Chestnuts: A Regenerative Food Crop and The Next Health Craze

Propagate Ventures’ mission is to accelerate the widespread implementation of agroforestry in cold climates, via the establish of profitable tree crops. We envision highly productive, ecologically-sound landscapes that produce food, fuel, and fiber for humanity. 100 years ago, the United States had a booming chestnut economy. The American chestnut, castanea dentata, was an overstory species from Iowa to Northern Georgia, to Maine. In 1904, a parasitic fungus known as the “chestnut blight” arrived from Japan, and killed as estimated 4 billion trees. 100 years later, Chinese chestnuts and Chinese-American hybrids blight-resistant, but pure American chestnut stands are few and far between. Pure American chestnuts are beautiful, productive forest trees, but for our purposes, Chinese chestnuts are just as good, if not better for food production.

Red Fern Farm

Red Fern Farm is a 25-year-old chestnut orchard in Wapello, Iowa. Kathy Dice and Tom Wahl own and run the property. Jeremy and Harrison of Propagate Ventures recently visited the farm to learn about chestnut production. Tom Wahl is an ecologist by trade, and in 1990, saw and foresaw the ecological and culinary benefits of chestnuts in comparison to annual crops such as corn and soy. Often in the regenerative agriculture sphere, figureheads with productive farms like to speak loudly about their operations. Kathy and Tom are much more modest, but nonetheless run an extremely productive, profitable business that we should pay attention to.

For the farmers among us, we’d like to go through some of the nuances of chestnut production at Red Fern Farm. We’ll do so with photos.

A chestnut burr at Red Fern Farm

A chestnut burr at Red Fern Farm

Red Fern’s Chestnuts are planted at 20x20-ft spacing. Tom had interacted with wider and narrower spacing, and was certain that this was the best option for his context. In China, where labor laws are different to say the least, trees are planted at 3-ft spacing between trees and 7-ft spacing between rows. There, intensive management by hand is economically viable.

Chestnuts at wide spacing with 5-ft tree guards

Chestnuts at wide spacing with 5-ft tree guards

Chestnuts grow in burs until they are ripe and ready to be eaten. The burs open, and the chestnuts drop to the ground. At Red Fern Farm, Chestnuts are harvested off the ground with a tool called a “nut wizard” and also by hand.

Fallen chestnuts, ready to be harvested: they can be shaken from the tree, or picked up by hand or with a nut sweeper.

Fallen chestnuts, ready to be harvested: they can be shaken from the tree, or picked up by hand or with a nut sweeper.

Chestnuts are still a traditional food across south eastern Europe and temperate Asia. Bosnians refugees from the 1990’s drive hours to harvest hundreds of pounds of chestnuts by hand. Koreans and Chinese immigrants from the east coast order nuts online from Prairie Grove Chestnut Growers, an aggregator that we’ll soon walk you through.

Red Fern Farm, in addition to chestnuts, produces pawpaw, persimmon, aronia berry, and honeyberry. Pawpaw and persimmon must be eaten fresh, and cannot be stored unprocessed for a long period of time like apples are. Aronia and honeyberry are niche crops: aronia is a dark, nutrient-dense berry that must also be processed into juices and wines, and honeyberry is an edible honeysuckle, improved in Saskatchewan. It is effectively a blueberry that fruits in June, and we expect it to take off as a new crop across the northern United States.

The Present Value of Chestnuts

From multiple reputable sources, we’ve been provided with estimates of $10,000 per acre in chestnut revenue, after 12 years, depending on management. Treated as an ordinary annuity at a 6% discount rate, the present value of revenue from 30 acres over the next 30 years would amount to $3.3 million from only chestnuts. This of course does not take into account establishment and management costs, but something that we’ve found in our travels is that agroforestry and row cropping and/or grazing are far from mutually exclusive. Rows of chestnut trees can be planted in between rows of corn, and pastured poultry can be raised in between the rows of chestnuts. Below is a video of Jeremy and Harrison playing frisbee in a black walnut grove in Lafayette, Indiana. The possibilities are endless.

The Prairie Grove Chestnut Growers

Prairie Grove Chestnuts Growers is a mom and pop operation in Columbus, Junction, Iowa. They are an aggregator for chestnut growers in Iowa, Illinois, and Missouri. They ship all over the country, and are growing rapidly. They run a very straightforward, seasonal business. Work is done by hand, and nuts are sorted by size with a DIY-machine.

At present, Prairie Grove sells to immigrants and non anglo-saxon Americans who either experienced a chestnut culture in their youth or through family traditions. They consume, understand, and value chestnuts. Bosnians and Koreans drive six hours to buy chestnuts, and Chinese citizens of New York City order them online. Wholesale prices range from $3-4 per pound for 25-100 lbs of nuts, while upscale grocery stores in Iowa City stock local chestnuts for $10 per pound.

Chestnuts have a sweet, nutty flavor, and are high in carbohydrate. They are of course gluten-free, and can be eaten raw, boiled, or roasted. They have traditionally been processed into flour. We see opportunities for expansion in added-value chestnut products such as polenta, gnocchi, chestnut chocolate milk, crepes, and baked goods. The possibilities are endless.

Industry Attractiveness

Chestnuts are a very attractive industry. The Van Eeghen Group is a Dutch family that has been in business for over 300 years. They gain large market shares in niche products, and operate in that industry until just before the product becomes a commodity: they catch new trend waves, and ride them until just before they peak. Chestnuts are at the precipice of becoming a wave.  They are currently a niche product that will likely hit the mainstream in the next ten years. Chestnuts are the next coconut, and the supply isn’t nearly large enough to supply that kind of demand.

If demand were to spike, supplier power of existing orchards and aggregators would be large, due to low levels of supply. Carbohydrate-rich nuts are few, but substitutes include any type of gluten-free carbohydrate such as buckwheat or brown rice.

A U.S. chestnut industry would have to compete with Chinese and Italian producers, but producers of other tree crops (such as apples) must do the same. At the end of the day, we believe that the demand is about to spike, and that domestic supply isn’t nearly large enough to meet that demand.

Propagate Ventures cares deeply about ecosystem restoration, but that is not what we speak to: we promote profitable crops that inherently restore ecosystems. We create ecologically regenerative assets classes, and chestnuts are a mainstay of our investment strategy.