Brian and Joe Nicholson, Jr., of Red Jacket Orchards used a local producer loan from Whole Foods Markets to erect tunnels over two acres of apricots, plums, and cherries.

Brian and Joe Nicholson, Jr., of Red Jacket Orchards used a local producer loan from Whole Foods Markets to erect tunnels over two acres of apricots, plums, and cherries.

In these days of tight credit, it’s hard to imagine somebody wanting to loan money to small farmers for expansion or capital-intensive projects. But a retailer—not a banker—has set aside millions as part of a unique loan program designed specifically for local producers.

New York’s Red Jacket Orchards is the first, and so far only, tree fruit producer to take advantage of the local producers loan program of Whole Foods Market.

"We had looked for grants to fund a project of growing tree fruit under high tunnels, but none were available," said Mark Nicholson, a third-generation family farmer who works with his father Joe, Jr., and twin brother, Brian, at Red Jacket Orchards in Geneva.

"We wanted to try growing apricots under tunnels, but tunnels are a fairly high capital expense," said Mark, adding that costs are around $25,000 to $30,000 per acre. "To add funding for one more special project to our business is always challenging."

Mark said that the loan program of Whole Foods was the vehicle that moved the tunnel project from concept to fruition. "To have a nontraditional lender interested in agriculture was really the catalyst to get things going."

Red Jacket Orchards, in business since 1958, has set itself apart by growing flavorful and unique varieties. The family produces apples, summer fruits, berries, and fruit juices, with much of their fruit marketed in New York City. Though it’s not necessary to have a business relationship with Whole Foods Markets to qualify for the loan program, the Nicholsons have dealt with Whole Foods for the last seven years.

In spring 2008, the Nicholsons erected framing for Haygrove high tunnels over two acres of apricots, Japanese plums, and early variety cherries. Some of the apricot trees were planted in 2007 in anticipation of the high tunnel system, while cherries were planted in 2008. Plastic covering for the tunnels will go up in 2009.

Apricot affinity

The Nicholsons have an affinity for apricots, having worked for years to develop a strong market presence in New York City with the fragile fruit. They are said to be one of the largest apricot growers east of the Rocky Mountains.

Frost protection for their apricots is the biggest reason they want to try the tunnel system. Tunnels will also provide protection from rain, especially important when it comes to cherries. Mark also thinks they can advance maturity under the tunnels, based on previous tunnel research.

Apricots inside the tunnels are planted at a high density of 738 trees per acre, with 4.5 feet between trees and 13 feet between rows, and are trained to the Spanish bush system. Plums were also planted at high ­densities.

The tunnels are 700 feet long with 24-foot bays. The six bays each cover two rows of fruit.

"We’re hoping that the dwarfing effect from having trees so close together will work," Mark said, explaining that dwarfing rootstocks for apricot are not available. "We don’t want to manage a standard-sized apricot tree under a tunnel system."

Thus far, the apricot trees, which will be third leaf in Spring 2009, look fantastic, he said.

Although they didn’t have the tunnel frame covered in 2008, they did put up the side curtains for the cherries which were planted this past year. The side covers kept deer from damaging the young, ­tender cherry trees.

Cornell University’s Terence Robinson and Robert Andersen (retired Cornell stone fruit breeder) are working with Red Jacket in the tunnel project and have planted replicated trees outside the ­tunnels to serve as a control.

Millions to loan

Whole Foods’ first loans were awarded in February 2007, according to Jennifer Brown, director of the local producer loan program.

"The impetus to create the loan program came from Whole Foods CEO John Mackey," she said. "John saw how successful microcredit lending has been in the Whole Planet Foundation and he thought it was a good concept that would translate well to local producers."

The foundation, established by Whole Foods, provides small loans—usually $200 or less—to self-employment projects in Latin America, Africa, and Asia, according to its Web site.

Although Whole Foods has set aside $10 million annually for the local producers loan program, Brown said that the program is far from being fully utilized. "We haven’t gotten anywhere near that amount." To date, less than $2 million has been loaned to growers and food producers.

Loans can be used to fund expansion or capital expenditure projects, such as investing in new equipment and infrastructure, expanding crops, converting to organic, and more, but not for operating expenses. She stressed that recipients do not have to be suppliers to Whole Foods Market, but they must meet the Whole Foods’ quality standards. Fruits and vegetables must be flavorful, consistent in quality, and produced in a clean and safe manner.

"You don’t have to be organic, although we do sell and promote organic food in our markets," she said. "But we also have conventionally produced food available in our stores."

The Whole Foods loan program gives growers another option for financing a special project, Mark said. "You still have to go in with a solid business plan and submit all the documents that you would for a regular bank loan. It’s not free money—it’s like a loan from a bank.

"I think it’s fantastic to have a nontraditional lending source—an organization that is looking to fund entrepreneurial projects—at a time when a lot of agricultural lenders are going through a tight time," he said. "It’s refreshing to have a retail organization like Whole Foods actually putting their money where their mouth is and showing their commitment to local producers."

Whole Foods’ Brown said they hope more producers will apply for loans. "Going to your retail partner is probably not first on your mind if you are a farmer when you need to borrow money. A lot of farmers loathe borrowing money if it’s not absolutely necessary. They are used to dealing with a line of credit but less comfortable in borrowing money to expand," she said 



  • Loan amounts range from $1,000 to $100,000 (with a maximum of $25,000 for start-ups).
  • Fixed interest rates are tied to market loan rates and currently vary between 5 and 9 percent.
  • Loan amounts cannot be greater than 80 percent of total project cost.
  • A $65 processing fee is due at the end of the process for approved loans. The fee covers a credit report and administrative expenses.
  • Monthly payments are required after a grace period is completed.
  • Collateral may be required.
  • There is no penalty for early ­repayment.
  • A producer may apply for additional financing if the initial loan is in good standing after one year.

    For more details, visit www.whole, call (512) 542-0895, or e-mail