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Item 1. Business

2021-01-14 compared with 2020-01-14 · 240 added, 245 removed, 173 unchanged (74% of the section changed)

Limoneira Company was incorporated in Delaware in 1990 as the successor to several businesses with operations in California since 1893.

Limoneira Company, a Delaware corporation, is the successor to several businesses with operations in California since 1893.

Our business and operations are described below.

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In addition, general information concerning our Company can be found on our website, the internet address of which is www.limoneira.com.

All of our filings with the Securities and Exchange Commission (the “SEC”), including but not limited to, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments thereto, are available free of charge on our website as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.

We are an agribusiness and real estate development company founded and based in Santa Paula, California, committed to responsibly using and managing our approximately 15,700 acres of land, water resources and other assets to maximize long-term stockholder value.

Our current operations consist of fruit production, sales and marketing, rental operations, real estate development and capital investment activities.

All of our filings with the SEC, including but not limited to, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments thereto, are available free of charge on our website as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.

We are primarily an agribusiness company founded and based in Santa Paula, California, committed to responsibly using and managing our approximately 15,400 acres of land, water resources and other assets to maximize long-term stockholder value.

Our current operations consist of fruit production, sales and marketing, rental operations, real estate and capital investment activities.

We are one of California’s oldest citrus growers.

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We use ground water provided by wells and surface water for our PDA and San Pablo farming operations in Chile and our Trapani Fresh farming operations in Argentina.

For more than 100 years, we have been making strategic investments in California agriculture and real estate development.

We currently have three real estate development projects in California.

These projects include multi-family housing and single-family homes comprising approximately 260 completed rental units and another approximately 1,500 units in various stages of planning and development.

For more than 100 years, we have been making strategic investments in California agriculture and real estate.

We currently have an interest in three real estate development projects in California.

These projects include multi-family housing and single-family homes comprising 256 completed rental units and another approximately 1,150 units in various stages of planning and development.

Fiscal Year 2020 Highlights and Recent Developments

On November 10, 2015, we entered into a joint venture with The Lewis Group of Companies (“Lewis”) for the residential development of our East Area I real estate development project.

We are equal partners in a joint venture with The Lewis Group of Companies (“Lewis”) for the residential development of our East Area I real estate development project.

To consummate the transaction, we formed Limoneira Lewis Community Builders, LLC (the "LLCB" or "Joint Venture").

The first phase of the project broke ground to commence mass grading on November 8, 2017.

Project plans include approximately 632 residential units in Phase 1.

The Joint Venture received lot deposits from national homebuilders in fiscal year 2018 and initial lot sales representing a total of 210 residential units closed in fiscal year 2019.

The Joint Venture closed on an additional 33 lots in the first quarter of fiscal year 2020.

Late in the third quarter of fiscal year 2018, Ventura County experienced record high temperatures.

The effect of these high temperatures resulted in lower avocado crop volume in fiscal year 2019 compared to fiscal year 2018.

Offsetting this temporary event is the benefit of crop insurance for approximately $2.3 million calculated on actual avocado harvest in fiscal year 2019.

On May 30, 2019, we acquired a 51% interest in a joint venture, Trapani Fresh, formed with FGF Trapani (“FGF”), a multi-generational, family owned citrus operation in Argentina.

To consummate the transaction, we formed a subsidiary under the name Limoneira Argentina S.A.U.

(“Limoneira Argentina”) as the managing partner and acquired a 51% interest in an Argentine Trust that holds a 75% interest in Finca Santa Clara (“Santa Clara”), a ranch with approximately 1,200 acres of planted lemons.

Trapani Fresh controls the trust and grows, packs, markets and sells fresh citrus.

Total consideration paid for our interest in Trapani Fresh was $15.0 million of which $7.5 million was paid to FGF on May 30, 2019.

The remaining $7.5 million was advanced to FGF, $4.0 million in February 2019 and $3.5 million in May 2019, as prepayments for the 25% interest in Santa Clara retained by FGF.

We have consolidated Trapani Fresh and have accounted for the acquisition of Trapani Fresh as a business combination, resulting in FGF’s 49% interest in Trapani Fresh being accounted for as a noncontrolling interest.

In fiscal year 2019, we sold a total of 50,000 shares of Calavo common stock at an average price of $95.71 per share.

Net proceeds from the sale were $4.8 million and we recognized a loss of $63 thousand .

We continue to own 200,000 shares of Calavo common stock.

With the adoption of Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2016-01 on November 1, 2018, changes in the fair value of the equity securities result in gains or losses recognized in net income.

The Company recorded unrealized losses of $2.1 million during fiscal year 2019 , which is included in other (expense) income in the consolidated statements of operations.

The Company purchased this investment for $10.00 per share in fiscal 2005.

In September 2019, we sold the multi-use Mercantile property consisting of a retail convenience store, gas station, car wash and quick serve restaurant located in Santa Paula, California.

We received net proceeds of $4.0 million and recognized a gain of approximately $0.6 million .

In October 2019, we sold The Terraces at Pacific Crest ("Pacific Crest") for approximately $3.0 million .

We received net proceeds of $2.9 million and recognized a gain of approximately $0.4 million .

The first phase of the project broke ground to commence mass grading in November 2017.

The Joint Venture has closed on lot sales representing 354 units from inception through October 31, 2020.

In the first quarter of fiscal year 2020, we entered into an agreement to sell our Sevilla property for $2.7 million.

After transaction and other costs, we expect to receive proceeds of approximately $2.6 million and recognize an insignificant gain.

At October 31, 2020, the $2.5 million carrying value of the property was classified as held for sale and included in prepaid expenses and other current assets.

In March 2020, we entered into a revolving equity line of credit promissory note and loan agreement with Farm Credit West for a $15.0 million Revolving Equity Line of Credit (the "RELOC") secured by a first lien on the Windfall Investors, LLC property.

The RELOC matures in 2043 and features a 3-year draw period followed by 20 years of fully amortized loan payments.

The interest rate

is variable with monthly interest-only payments during the 3-year draw period and monthly principal and interest payments thereafter.

In March 2020, we sold our remaining 200,000 shares of Calavo Growers, Inc.

("Calavo") common stock at an average price of $55.29 per share.

Net proceeds from the sale were $11.0 million and we recognized a loss of $6.3 million.

In March 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was signed into law.

The CARES Act provides numerous tax provisions and other stimulus measures, including temporary changes regarding the prior and future utilization of net operating losses, temporary changes to the prior and future limitations on interest deductions, temporary suspension of certain payment requirements for the employer portion of Social Security taxes, the creation of certain refundable employee retention credits, and technical corrections from prior tax legislation for tax depreciation of certain qualified improvement property.

We evaluated the impact of the CARES Act on our consolidated financial statements and recorded approximately $1.9 million of income tax benefit and applied for $5.8 million of federal refunds and an additional $0.9 million of California refunds in fiscal years 2020 and 2021, of which $0.8 million and $5.0 million were received in October 2020 and December 2020, respectively.

On March 12, 2020, the Board of Directors of our Company approved a share repurchase program authorizing us to repurchase up to $10.0 million of our outstanding shares of common stock through March 2021.

Under the share repurchase program, purchases of shares of common stock may be made from time to time in the open market or in privately negotiated transactions.

The share repurchase program may be modified, suspended or discontinued at any time and does not commit us to repurchase shares of our common stock.

During fiscal year 2020, we repurchased 250,977 shares under the share repurchase program for approximately $3.5 million.

As of October 31, 2020, the remaining authorization under this program is approximately $6.5 million.

On June 30, 2020, we entered into a Conversion Agreement with Farm Credit West to convert our term loans to fixed interest rate loans effective July 1, 2020.

No changes were made to the outstanding principal balances on the loans and we made no cash repayments of principal.

The rates are subject to a prepayment restriction period for a portion of the fixed rate term that will expire on January 1, 2021, after which we may prepay any amounts without penalty.

In August 2020, we sold a property, located in Lindsay, California.

We received net proceeds of $6.0 million and after transaction and other costs, we recorded a loss of approximately $0.4 million as of October 31, 2020.

On December 15, 2020, we declared a cash dividend of $0.075 per common share payable on January 15, 2021, in the aggregate amount of $1.3 million to stockholders of record as of December 28, 2020.

COVID-19 Pandemic

The global spread of the novel coronavirus (COVID-19) in recent months has negatively impacted the global economy, disrupted global supply chains and created significant volatility and disruption of financial markets.

The impact of this pandemic has created significant uncertainty in the global economy and has affected our business, employees, suppliers, and customers.

The COVID-19 pandemic has had an adverse impact on the industries and markets in which we conduct business.

In particular, the United States lemon market has seen a significant decline in volume.

Lemon demand began falling in mid-March when wide spread shelter in place orders were issued, resulting in a significant market oversupply.

The export market for fresh produce has also significantly declined due to COVID-19 impacts.

The decline in demand for our products beginning the second quarter of 2020, which we believe was a result of the COVID-19 pandemic, negatively impacted our sales and profitability for the second, third and fourth quarters of 2020.

We also expect an adverse impact on our sales and profitability in future periods.

These impacts are expected to be material.

However, the duration of these trends and the magnitude of such impacts cannot be precisely estimated at this time, as they are affected by a number of factors, many of which are outside management’s control, including, but not limited, to those presented in - Item 1A.

Risk Factors of this Annual Report.

Although subject to unforeseen changes that may arise as the COVID-19 pandemic continues to unfold, we currently expect improvement in fiscal year 2021.

We took proactive actions early on to protect the health of our employees and their families, including curtailing business travel and encouraging video conferencing whenever possible.

In addition, as the COVID-19 pandemic worsened throughout the spring, we allowed personnel to work remotely to the extent possible.

While we believe we have responded appropriately to mitigate the impacts of the COVID-19 pandemic, as the situation evolves, we will continue to analyze additional mitigation measures that may be needed to preserve the health and safety of our workforce and our customers and the ongoing continuity of our business operations.

Those measures might include modifying workspaces, continuing social distancing policies, implementing new personal

protective equipment or health screening policies at our facilities, or such other industry best practices needed to continue to maintain a healthy and safe environment for our employees amidst the COVID-19 pandemic.

Given the economic uncertainty as a result of the COVID-19 pandemic, we have taken actions to improve our current liquidity position, including temporarily postponing capital expenditures, selling equity securities to increase cash, reducing operating costs, and substantially reducing discretionary spending.

We are one of the largest growers of lemons and avocados in the United States and maintain our country's food chain infrastructure and thus are considered an essential business and permitted to remain open during the ongoing pandemic, be it at reduced volumes, in order to fulfill our customers' needs.

However, there is significant uncertainty around the breadth and duration of our business disruptions related to the COVID-19 pandemic, as well as its impact on the U.S.

economy, the ongoing business operations of our clients and our results of operations and financial condition.

While our management team is actively monitoring the impacts of the COVID-19 pandemic and may take further actions altering our business operations that we determine are in the best interests of our employees and clients or as required by federal, state, or local authorities, the full impact of the COVID-19 pandemic on our results of operations, financial condition, or liquidity for fiscal year 2021 and beyond cannot be fully estimated at this point.

The following discussions are subject to the future effects of the COVID-19 pandemic on our ongoing business operations.

Business Division Summary

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agribusiness, rental operations and real estate development.

The agribusiness division is comprised of four reportable operating segments:

fresh lemons, lemon packing, avocados and other agribusiness, and includes our farming, harvesting, lemon packing and lemon sales operations.

The rental operations division includes our residential and commercial rentals, leased land operations and organic recycling.

The real estate development division includes our real estate projects and development.

Financial information and discussion of our six reportable segments, which includes fresh lemons, lemon packing, avocados, other agribusiness, rental operations and real estate development, are contained in the notes to the accompanying consolidated financial statements of this Annual Report.

Agribusiness Division

The agribusiness division is comprised of four of our reportable operating segments:

fresh lemons, lemon packing, avocados and other agribusiness, which represented 97% , 96% and 96% of our fiscal year 2019 , 2018 and 2017 consolidated revenues, respectively, of which fresh lemons and lemon packing combined represented 87% , 80% and 78% of our fiscal year 2019 , 2018 and 2017 consolidated revenues, respectively.

We are one of California’s oldest citrus growers and one of the largest growers of lemons and avocados in the United States.

In addition to growing lemons and avocados, we grow oranges and a variety of specialty citrus and other crops.

We have agricultural plantings throughout Ventura, Tulare, San Bernardino and San Luis Obispo Counties in California, Yuma County in Arizona, La Serena, Chile and Jujuy, Argentina, which collectively consist of approximately 6,200 acres of lemons, 900 acres of avocados, 1,600 acres of oranges and 1,000 acres of specialty citrus and other crops.

With the acquisition of PDA and San Pablo in Chile and Trapani Fresh in Argentina, we have approximately 500 acres of lemons and oranges plantings in Chile and approximately 1,200 acres of lemon plantings in Argentina.

We also operate our own packinghouses in Santa Paula and Oxnard, California and Yuma, Arizona, where we process, pack and sell lemons we grow as well as lemons grown by others.

In addition, we operate packinghouses in Argentina.

Our lemon farming is included in our “fresh lemons” and “lemon packing” reportable operating segments within our financial statements.

The agribusiness division is comprised of three reportable operating segments:

fresh lemons, lemon packing and other agribusiness, which includes avocados, oranges, specialty citrus and other crops.

The agribusiness division includes our core operations of farming, harvesting, lemon packing and lemon sales operations.

The rental operations include our residential and commercial rentals, leased land operations and organic recycling.

The real estate development division includes our investments in real estate development projects.

Agribusiness Summary

We market and sell lemons directly to our food service, wholesale and retail customers throughout the United States, Canada, Asia, Australia and certain other international markets.

We are one of the largest lemon growers in the United States with approximately 6,000 acres of lemons planted primarily in Ventura, Tulare and San Bernardino Counties in California and in Yuma County, Arizona.

In California, the lemon growing area stretches from the Coachella Valley to Fresno and Monterey Counties, with the majority of the growing areas being located in the coastal areas from Ventura County to Monterey County.

In California, the lemon growing area stretches from the Coachella Valley to Fresno and Monterey Counties, with the majority of the growing areas located in the coastal areas from Ventura County to Monterey County.

Ventura County is California’s top lemon producing county.

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California-grown lemons are available throughout the year, with peak production periods occurring from January through August.

The storage life of fresh lemons generally ranges from one to eighteen weeks, depending upon the maturity of the fruit, the growing methods used and the handling conditions in the distribution chain.

With an average annual production of approximately 800,000 tons of lemons in the United States, California accounts for approximately 93% of the lemon crop, with Arizona producing the majority of the rest.

Approximately 71% of the United States lemon crop is utilized in the fresh market, with the remainder going to the processed market for products such as juice, oils and essences.

Most lemons are consumed as either a cooking ingredient, a garnish, or as juice in lemonade or carbonated beverages or other drinks.

Demand for lemons is typically highest in the summer, although California producers through various geographical zones are typically able to harvest lemons year-round.

Our avocado farming is included in our “avocados” reportable segment within our financial statements.

The storage life of fresh lemons generally ranges from one to 18 weeks, depending upon the maturity of the fruit, the growing methods used and the handling conditions in the distribution chain.

We are one of the largest avocado growers in the United States with approximately 900 acres of avocados planted throughout Ventura County.

In California, the avocado growing area stretches from San Diego County to Monterey County, with the majority of the growing areas located approximately 100 miles north and south of Los Angeles County.

Over the last 75 years, the avocado has transitioned from a single specialty fruit to an array of over 100 varieties ranging from the green-skinned Zutanos to the black-skinned Hass, which is the predominant avocado variety marketed on a worldwide basis.

California-grown avocados are available year-round, with peak production periods occurring between February and September.

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The storage life of fresh avocados generally ranges from one to four weeks, depending upon the maturity of the fruit, the growing methods used and the handling conditions in the distribution chain.

We provide all of our avocado production to Calavo, a packing and marketing company listed on the NASDAQ Global Select Market under the symbol CVGW.

We provide a majority of our avocado production to Calavo, a packing and marketing company listed on the NASDAQ Global Select Market under the symbol CVGW.

Calavo’s customers include many of the largest retail and food service companies in the United States and Canada.

Our marketing relationship with Calavo dates back to 2003.

Calavo receives fruit from our orchards at its packinghouse located in Santa Paula, California.

Calavo’s proximity to our agricultural operations enables us to keep transportation and handling costs to a minimum.

proximity to our agricultural operations enables us to keep transportation and handling costs to a minimum.

Our avocados are packed by Calavo and sold and distributed under its own brands to its customers primarily in the United States and Canada.

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The need for more production per acre to compete with foreign sources of supply has required us to take an important lead in the practice of dense planting (typically four times the number of avocado trees per acre versus traditional avocado plantings) and mulching composition to help trees acclimate under conditions that more closely resemble those found in the tropics, a better climate for avocado growth.

Our orange farming is included in our “other agribusiness” reportable segment within our financial statements.

While we are primarily known for our high-quality lemons, we also grow oranges.

Oranges, Specialty Citrus and Other Crops.

We have approximately 1,400 acres of oranges planted primarily in Tulare County, California.

In California, the growing area for oranges stretches from Imperial County to Yolo County.

For many decades, the Valencia variety of oranges was grown in Ventura County primarily for export to the Pacific Rim.

Throughout the late twentieth century, developing countries began producing the larger, seedless Navel variety of oranges that successfully competed against the smaller Valencia variety.

California-grown Navel oranges are available from October to June, with peak production periods occurring between January and April.

California-grown Valencia oranges are available from March to October,

with peak production periods occurring between June and September.

Approximately 96% of our orange plantings are of the Navel variety and approximately 4% are of the Valencia variety.

Navel oranges comprise most of California’s orange crop, accounting for approximately 80% over the past three growing seasons.

Valencia oranges account for a vast majority of the remainder of California’s orange crop.

While California produces approximately 40% of the nation’s oranges, its crop accounts for approximately 90% of those going to the fresh market.

The share of California’s crop going to fresh market, as opposed to the processed market (i.e., juices, oils and essences) varies by season, depending on the quality of the crop.

We estimate approximately 70% of our oranges are sold to retail customers and approximately 30% are sold to wholesale customers.

Specialty Citrus and Other Crops.

Our specialty citrus and other crop farming is included in our “other agribusiness” reportable segment within our financial statements.

A few decades ago, we began growing specialty citrus varieties and other crops that we believed would appeal to changing North American and worldwide demand.

As a result, we currently have approximately 1,000 acres of specialty citrus and other crops planted such as Moro blood oranges, Cara Cara oranges, Minneola tangelos, Star Ruby grapefruit, pummelos, pistachios and wine grapes.

Acreage devoted to specialty citrus and other crops in California has been growing significantly over the past few decades, especially with the popularity of the Clementine, a type of mandarin orange.

Similar to our oranges, we utilize third-party packinghouses to process and pack our specialty citrus.

A portion of our specialty citrus is marketed and sold under the Sunkist brand by Sunkist and orders are processed by Sunkist-member packinghouses.

As an agricultural cooperative, Sunkist coordinates the sales and marketing of the specialty citrus and orders are processed by Sunkist-member packinghouses for direct shipment to customers.

We currently market our other crops, such as pistachios and wine grapes, utilizing processors which are not members of agricultural cooperatives.

We currently have approximately 900 acres of specialty citrus and other crops planted such as Moro blood oranges, Cara Cara oranges, Minneola tangelos, Star Ruby grapefruit, pummelos, pistachios and wine grapes.

We utilize third-party packinghouses to process and pack our oranges and specialty citrus.

A portion of our oranges and specialty citrus is marketed and sold under the Sunkist brand by Sunkist and orders are processed by Sunkist-member packinghouses.

As an agricultural cooperative, Sunkist coordinates the sales and marketing of the oranges and specialty citrus and orders are processed by Sunkist-member packinghouses for direct shipment to customers.

We currently market our other crops, such as pistachios and wine grapes, utilizing processors that are not members of agricultural cooperatives.

Our pistachios are harvested and sold to a roaster, packager and marketer of nuts, and our wine grapes are sold to various wine producers.

We have agricultural plantings on properties located in Ventura, Tulare, San Luis Obispo and San Bernardino Counties in California, Yuma County in Arizona, La Serena, Chile and Jujuy, Argentina.

We have agricultural plantings on properties located in the United States, Chile and Argentina.

The following is a description of our agriculture properties:

County / State or Country

Limoneira/Olivelands

Teague McKevett

Rancho La Cuesta

Limco Del Mar

Porterville Ranches

Ducor Ranches

Sheldon Ranches

Windfall Farms

San Luis Obispo, CA

San Bernardino, CA

Associated Citrus Packers

Pan de Azucar & San Pablo

La Serena, Chile

Jujuy, Argentina

Other agribusiness land

Various Counties, CA

Ranch Name County / State or Country Total

Acres Lemons Avocados Oranges Specialty

Limoneira/Olivelands Ventura, CA 1,700 700 500 — — 500

La Campana Ventura, CA 300 100 200 — — —

Teague McKevett Ventura, CA 500 — 100 — — 400

Orchard Farm Ventura, CA 1,100 500 — — — 600

Rancho La Cuesta Ventura, CA 200 100 — — — 100

Limco Del Mar Ventura, CA 200 100 100 — — —

Porterville Ranches Tulare, CA 1,200 400 — 400 200 200

Ducor Ranches Tulare, CA 1,000 300 — 400 300 —

Sheldon Ranches Tulare, CA 700 200 — 400 — 100

Lemons 400 Tulare, CA 800 400 — — — 400

Windfall Farms San Luis Obispo, CA 700 — — — 300 400

Cadiz San Bernardino, CA 800 600 — — — 200

Associated Citrus Packers Yuma, AZ 1,300 1,000 — — — 300

Pan de Azucar & San Pablo La Serena, Chile 3,500 300 — 200 — 3,000

Santa Clara Jujuy, Argentina 1,200 1,200 — — — —

Other agribusiness land Various Counties, CA 200 100 — — 100 —

Total 15,400 6,000 900 1,400 900 6,200

Percentage of Total 100 % 39 % 6 % 9 % 6 % 41 %

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Our headquarters, lemon packing operations and storage facilities are located on this property.

The Teague McKevett Ranch is the site of our real estate development project known as East Area I and described below under the “Real Estate Development Division” heading.

Windfall Farms is an approximately 700-acre former thoroughbred breeding farm and equestrian facility located in Creston, California, near Paso Robles, California.

During fiscal years 2014 and 2015, we planted approximately 200 acres of vineyards and an additional 100 acres in 2017.

Vineyards are generally productive after four years.

During the fourth quarter of 2019 , the vineyards produced their fourth harvest from the 2014 planting and their third harvest from the 2015 planting, generating approximately 1,300 tons of grapes and $1.3 million of revenue in 2019 .

We expect to sell vineyard production by the ton to various wineries with current per ton prices of approximately $1,100 depending on the grape variety and other factors.

Limco Del Mar is owned by a limited partnership of which we are the general partner and own an interest of 28.1%, which is comprised of a 1.3% general partner interest and a 26.8% limited partner interest.

We manage the Cadiz Ranches under operating lease arrangements.

We purchased substantially all of the Sheldon Ranches property in two separate transactions, which closed in September and December 2015.

We previously managed the Sheldon Ranches under operating lease arrangements.

The Teague McKevett Ranch is the site of our real estate development project known as East Area I and described below under the “Real Estate Development Summary” heading.

The other agribusiness land in the table above includes corporate and lemon packing facilities, land leased to other agricultural businesses, rental units, roads, creeks, hillsides and other open land.

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The fruit varieties that we grow are typically non-producing for approximately the first four years after planting.

Currently, we have approximately 1,200 acres of lemons, 200 acres of oranges and 200 acres of specialty citrus and other crops that are under development.

Orchards may continue producing fruit longer than their depreciable lives.

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Age of Orchards

County, State, Fruit Variety

Over 25 Years

Total Ventura, CA

Specialty citrus and other

Total Tulare, CA

San Bernardino, CA - Lemons

San Luis Obispo, CA - Wine Grapes

Yuma, AZ - Lemons

La Serena, Chile

Total La Serena, Chile

Jujuy, Argentina - Lemons

Percentage of Total

Summary by Crop

0-4 Years 5-25 Years Over 25 Years Total

Lemons 1,200 3,500 1,300 6,000

Avocados — 500 400 900

Oranges 200 700 500 1,400

Specialty citrus and other 200 600 100 900

Total 1,600 5,300 2,300 9,200

Lemon Packing and Sales

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Our strategy for growing the profitability of our lemon packing operations calls for optimizing the percentage of a crop that goes to the fresh market, or fresh utilization, and procuring a larger percentage of the California and Arizona lemon crop.

We invest considerable time and research into refining and improving our lemon packing through innovation and are continuously in search of new techniques to refine how premium lemons are delivered to our consumers.

In the second quarter of fiscal year 2016, our new lemon packing facility became operational, which has doubled our lemon packing capacity and has increased the efficiency and financial results of these operations.

Rental Operations Division

Our rental operations division is provided for in our financial statements as its own reportable segment and includes our residential and commercial rentals, leased land operations and organic recycling.

The rental operations division represented approximately 3% , 4% and 4% of our fiscal year 2019 , 2018 and 2017 consolidated revenues, respectively.

We own and maintain approximately 260 residential housing units located in Ventura and Tulare Counties in California that we lease to employees, former employees and non-employees.

In fiscal year 2015, we added 65 new agriculture workforce housing units in Santa Paula, California and are planning to add an additional 6 units in 2020.

These properties generate reliable cash flows which we use to partially fund the operating costs of our business and provide affordable housing for many of our employees and the community.

We own several commercial office buildings and as with our residential housing units, these properties generate reliable cash flows which we use to partially fund the operating costs of our business.

As of October 31, 2019 , we lease approximately 500 acres of our land to third-party agricultural tenants who grow a variety of row crops such as strawberries, peppers, celery and cabbage.

We invest considerable time and research into refining and improving our lemon packing through innovation and are continuously searching for new techniques to refine how premium lemons are delivered to our consumers.

In fiscal year 2016, our updated lemon packing facility became operational which doubled our lemon packing capacity and increased the efficiency and financial results of these operations.

Rental Operations Summary

Our rental operations include our residential and commercial rentals, leased land operations and organic recycling.

We own and maintain 256 residential housing units located in Ventura and Tulare Counties in California that we lease to employees, former employees and non-employees.

We also own several commercial office buildings and as with our residential housing units, these properties generate reliable cash flows that we use to partially fund the operating costs of our business.

As of October 31, 2020, we lease approximately 500 acres of our land to third-party agricultural tenants who grow a variety of row crops.

Our leased land business provides us with a profitable method to diversify the use of our land.

Organic Recycling

With the help of one of our tenants, Agromin, Inc.

(“Agromin”), a processor of premium soil products and a green waste recycler located in Oxnard, California, we have implemented an organic recycling program.

Agromin provides green waste recycling for cities in Santa Barbara, Los Angeles and Ventura Counties.

We worked with Agromin to develop an organic recycling facility on our land in Ventura County, to receive green materials (lawn clipping, leaves, bark and other plant materials) and convert such material into mulch that we spread throughout our agricultural properties to help curb erosion, improve water efficiency, reduce weeds and moderate soil temperatures.

We receive a percentage of the gate fees Agromin collects from regional waste haulers and enjoy the benefits of the organic material.

Real Estate Development Division

Our real estate development division is provided for in our financial statements as its own reportable segment and includes our real estate development operations.

The real estate development division had no revenues in fiscal years 2019 , 2018 or 2017 .

We also partner with one of our tenants and have an organic recycling facility on our land in Ventura County.

Real Estate Development Summary

We invest in real estate development projects and recognize that long-term strategies are required for successful real estate development activities.

Our goal is to redeploy real estate earnings and cash flow into the expansion of our agribusiness and other income producing real estate.

For real estate development projects and joint ventures, it is not unusual for the timing and amounts of revenues and costs, partner contributions and distributions, project loans, other financing assumptions and project cash flows to be impacted by government approvals, project revenue and cost estimates and assumptions, economic conditions, financing sources and product demand as well as other factors.

Such factors could affect our results of operations, cash flows and liquidity.

For more than 100 years, we have been making strategic real estate investments in California agricultural and developable real estate.

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East Area I - Santa Paula, California.

East Area I consists of 523 acres that we have used as agricultural land and is located in Santa Paula approximately ten miles from the City of Ventura and the Pacific Ocean.

East Area I consists of 523 acres that we historically used as agricultural land and is located in Santa Paula approximately ten miles from the City of Ventura and the Pacific Ocean.

This property is also known as our Teague McKevett Ranch.

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This vote was a requirement of the Save Open-Space and Agricultural Resources (“SOAR”), ordinance that mandates a public vote of the City of Santa Paula for land use conversion.

On November 10, 2015, we entered into the Joint Venture with Lewis for the residential development of our East Area I real estate development project.

In November 2015, we entered into the Joint Venture with Lewis for the residential development of our East Area I real estate development project.

To consummate the transaction, we formed LLCB as the development entity, contributed our East Area I property to the Joint Venture and sold a 50% interest in the Joint Venture to Lewis for $20.0 million.

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The Joint Venture partners will share in capital contributions to fund project costs until loan proceeds and/or revenues are sufficient to fund the project.

These funding requirements are currently estimated to

total $15.0 million to $20.0 million for each Joint Venture partner in the first three to four years of the project and we funded $4.0 million , $3.5 million and $7.5 million in fiscal years 2019 , 2018 and 2017 , respectively.

We also entered into a lease agreement with the Joint Venture to lease back a portion of the contributed property, which allowed us to continue farming the property during the phased build-out of the project.

We terminated this lease in December 2018.

The first phase of the project broke ground to commence mass grading on November 8, 2017.

Project plans include approximately 632 residential units in Phase 1 and site improvements have been substantially completed.

The Joint Venture received lot deposits from national homebuilders in fiscal year 2018 and initial lot sales representing a total of 210 residential units closed in fiscal year 2019.

The Joint Venture closed on an additional 33 units in the first quarter of fiscal year 2020.

Since inception, each Joint Venture partner has made funding contributions of $21.4 million, including $2.8 million, $4.0 million and $3.5 million in fiscal years 2020, 2019 and 2018, respectively.

The first phase of the project broke ground to commence mass grading in November 2017.

Project plans include approximately 1,500 residential units with 632 residential units in Phase 1 and site improvements substantially completed.

representing 144 and 210 residential units closed in fiscal years 2020 and 2019, respectively and 354 residential units have closed from the project's inception to October 31, 2020.

The Joint Venture closed an additional 44 units in the first quarter of fiscal year 2021.

East Area II - Santa Paula, California.

We and our design associates are in the process of formulating plans for East Area II, a parcel of approximately 30 acres adjacent to East Area I, also a part of our Teague McKevett Ranch, that we believe is suited to commercial and/or industrial development along the south side of California Highway 126, a heavily traveled corridor that connects Highway 101 at Ventura on the west with Interstate 5 at Santa Clarita on the east.

Our design associates and we are in the process of formulating plans for East Area II, a parcel of approximately 30 acres adjacent to East Area I.

East Area II is also a part of our Teague McKevett Ranch, which we believe is suited to commercial and/or industrial development along the south side of California Highway 126, a heavily traveled corridor that connects Highway 101 at Ventura on the west with Interstate 5 at Santa Clarita on the east.

When completed, we expect that the development will contribute to the economic vitality of the region and allow residents to work and shop within close proximity to their homes.

The successful development of East Area II will be partly dependent on the success of East Area I described above.

The successful development of East Area II will be partly dependent on the success of East Area I.

We expect that East Area II could accommodate large retailers, a medium or large employer, a complex of mixed business and retail, or some combination of the foregoing.

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Santa Maria - Santa Barbara County, California.

As of October 31, 2019 , we were invested in one entitled development parcel, Sevilla, in Santa Barbara County, California, a county that, in our experience, entitles very few parcels.

Located in Santa Maria, the parcel offers a residential and/or commercial development opportunity.

Sevilla is approved for 69 single-family homes adjacent to shopping, transportation, schools, parks and medical facilities, with a parcel of approximately 3 acres zoned for commercial use.

We sold the commercial portion of our Sevilla property in November 2017.

The Company is actively marketing this property.

Competitive Strengths

Agribusiness Division

As of October 31, 2020, we were invested in one entitled development parcel, Sevilla, located in Santa Maria in Santa Barbara County, California.

In the first quarter of fiscal year 2020, the Company entered into an agreement to sell its Sevilla property for $2.7 million, which is expected to close in fiscal year 2021.

Markets and Competitive Strengths

Agribusiness Operations

With agricultural operations dating back to 1893, we are one of California’s oldest citrus growers and one of the largest growers of lemons and avocados in the United States.

Consequently, we have developed significant experience with a variety of crops, mainly lemons, avocados and oranges.

The following is a brief list of what we believe are our significant competitive strengths with respect to our agribusiness division, which includes our fresh lemons, lemon packing, avocados and other agribusiness segments unless otherwise noted:

The following is a brief list of what we believe are our significant competitive strengths with respect to our agribusiness operations:

• Our agricultural properties in Ventura County are located near the Pacific Ocean, which provides an ideal environment for growing lemons, avocados and row crops.

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• A significant amount of our agribusiness property was acquired many years ago, which results in a low-cost basis and associated expenses.

We have a well-trained and retentive labor force with many employees remaining with us for more than 30 years.

• In our fresh lemons and lemon packing segments, our integrated business model with respect to growing, packing, marketing and selling lemons allows us to better serve our customers.

• Our lemon packing operations provide marketing opportunities with other citrus companies and their respective products.

Since 2010, we have achieved and maintained GLOBALGAP Certification by successfully demonstrating our adherence to specific GLOBALGAP standards.

GLOBALGAP is an internationally recognized set of farm standards dedicated to “Good Agricultural Practices” or GAP.

We believe that GLOBALGAP Certification differentiates us from our

competitors and serves as reassurance to consumers and retailers that food reaches acceptable levels of safety and quality, and has been produced sustainably, respecting the health, safety and welfare of workers and the environment, and in consideration of animal welfare issues.

• We have made investments in ground-based solar projects that provide us with tangible and intangible non-revenue generating benefits.

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We own shares in the following mutual water companies:

Farmers Irrigation Co., Canyon Irrigation Co., San Cayetano Mutual Water Co., Middle Road Mutual Water Co.

Farmers Irrigation Co., Canyon Irrigation Co., San Cayetano Mutual Water Co., Middle Road

Mutual Water Co.

and Pioneer Water Company, Inc.

In 2007, we acquired additional water rights in the adjudicated Santa Paula Basin (aquifer) and in September 2013 we acquired water rights in the YMIDD with our acquisition of Associated Citrus Packers, Inc.

(“Associated”).

In February 2017, we acquired water rights with our purchase of 90% of PDA and in July 2018, we acquired additional water rights in Chile with our acquisition of San Pablo.

Rental Operations Division

With respect to our rental operations division, we believe our competitive advantages are as follows:

Our housing and land rentals provide a consistent, dependable source of cash flow that helps to counter the volatility typically associated with an agricultural business.

Our housing rental business allows us to offer a unique benefit to our employees, which in turn helps to provide us with a dependable, long-term employee base.

Our leased land business allows us to partner with other agricultural producers that can serve as a profitable alternative to under-producing tree crop acreage.

Our organic recycling tenant provides us with a low cost, environmentally friendly solution to weed and erosion control.

Real Estate Development Division

With respect to our real estate development division, we believe our competitive advantages are as follows:

Our real estate development activities are primarily focused in coastal areas north of Los Angeles and south of Santa Maria, which we believe have desirable climates for lifestyle families, retirees and athletic and sports enthusiasts.

Additionally, we acquired water rights in the adjudicated Santa Paula Basin (aquifer), the YMIDD and in Chile.

Real Estate Development Operations

With respect to our real estate development operations, we believe our competitive advantages are as follows:

• We have entitlements to build approximately 1,500 residential units in our East Area I (Harvest at Limoneira) development.

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Business Strategy

While each of our business divisions has a separate business strategy, we are an agribusiness and real estate development company that generates annual cash flows to support investments in agricultural and real estate development activities.

We are an agribusiness and real estate development company that generates annual cash flows to support investments in agricultural and real estate development activities.

As our agricultural and real estate development investments are monetized, we intend to seek to expand our agribusiness into new regions and markets and invest in cash-producing residential, commercial and industrial rental assets.

The following describes the key elements of our business strategy for each of our agribusiness, rental operations and real estate development business divisions.

Agribusiness Division

With respect to our agribusiness division, key elements of our strategy are:

The following describes the key elements of our business strategy.

With respect to our agribusiness operations, key elements of our strategy are:

• Acquire Additional Lemon Producing Properties .

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We continually seek to acquire additional lemons from third-party growers to pack through our plants.

Third-party growers are only added if we determine their fruit is of good quality and can be cost effective for both us and the grower.

Third-party growers are only added if we determine their fruit is of good quality and can be cost effective for both the grower and us.

Of most importance is the overall fresh utilization rate for our fruit, which is directly related to quality.

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We have the ability to supply a wide range of customers and markets and, because we produce high quality lemons, we can export our lemons to international customers, which many of our competitors are unable to supply.

Construction of a New Lemon Packinghouse .

• Construction of an Updated Lemon Packinghouse .

Over the years, new machinery and equipment along with upgrades have been added to our original packinghouse and cold storage facilities.

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A project to double the capacity and increase the efficiency of our lemon packing facilities became operational in fiscal year 2016.

We expect that this project will ultimately increase fresh lemon processing capacity and lower packing costs by reducing labor and handling inputs.

Opportunistically Expand our Plantings of Oranges, Specialty Citrus and Other Crops .

Our plantings of oranges, specialty citrus and other crops have been profitable and have been pursued to diversify our product line.

We expect that

this project will has increased fresh lemon processing capacity and lower packing costs by reducing labor and handling inputs.

• Opportunistically Expand our Plantings of Avocados, Oranges, Specialty Citrus and Other Crops .

Our plantings of avocados, oranges, specialty citrus and other crops have been profitable and have been pursued to diversify our product line.

Agricultural land that we believe is not suitable for lemons is typically planted with oranges, specialty citrus or other crops.

While we intend to expand our orange, specialty citrus and other crops, we expect to do so on an opportunistic basis in locations that we believe offer a record of historical profitability.

Opportunistically Expand our Plantings of Avocados .

We may opportunistically expand our plantings of avocados primarily because our profitability and cash flow realized from our avocados help to diversify our fruit production base.

Maintain and Grow our Relationship with Calavo .

Our alignment with and ownership stake in Calavo comprises our current marketing strategy for avocados.

While we may expand our avocados, oranges, specialty citrus and other crops, we expect to do so on an opportunistic basis in locations that we believe offer a record of historical profitability.

• Maintain our Relationship with Calavo .

Our alignment with Calavo comprises our current marketing strategy for avocados.

Calavo has expanded its sourcing into other regions of the world, including Mexico, Chile and Peru, which allows it to supply avocados to its retail and food service customers on a year-round basis.

California avocados occupy a unique market window in the year-round supply chain and Calavo has experienced a general expansion of volume as consumption has grown.

Thus, we intend to continue to have a strong and viable market for our California avocados as well as an equity participation in Calavo’s overall expansion and profitability.

Diversify our Agribusiness Portfolio with the Development of a Vineyard at Windfall Farms.

Our Windfall Farms property has approximately 500 acres suitable for vineyard development.

During fiscal years 2014 and 2015, we planted approximately 200 acres of vineyards and an additional 100 acres in fiscal year 2017.

We intend to continue to plant vineyards at the property up to the 500 suitable acres.

We believe the vineyards are consistent with our agribusiness strategy and provide diversification to our crop production and operating results.

Rental Operations Division

With respect to our rental operations division, key elements of our strategy include the following:

Thus, we intend to continue to have a strong and viable market for our California avocados.

Other Operations

With respect to our rental operations and real estate development activities, key elements of our strategy include the following:

• Secure Additional Rental and Housing Units .

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Additionally, we believe our housing rental operation allows us to offer a unique benefit to our employees.

We have built and leased 65 out of a total of 71 approved additional units through infill projects on existing sites and groupings of units on new sites within our owned acreage.

We plan to build and lease the 6 additional remaining units in fiscal 2020.

• Opportunistically Lease Land to Third-Party Crop Farmers .

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We intend to redeploy our future financial gains to acquire additional income-producing real estate investments and agricultural properties.

Real Estate Development Division

With respect to our real estate development division, key elements of our strategy include:

• Selectively and Responsibly Develop our Agricultural Land .

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We thus intend to maintain our position as a responsible agricultural landowner and major employer in Ventura County while focusing our real estate development activities on those agricultural land parcels that we believe offer the best opportunities to demonstrate our long-term vision for our community.

Opportunistically Increase our Real Estate Holdings .

We intend to redeploy our future financial gains to acquire additional income-producing real estate investments and agricultural properties.

With respect to our fresh lemons and lemon packing segments, we have marketed and sold our lemons directly to our food service, wholesale and retail customers in the United States, Canada, Asia, Australia and certain other international markets since 2010.

We market and sell our lemons directly to our food service, wholesale and retail customers in the United States, Canada, Asia, Australia, Europe and certain other international markets.

We sold lemons to approximately 230 U.S.

and international customers during fiscal year 2020.

In terms of our avocados segment, we sell all of our avocados to Calavo.

In our other agribusiness segment, our oranges, specialty citrus and other crops are sold through Sunkist and other third-party packinghouses and our wine grapes are sold to wine producers.

Raw Materials

In our fresh lemons and lemon packing segments, paper is considered to be a material raw product for our business because most of our products are packed in cardboard cartons for shipment.

Paper is readily available and we have numerous suppliers for such material.

In our agribusiness division, petroleum-based products such as herbicides and pesticides are considered to be raw materials and we have numerous suppliers for these products.

We sell a majority of our avocados to Calavo.

Our oranges, specialty citrus and other crops are sold through Sunkist and other third-party packinghouses and our wine grapes are sold to wine producers.

Information about Geographic Areas

During fiscal year 2019 , we had approximately $3.2 million of lemon and orange sales in Chile by PDA and San Pablo and $14.7 million of lemon sales in Argentina by Trapani Fresh.

During fiscal year 2018 , we had approximately $2.8 million of lemon and orange sales in Chile by PDA and San Pablo.

During fiscal year 2017 , we had approximately $1.1 million of lemon and orange sales in Chile by PDA.

During fiscal years 2020, 2019 and 2018, we had an aggregate of approximately $3.5 million, $3.2 million and $2.8 million of total sales in Chile by PDA and San Pablo, respectively.

During fiscal years 2020 and 2019, we had an aggregate of approximately $14.2 million and $14.7 million of total sales in Argentina by Trapani Fresh.

The majority of our avocados, oranges and specialty citrus and other crops are sold to packinghouses and processors located in the United States.

Most of our long-lived assets are located within the United States.

Long-lived assets, net of accumulated depreciation, located in Chile and Argentina were $15.6 million and $18.7 million, respectively, as of October 31, 2019 and $15.7 million in Chile as of October 31, 2018.

Seasonal Nature of Business

As with any agribusiness enterprise, our agribusiness division operations are predominantly seasonal in nature.

The harvest and sale of our lemons, avocados, oranges and specialty citrus and other crops occurs in all quarters, but is generally more concentrated during our third quarter.

With respect to our fresh lemons and lemon packing segment, our lemons are generally grown and marketed throughout the year.

In terms of our avocados segment, our avocados are sold primarily from January through August.

In terms of our other agribusiness segment, our Navel oranges are primarily sold from January through June;

our Valencia oranges are primarily sold from June through September;

our specialty citrus is sold from November through April and our specialty crops, such as pistachios and wine grapes, are sold in September and October.

The agribusiness division crop markets, including those in which all of our agribusiness segments operate, are intensely competitive, but no single producer has any significant market power over any market segments, as is consistent with the production of most agricultural commodities.

The agribusiness crop markets are intensely competitive, but no single producer has any significant market power over any market segments, as is consistent with the production of most agricultural commodities.

Generally, there are a large number of global producers that sell through joint marketing organizations and cooperatives.

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Customers are typically large retail chains, food service companies, industrial manufacturers and distributors who sell and deliver to smaller customers in local markets throughout the world.

In the purest sense, our largest competitors in our agribusiness segments are other citrus and avocado producers in California, Mexico, Chile, Argentina and Florida, a number of which are members of cooperatives such as Sunkist or have selling relationships with Calavo similar to that of Limoneira.

We also compete with other fruits and vegetables for the share of consumer expenditures devoted to fresh fruit and vegetables:

that of Limoneira.

Our lemons and oranges also compete with other fruits and vegetables for the share of consumer expenditures devoted to fresh fruit and vegetables:

apples, pears, melons, pineapples and other tropical fruit.

In our avocados segment specifically, avocado products compete in the supermarket with hummus products and other dips and salsas.

According to the USDA, U.S.

producers of fruit and tree nuts generate approximately $25 billion in revenue from fruit and tree nuts annually, about 20% of which is exported.

Avocado products compete in the supermarket with hummus products and other dips and salsas.

For our specific crops, the size of the U.S.

market is approximately $690 million for lemons, both fresh and juice, approximately $400 million for avocados, and approximately $1.7 billion for oranges, both fresh and juice.

Competition in the various markets in which our agribusiness division operates is affected by reliability of supply, product quality, brand recognition and perception, price and the ability to satisfy changing customer preferences through innovative product offerings.

Competition in the various agribusiness markets is affected by reliability of supply, product quality, brand recognition and perception, price and the ability to satisfy changing customer preferences through innovative product offerings.

The sale and leasing of residential, commercial and industrial real estate is very competitive, with competition coming from numerous and varied sources throughout California.

Our greatest direct competition for each of our current real estate development properties in Ventura and Santa Barbara Counties comes from other residential and commercial developments in nearby areas.

Resources and Raw Materials

In our fresh lemons and lemon packing segments, paper is considered a material raw product for our business because most of our products are packed in cardboard cartons for shipment.

Paper is readily available and we have numerous suppliers for such material.

In our agribusiness division, petroleum-based products such as herbicides and pesticides are considered raw materials and we have numerous suppliers for these products.

Intellectual Property

We have numerous trademarks and brands under which we market and sell our fruits, particularly lemons, domestically and internationally, many of which have been owned for decades.

In our fresh lemons and lemon packing segment, the brands of Limoneira lemons which are of importance include:

Santa®, Paula®, Bridal Veil®, Fountain®, Golden Bowl® and Level®;

these examples of trademarks are owned by us and registered with the United States Patent and Trademark Office.

The material brands of Limoneira lemons include, but are not limited to, Santa®, Paula®, Bridal Veil®, Fountain®, Golden Bowl® and Level®.

These trademarks are owned by us and registered with the United States Patent and Trademark Office.

We also acquired certain lemon brands with acquisitions, including Kiva® and Kachina®, Oxnard Lemon, Uno, Sunny, Trapani, Argentinian Beauty, Natural and Trapani Fresh.

At October 31, 2019 , we had 319 employees, of which 101 were salaried and 218 were hourly.

None of our employees are subject to a collective bargaining agreement.

We believe that our relations with our employees are good.

Research and Development

For our agribusiness division, our research and development programs concentrate on sustaining the productivity of our agricultural lands, product quality and value-added product development.

Agricultural research is directed toward sustaining and improving product yields and product quality by examining and improving agricultural practices in all phases of production (such as the development of specifically adapted plant varieties, land preparation, fertilization, pest and disease control, post-harvest handling, packing and shipping procedures), and includes on-site technical services and the implementation and monitoring of recommended agricultural practices.

Research efforts are also directed towards integrated pest management.

We conduct agricultural research at field facilities throughout our growing areas.

We also sponsor research related to environmental improvements and the protection of worker and community health.

The aggregate amounts we spent on research and development in each of the last three years have not been material in any such year.

Seasonal Nature of Business

As with any agribusiness enterprise, our agribusiness operations are predominantly seasonal in nature.

The harvest and sale of our lemons, avocados, oranges and specialty citrus and other crops occurs in all quarters, but is generally more concentrated during our third quarter.

Our lemons are generally grown and marketed throughout the year, our avocados are primarily sold from January through August, our oranges are primarily sold from January through June, our specialty citrus is sold from November through April and our specialty crops, such as pistachios and wine grapes, are sold in September and October.

Environmental and Regulatory Matters

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The California State Department of Food and Agriculture oversees our packing and processing of lemons and conducts tests for fruit quality and packaging standards.

We are also subject to laws and regulations which govern the use of pesticides and other potentially hazardous substances and the treatment, handling, storage and disposal of materials and waste and the remediation of contaminated properties.

We are also subject to laws and regulations that govern the use of pesticides and other potentially hazardous substances and the treatment, handling, storage and disposal of materials and waste and the remediation of contaminated properties.

Advertising of our products is subject to regulation by the Federal Trade Commission and our operations are subject to certain health and safety regulations, including those issued under the Occupational Safety and Health Act.

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These remedies can increase costs, decrease revenues and lead to additional charges to earnings, which may have a material adverse effect on our business, results of operations and financial condition.

Environmental, Social and Governance (“ESG”)

Limoneira is an agricultural and community development company which, based upon its rich heritage and traditions, seeks not only to maximize value for its customers and shareholders, but also to enhance its legacy by employing sustainable practices in all aspects of operations including stewardship of both its natural and human resources.

The Company recognizes the increased emphasis by shareholders, business partners and other key constituents in recent years on ESG programs that are embedded into

day-to-day business policies and practices.

The Company is proud of its commitment to doing the right thing for communities, the environment and its employees.

Corporate responsibility is an important priority for the Company and its Board of Directors.

We have a long history of strong commitment to being an ethical and responsible company acting with integrity and respect for each other, our communities and the environment.

The Board of Directors tasked the Nominating and Corporate Governance Committee with the responsibility for overseeing our environmental, social responsibility and sustainability programs and practices, including the consideration of potential long- and short-term trends and impacts that environmental and social responsibility and sustainability issues may have related to our business.

Environmental

Sustainability has been a mindset at Limoneira that was instilled by the Company’s founders over 127 years ago and is the basis of our corporate culture at Limoneira.

Not only does Limoneira’s sustainable agriculture address many environmental and social concerns, it offers innovative and economically viable opportunities for Limoneira and other producers, employees, consumers, and policy makers in the entire global food system.

From 2010 to 2019, we achieved and maintained GLOBALG.A.P.

certification by successfully demonstrating our adherence to specific Good Agricultural Practices ("GAP") and other farming standards.

Beginning in fiscal 2020, Limoneira has received the highest rating (Superior) from Primus Labs, the first certification body of the Global Food Safety Initiative (GFSI).

PrimusGFS is focused on the food safety of the agricultural sector products and establishes a series of GAP and other requirements for managing the production, handling, processing and storing operations.

We believe that our certification differentiates us from our competitors and serves as reassurance to consumers and retailers that food reaches acceptable levels of safety and quality, and has been produced sustainably, respecting the health, safety and welfare of workers and the environment, and in consideration of animal welfare issues.

Limoneira adheres to all food safety regulations and follows Good Manufacturing Practices (GMPs) as established in the Code of Federal Regulations (21 CFR 1 10), which have led to the Company’s food safety rating being one of the highest in the industry.

Limoneira has seven solar installations across the Company that produce a total of approximately seven million kilowatts annually and enable us to be approximately 50% off the grid.

We also have a 750kWh Tesla scalable energy storage system that reduces energy costs, improves reliability for demand charges and shifts energy use from peak to off peak times.

Water Management

Water is one of our world’s most valuable resources, and the supply of this natural resource faces continual pressure from growing populations, economic activities, and the increasing need for agricultural food production.

Limoneira takes important steps to protect this resource.

Our water quality and supply is maintained through ground water monitoring, rigorous lab testing, filtration systems, and a network of micro sprinklers.

Limoneira constructed a natural wastewater treatment system using patented technology that is a low carbon footprint project with a series of gravity-fed ponds that circulate and clean 30 million gallons of water annually utilizing natural vegetation, local plants and fine gravels.

Ultraviolet Rays (UV) remove any bacteria in the water to achieve California Title 22 drinking water standards.

Organic Recycling

With the help of one of our tenants, Agromin, Inc., a processor of premium soil products and a green waste recycler, we developed and implemented an innovative organic recycling facility on our land in Ventura County.

This 10 acre facility receives green materials (lawn clipping, leaves, bark and other plant materials) that would typically go to landfills and converts such material into mulch that we spread throughout our agricultural properties to help curb erosion, improve water efficiency, reduce weeds and moderate soil temperatures.

Biological Pest Management

Limoneira was one of the founders of the Integrated Pest Management program in Ventura County.

We have been working with Associates Insectary since 1928 to minimize the use of pesticides by releasing beneficial insects into orchards to control destructive agricultural pests.

Social and Human Capital Resources

Limoneira is committed to protecting the human rights, safety and dignity of the people who contribute to the success of our business.

We also seek to support the welfare of the people who produce, process and harvest the products we sell.

At October 31, 2020, we had 299 employees, of which 104 were salaried and 195 were hourly.

None of our employees is subject to a collective bargaining agreement.

We believe that our relations with our employees are good.

Health and Safety

Limoneira’s overall culture emphasizes the health and safety of our employees and the customers we serve.

Our recent Take a Healthy Stand™ campaign showcases the many ways that lemons can play a role in helping to alleviate serious health issues and our free Nature’s Pharmacy™ app links items found in the produce section of local grocery stores to related health benefits.

Our website offers tips, tricks, recipes and other ways to incorporate citrus into everyday life.

Limoneira has an Illness and Injury Prevention Plan (IIPP) and a Safety Guide and conforms to and follows all regulations and guidelines set forth by OSHA in all facilities and operations.

Where the State’s guidelines, such as Cal OHSA, are different from the OSHA standard, Limoneira adheres to the most extensive guideline.

We have excellent results from our safety programs compared to similar companies within our industry.

In response to the COVID-19 pandemic, we have implemented, and continue to improve, appropriate safety measures in all of our facilities and locations.

The Company offers comprehensive health insurance coverage to all employees and has a supplemental wellness program.

Employee Engagement

Limoneira has always operated on the principle that all businesses are only as successful as their employees – and content employees are motivated employees.

We have a well-trained and retentive labor force with many employees remaining with us for more than 30 years.

We offer competitive pay and best-in-class benefits, including a 401k plan with both profit sharing and safe-harbor matching contributions.

With approximately 87% of our workforce Hispanic or Latino, to avoid language barriers, we provide bilingual company communications and educational programs such as English as a Second Language.

Our new initiative "Every Box Counts" emphasizes our employees’ pride in delivering quality produce from farm to table.

Workforce Housing

We own and maintain 256 residential housing units located in Ventura and Tulare Counties in California that we lease to employees, former employees and non-employees.

Our residential units provide affordable housing to many of our employees, including our agribusiness employees.

Employees live close to their work, which reduces traffic and commuting times.

This unique employment benefit helps us maintain a dependable, long-term employee base.

Community Development and Philanthropy

We have deep roots in our community and each year we collaborate with and devote resources to many worthwhile entities that make our region a special place to live and work.

We fund children’s agricultural education, college scholarships, health and human services, industry, community, cultural events and projects that make our communities more vibrant and sustainable.

Limoneira also founded a federal credit union onsite to provide agricultural employees an opportunity to accumulate savings and create a source of credit.

Management and employees volunteer time and resources for various industry, community and non-profit organizations by serving on their boards and committees and staffing events.

Our Harvest at Limoneira master-planned community continues our long history of building, integrating and sustaining community to promote economic, social and cultural vitality in our community.

Business Practices

Limoneira supports the efforts of the Produce Marketing Association and the United Fresh Produce Association to create an industry-wide framework on the responsible production and procurement of fresh fruit, vegetables and flowers.

The Ethical Charter on Responsible Labor Practices captures this mission and we adhere to the charter’s guiding principles regarding opposing

discrimination in any form.

We live by our Supplier Code of Conduct in how we approach our business.

This Code is global in its scope, and applies to all suppliers and their facilities, as well as our manufacturing facilities.

In order to align with international standards, the Code is derived from the policies, standards, and conventions of the United Nations (UN) and the International Labor Organization (ILO), as well as other leading independent standards such as the Responsible Business Alliance (RBA) and Worldwide Responsible Accredited Production (WRAP).

Limoneira’s Board and Management expect the Company’s vendors, suppliers and their products and services to adhere to similar environmental standards.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business