year, we had so much rain that chestnut trees don’t do good in rain, in a lot of rain because the roots have got to have air and so we went from producing or processing 100,000 pounds in 2018 to about 20,000 pounds last year. And now we’ve had the storm go through here and we’re looking to process maybe 50,000 this year. So I got to get past these last two years. And then we’re going to upgrade our facility we’re going to incorporate a some type of a bleach system or a cleaning system with water before before we bag them. I mean there’s a lot of things we’re going to do but I’m trying to I’m 68 years old. I’ve been behind the eight ball financially in my life. I never want to be there again. So I’m doing these things. As I see I can as I go through every year.

JASON FISCHBACH  47:10

Yeah. Awesome. (Music) Brought to you by the University of Wisconsin Madison Division of Extension.