From left, William Pitman and Vince Ochinero show off the pasteurization machine used for processing pistachios and almonds. Photo by Edward Smith
Written by Edward Smith
Before William Pitman, president of Benton Enterprises, LLC, knew where the opportunity zones in California were, he thought the federally approved tax shelters were all in urban areas. He soon found out his almond farm and processing plant in Madera lies right in the middle of one of the census tracts for tax incentives.
Now, he’s executed one of the first opportunity funds in the Central Valley, and he hopes the designation will send investors his way to make his method of processing foods into a “game changer” for the entire food industry.
Pitman owns Heart Ridge Farms, which uses a special pasteurization method for processing pistachios and almonds. He believes the technology could have applications for a variety of foods, from spices to leafy greens. He even started a separate entity, Adaptable Technology Systems, to market the pasteurization process.
As part of The Tax Cuts and Jobs Act of 2016, the Treasury Department designated certain disadvantaged census tracts as opportunity zones. Investors looking to defer capital gains taxes from one venture can put money into qualified projects via an opportunity fund. If held there for 10 years, the gains put into the project can be withdrawn tax-free. Pitman hopes this will bring in money from people under the gun to execute funds before the incentive expires.
Pitman’s “adaptable method” pasteurizes almonds in a way that gives them a unique crunch and taste, he claims. He feels these traits have helped Heart Ridge Farms, the marketing branch of Benton Enterprises, penetrate into the school, government and convenience stores markets. At the same time, he wants to be able to use the adaptable method for different foods.
“Both of these projects require capital, and we’ve been looking for capital for quite a while,” Pitman SAID.
With the help of Fresno-based Moss Adams LLP and Oakland-based legal firm Cutting Edge Counsel, he formed Berenda Opportunity Fund LLC. The hope is to raise $11-16 million.
Investment will include expanding the current processing facility and storage for pistachios and almonds as well as a research facility for industry experts in each food category to develop a-la-carte methods for pasteurization. Additionally, a newer, larger facility will be able to process between 40-50 million pounds of food yearly, up from the 5.5 million pounds he is processing already.
His feels confident on a 28% return on the investment over the 10-year period.
Berenda would share ownership with Benton Enterprises in the umbrella company H-ATS, combining the Heart Land brand with Adaptable Technology Systems.
Pitman got into food safety and pasteurization after his time on the almond board following a severe salmonella outbreak in 2006.
“They devastate industries when they have a recall. Somebody gets sick and goes to the hospital, and maybe dies,” Pitman said. “We’ve discovered something that’s really cool that we can refine.”
His method of treating nuts uses what he calls “moist heat,” which kills pathogens at lower temperatures, making food taste better and last longer, Pitman said.
The method also meets organic, gluten-free and non-GMO standards, he said.
The variable control has lead him to believe that it can be used for not only dry goods such as spices and nuts — of which he’s confident in the success of adaptable technology — but also moist goods such as leafy vegetables, poultry or even cannabis. Pitman even thinks it could be used to neutralize the potentially harmful effects of pesticides. In 2018, the romaine industry faced an expansive recall.
With the opportunity zone investments, Pitman says he can build the research facility to determine the factors needed to pasteurize different foods using the “adaptable” method. And the intellectual property associated with developing the hardware and processes can carry H-ATS into the future.
“People want safer food,” said Edgar Rodriguez, food safety manager with Heart Ridge Farms. “It wasn’t like this 10 years ago.”
Romaine lettuce faced a recall due to E. coli in 2018 that in one month alone dropped sales of the lettuce 45%. The outbreak also affected iceberg sales by 22% and red leaf by 17%, according to fortune.com.
Rodriguez said the moist heat method has successfully killed pathogens with in-shell pistachios, one of the hardest foods to pasteurize. The result has yielded pistachios with vibrant, unadulterated colors, he said.
The “adaptable” process has also helped get his product into high schools as well as convenience stores.
Within 14-16 months of securing funding, Pitman hopes to have the machinery designed and built for initial testing.
This will “easily” meet the mandate by the Treasury Department to increase capital improvements on property by at least 100%, Pitman said.
Once built, Pitman thinks the technology could easily be sold or retained, depending on how investors feel.
“We’ll build the brand, the brand will catch other people’s awareness. Big companies tend to buy people like us out when it hits $100 million or bigger,” Pitman said. “We could be at least a $200 million, if not a $300 million company by that time.”