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Peanut-Shelling Facility Brings Jobs to Southern Georgia
Like many rural areas across the country, the economy of Douglas, Ga., revolves around its natural resources. In this instance, it’s peanut farming. Premium Peanut, a newly formed organization, built a peanut-shelling facility to benefit a collection of 225 member farms in a cooperative-like arrangement.
Karl Zimmer, president and CEO of Premium Peanuts, said that this co-op model, “gives farmers stability and a long-term commitment” from the shelling plant. Farmers sign purchase agreements with Premium Peanut so they know the volume of peanuts the plant will purchase each year and at what price the peanuts will be purchased.
By comparison, Zimmer said that farmers selling peanuts to large corporate shelling companies oftentimes don’t know how much the plants will purchase and at what price. He said price and quantities can fluctuate from year-to-year.
Premium Peanut, which is owned by each of the 225 farms, has the capacity to de-shell 140,000 tons of peanuts annually. The company has 140,000 shares, with each share equaling 1 ton of peanuts. Therefore, Zimmer said that every farmer knows exactly how much peanuts the facility will buy from them based on the number of shares the farmer owns.
When peanuts are brought into the 40,000-square-foot facility, the “farmer stock,” or in-shell peanuts, are first cleaned to remove excess dirt or debris. The peanuts are then shelled and cleaned once more. From there, the peanuts are sized and then put in 1-ton bags according to their size and then distributed to buyers.
Zimmer said that the biggest challenge was that there was very little time to scale production. “We went from zero to 100 overnight,” said Zimmer. Premium Peanut distributes peanuts globally. Zimmer said it is the largest cooperative of peanut farmers in the United States, the fourth-largest seller of peanuts across the county, and he estimates this is the largest shelling plant in the world.
Construction started in spring 2015 and was completed in mid-January. While the plant had been running for a few months, Premium Peanut held a grand opening ceremony in late April.
The shelling facility is located in a census track with high levels of poverty. Nearly 29 percent of the local population has an income below the poverty line and the city of Douglas had an approximately 9 percent unemployment rate at the time the project was underwritten, according to CEI Capital Management LLC (CCML), which provided a majority of the new markets tax credit (NMTC) allocation.
The plant is projected to create 100 direct jobs and roughly 30 indirect jobs, according to CCML. Zimmer said that those indirect jobs will go to truckers who haul the peanuts, and many others. The majority of direct jobs will be made available to low-income individuals and all will pay a living wage with benefits for single adults in the county, according to CCML. “In terms of impact, No. 1 is direct job creation. No. 2 is the indirect jobs. And most importantly for the 225 farmers, times are tough. This brings stability and protects their livelihood,” said Zimmer.
NMTCs Finance Construction
In order to help finance development, Premium Peanut used NMTCs. CCML and SunTrust Community Capital provided the NMTC allocations, with SunTrust also investing in the credits.
CCML provided a $20 million NMTC allocation. CCML has been active in the NMTC sector since the inception of the program and has received an allocation of credits in 10 of the last 12 rounds. The community development entity (CDE) also applied for credits under the 13th round. “This development really resonated with us, both from an underwriting perspective and a mission perspective,” said Tad Atwell, executive vice president at CCML. Atwell referred to this development as “the holy grail” for three reasons: it is located in a rural area in an underserved state as identified by the CDFI Fund, because it directly benefits small-to-medium size farms (aligning with the mission of CCML and its parent, CEI), and because of the impressive job creation. The development was identified by one of SunTrust Bank’s local commercial bankers. CCML chief operating officer Tom Dolan added, “It is compelling to have a local bank involved on the ground floor.” Dolan also liked this development because it unified locally owed peanut farmers.
SunTrust Community Capital provided a $3 million NMTC allocation and a $7.4 million equity investment. Steve Ross, NMTC relationship manager at SunTrust, also liked the development because of its location in a non-metro area in Georgia. “It provided critical job creation in an area of high unemployment,” said Ross. He added that these jobs will have much higher pay than comparable jobs in the area. Ross said that the NMTCs were needed to fill the gap in the capital stack.
Other funding for this development included $24 million in owner equity raised by the farmers and a $20 million loan from AgSouth Farm Credit.;
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