Dr. Jim White, Ph.D.
For more than a century, the United States has been a major producer of vegetables and fruits, with total agricultural exports — to Canada, Mexico, Taiwan, Japan and many other countries — valued in 2018 at $140 billion.
The high-tech agricultural industry is an investor’s dream
In Business Greater Phoenix
Domestic sales aren’t as rosy. As COVID-19 shuttered restaurants, hotels and school districts around the country, farmers in Arizona and around the U.S. are desperately hoping to extend the shelf-life of their crops.
Arizona ranks second in the nation for producing lemons, cantaloupe and honeydew melons as well as spinach. The state’s leafy greens, primarily lettuce, bring in more than $700 million annually. Spinach and cauliflower together bring in another $100 million. Arizona also harvests dates, nuts and tomatoes.
But the fallout from the pandemic has sliced away at many markets growers depend on to buy their goods. More than ever, growers are seeking to extend the shelf life of their produce so that it doesn’t go to waste.
…the journey of vegetables post-harvest will mean massive revenue increases to the growers in distressed rural communities.
Cutting-edge equipment and innovation can help farmers preserve crops before they spoil. Scientists have learned that quickly zapping heat from freshly picked produce prevents the growth of microbes that hasten the process of decay, extending the shelf life of vegetables and fruits and improving their quality.
The technology is called “pre-cooling.” It, along with immediate transfer to cold storage for up to seven days followed by transportation in refrigerated trucks, will change the journey of millions of vegetables . . . and help keep their growers in business.
Right now, not many cooling facilities are commercially run; most are small operations, privately owned by the growers/shippers for their own use. Of the 2,000 cold storage facilities around the country, more than half date back to the 1970s or earlier. Most are antiquated and becoming obsolete. With an influx of investor capital into this asset class, however, these outdated facilities can become cutting-edge once again, with innovations that include driverless pallets and robotic shuttles.
One such facility in Salinas, Calif., is being redeveloped by a Scottsdale-based company. Founded in 1936 with additional building that continued through the 1970s, the Salinas campus is emblematic of what can be a profitable asset class for capital investors.
The ripples from this redevelopment and that of other facilities around the country will be felt far beyond the footprint of each campus. Many of the old facilities are located in what are known as Qualified Opportunity Zones, impoverished and distressed communities suffering from unemployment, population decline and other social ills.
Of the 8,800 Qualified Opportunity Zones designated by state governors and certified by the federal government, 40 percent are rural. Funneling investor capital into opportunity zones is an initiative set forth in the Tax Cuts and Jobs Act of 2017. Investing in them through Qualified Opportunity Funds can save struggling communities. Some 35 million people reside in opportunity zones. Their lives are dramatically impacted when new businesses are launched, closed companies are repurposed, real estate is developed and failing infrastructure is repaired.
And investors benefit through this initiative, as they obtain significant capital gains tax breaks and possibly outsized returns on investment. Importantly, the initiative is a nice alternative to equities, which are proving prohibitively volatile, especially during the pandemic.
Investors save 10 percent of any capital gains if invested in a qualified opportunity zone business before December 31, 2021, and have until April 15, 2027, to pay any capital gains owed. Moreover, they can receive annual dividends, and any appreciation on the investment after ten years is tax free, making it a solid investment strategy.
Projects like the redevelopment of pre-cooling and cold storage campuses will positively impact the surrounding communities and the entire agricultural industry of each region. Extending the shelf-life of produce will provide Americans with fresher, higher quality products. And reimagining the journey of vegetables post-harvest will mean massive revenue increases to the growers in distressed rural communities.
As the stock market plummets and individual and institutional investors are looking for solid alternatives, agriculture is ripe for investment.
Jim White, PhD is Chairman and CEO of Post Harvest Technologies, Inc. and Growers Ice Company, Inc., Founder and CEO of PHT Opportunity Fund LP, and Founder and President of JL White International, LLC. His new book is a heartfelt rallying cry for investors: Opportunity Investing: How to Revitalize Urban and Rural Communities with Opportunity Funds, launched March 31, 2020.
Dr. White was raised in South Carolina. He holds a BS in civil engineering, an MBA, and a doctorate in psychology and organizational behavior. He acquires struggling businesses to revive and develop them into profitable enterprises using his proprietary business turnaround strategy. To date, he has generated more than $1.8 billion in revenue.