Agenda Item Wording:
title
Award a Contract for Farm Management Services - Award a contract to A&K Precision Management for Farm Management Services in the amount not to exceed $1.5 million per year to manage a total of 445 acres of pecan orchards surrounding the Water Reclamation Facility (WRF). The initial contract shall be for a twelve (12) month period and shall, at the City's option and upon mutually agreeable terms, be renewable annually thereafter for four (4) consecutive one-year periods.
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Deadline for Action: 3/3/2025
Submitting Department: Public Works
Contact Name and Phone Number: Nick Bartsch 559-713-4428 ; Rehana Cale 559-713-4176
Department Recommendation:
Staff recommends that the Council authorize staff to enter into a contract with A&K Precision Management in the amount not to exceed $1.5 million per year to manage a total of 445 acres of pecan orchards surrounding the Water Reclamation Facility (WRF) in accordance with RFP-24-25-02. The initial contract shall be for a twelve (12) month period and shall, at the City's option and upon mutually agreeable terms, be renewable annually thereafter for four (4) consecutive one-year periods. Staff also recommends that the City simultaneously put out a request for bids to lease the property in subsequent years to evaluate the viability of an alternative option.
Background Discussion:
Since the 1960’s, the City has farmed various areas of City-owned land within and around the City of Visalia. Over time, many of the orchards and row crops have been removed, land sold, or farming has ceased due to various reasons. Per Council’s direction, the 138-acre walnut orchard, north of the City’s Water Reclamation Facility (WRF), was recently removed and has been temporarily fallowed under the Greater Kaweah Groundwater Sustainability Agency’s Pilot Fallowing Program. Additionally, the City has 408 acres leased to Koetsier Dairy for row crops southeast of the WRF. Staff is continuing to explore and evaluate alternative options for the best, and most strategic, future use of these properties. Finally, the City has 445 acres of pecan orchards surrounding the WRF. Based on developing maturity, the health and condition of the pecan orchards, and projected crop production, the City Council directed City staff to continue farming the 445 acres of pecans in December 2023, utilizing Farm Management services under the prior contract, and solicit a new Request for Proposals (RFP) for this service given the prior contract term was scheduled to expire.
Request for Proposals RFP-24-25-02: Farm Management Services was advertised in the Visalia Times Delta on October 4, 2024 and October 9, 2024. Notices were sent to 57 agricultural contractors and posted on BidNetDirect online. Two pre-bid meetings were held on October 16, 2024 and October 17, 2024, with several firms in attendance at each meeting. The evaluation was based upon the following criteria:
|
Criteria |
Explanation |
Weight (Points) |
|
Merit of Proposal Submittal/ Presentation |
Proposal submittal thoroughness |
20 |
|
Knowledge and Expertise of Personnel/Company |
Capability of personnel Staff qualifications Knowledge in pecan trees |
20 |
|
Understanding of Project |
Knowledge of project requirements |
20 |
|
Cost |
Evaluation of proposed fee structure and schedule |
15 |
|
Record of Past Performance |
Farming pecans of 250+ acres Ability to work effectively with City staff and related parties |
20 |
|
Local Vendor Preference |
Proposals submitted by businesses with a business address in Tulare County, CA will receive 5 percentage points |
5 |
Based on aggregate evaluations and scoring from a committee comprised of various City employees and an industry professional using the above criteria, A&K Precision Management’s proposal was determined to be the most comprehensive and most qualified.
Summary:
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Proposers: |
Location |
|
Ag & Industrial Enterprises |
Earlimart, CA |
|
Ag Land Partners |
Woodlake, CA |
|
A&K Precision Management |
Visalia, CA |
|
Hester Orchards Inc. |
Farmersville, CA |
|
Hilvers Farm Management |
Visalia, CA |
|
Rooted Asset Management |
Visalia, CA |
|
R & R Farms |
McFarland, CA |
Staff has reviewed A&K Precision Management’s qualifications and their provided references and found them to be properly licensed with a positive work history.
Staff met with A&K Precision Management on several occasions to gain additional clarification regarding aspects of their experience and their approach to farm management, along with terms of their proposal. A&K Precision Management highlighted their experience and expertise in agronomy, farm and business development, and overall farm management. Their proposed ingenuitive approach toward the use of technology, assessment and efficient utilization of fertilizers and soil amendments, and continual effort to seek operational efficiencies identified the potential to reduce ongoing operational expenses. Given the size of the trees, they identified the ability to start utilizing mechanical hedging, as an alternative to manual pruning, with some of the trees would result in cost savings, for example. They also identified potential opportunities that could lead toward overall improved crop production, such as adjustments in pruning methods/techniques. Their business-minded approach toward long-term planning, profitability and long-term viability was also seen as an asset. After continued negotiations, an updated proposal was provided on February 5, 2025 with revised rates and estimated annual costs of $1,352,631.
Fiscal Impact:
Because the land surrounding the Water Reclamation Facility is owned by the Wastewater Fund (4344), all related expenses are coded to this fund, and subsequently any proceeds from the sale of crop is also credited to the same fund. Most recently, in FY 2023/24, the annual farming operational expenditures for the west-side pecans were $1,391,865. Similarly structured as the existing Farm Management contract, A&K Precision Management proposed estimated annual costs of $1,352,631, made up of both fixed monthly costs, for the on-going management, oversight and planning related to the operation, along with reimbursable costs based on material costs and hourly labor and equipment rates. It is anticipated that the costs under a contract with A&K Precision Management would be comparable to what the City is currently incurring. The proposed fee structure and rates of every proposer varied, but those provided by A&K Precision Management were competitive and in line with those received from the other proposers.
As the orchard has matured, revenues have fluctuated, but harvest volumes have trended in a positive direction as a result of the increasing size and maturity of the trees along with the continued improvement of the health and maintenance of the orchard. However, overall, annual revenues generated from the pecan operation have continued to result in net operational losses. This was anticipated with the development of an orchard, but as the trees approach maturity, the average volume of nuts harvested annually is anticipated to continue to increase. Pecans are an alternate bearing crop, meaning they tend to produce a heavier (larger) crop every other year, so this, and other factors such as market conditions (pricing, demand, and availability), environmental conditions (weather) affecting both volume and the quality of the crop, as well as the cost of operations (materials and labor) all contribute toward overall profitability.
Below is a chart showing the City’s pecan orchard harvest quantity, quality, and payment summary over the past 3 years:
|
|
2021/22 |
2022/23 |
2023/24 |
|
Total (Pounds) |
373,311 |
442,614 |
474,547 |
|
Pounds/Acre |
838.9 |
994.64 |
1,066 |
|
Weighted Average Edible Yield (Pounds) |
213,248 |
238,398 |
269,575 |
|
Weighted Average Edible Yield (Percentage) |
57.12% |
53.86% |
56.80% |
|
Payment Per In-shell Pound |
$1.97 |
$1.42 |
$1.56 |
|
Total Payment: |
$735,519.07 |
$629,283.15 |
$727,158.30 |
The most recent harvest (2024/25) revenues are not finalized as sales have not yet been completed. In recent years, the quality of the City’s pecan kernels has been above average among those processed by the City’s contracted processor. However, the 2024/25 harvest produced less than recent years as a result of environmental conditions just prior to harvest and the impact of a perceived alternate-bearing season, both affecting the total volume harvested and also resulting in a lower edible yield (quality).
The variability of numerous factors, coupled with a still maturing orchard, make it difficult to predict when, and if, overall profitability will occur. The City’s pecan orchards were planted over the course of three years (2013, 2014 and 2015) - 100 acres, 156 acres, and 189 acres, respectively, making them 10-12 years old. Currently, the oldest trees have developed a full canopy, achieving their maximum size as they continue to develop more fruit-bearing limbs. These trees are projected to achieve maturity around 15 years of age, at which time they have the potential to produce as much as 3,500 pounds per acre, but at this point of maturity, actual production at full maturity is unknown. Projections show the need to produce an average of 2,000 pounds per acre to match current operational expenses at current market pricing. Recently, the price per pound has been relatively low compared to historic norms, and the City’s crop is only producing approximately half of the quantity needed to break even at that price. However, with fluctuations in market pricing, that projection can vary significantly.
Prior Council Action:
December 18, 2023 - City Council was presented an update to the city-owned farmland and farming operations and provided direction to continue farming operations of the 445 acres of pecans.
February 16, 2021 - City Council was presented an update to the city-owned farmland and farming operations.
February 19, 2019 - City Council entered into a contract with Jeb Headrick Farming for an annual not to exceed amount of $1,000,000
Other: N/A
Alternatives:
Authorize staff to enter into an agreement with A&K Precision Management, as identified, while also pursuing alternative short- and long-term non-agricultural uses for the land including, but not limited to, alternative energy production (solar/hydrogen), recreation, short term storage, and other uses that would minimize water use, and provide for dust and weed control.
1. Enter into an agreement with A&K Precision Management for a period of 12 months, and direct staff to go back out with a new Request for Proposals for Farm Management Services.
2. Not enter into an agreement with A&K Precision Management and attempt to further negotiate the terms of the agreement, and if unsuccessful, direct staff to consider alternate proposals submitted under RFP24-25-02. This is not recommended as a delay in the award of a contract may result in a lapse in necessary management and operations.
Recommended Motion (and Alternative Motions if expected):
recommendation
I move to authorize staff to enter into a contract with A&K Precision Management in the amount not to exceed $1.5 million per year to manage a total of 445 acres of Pecans surrounding the Water Reclamation Facility (WRF) in accordance with RFP-24-25-02. The initial contract shall be for a twelve (12) month period and shall, at the City's option and upon mutually agreeable terms, be renewable annually thereafter for up to four (4) consecutive one-year periods. Additionally, authorize staff to put out a request for bids to lease the property in subsequent years to evaluate the viability of an alternative option.
end
Environmental Assessment Status: N/A
CEQA Review: N/A
Attachments:
Attachment #1 - RFP-24-25-02
Attachment #2 - Vicinity Map
Attachment #3 - A&K Precision Management - Proposal