Note 5 - Inventories

9 Months Ended

Sep. 30, 2017

(

)

INVENTORIES

Inventories consisted of the following (in thousands):

	September 30, 2017								December 31, 2016
	Orchard		Branded Product			Total			Orchard		Branded Product			Total

Wet-in-shell	$	360	$	-		$	360		$	919	$	-		$	919
Dry-in-shell		3,143		-			3,143			4,527		-			4,527
Macadamia nut kernel		-		1,433			1,433			-		2,362			2,362
Finished goods		-		1,391			1,391			-		1,902			1,902
Farming supplies		114		-			114			135		-			135
Packaging, supplies and ingredients		-		510			510			-		584			584
Allowance for shrink and obsolescence		-		(77	)		(77	)		-		(136	)		(136	)
Total inventory, net	$	3,617	$	3,257		$	6,874		$	5,581	$	4,712		$	10,293
Deferred farming cost	$	736	$	-		$	736		$	-	$	-		$	-
Total inventory and deferred farming costs, net	$	4,353	$	3,257		$	7,610		$	5,581	$	4,712		$	10,293

Orchard costs (e.g., irrigation, fertilizer, pruning and depreciation) related to nuts sold under nut purchase contracts and services provided under farming contracts were expensed to cost of revenues based on management

’s estimate of the costs expected to be incurred to produce macadamia nuts sold during the interim reporting period, with the difference between costs incurred-to-date and costs expensed-to-date included in inventory as deferred farming costs. Deferred farming costs historically accumulate during the

first

and

second

quarter of the year and are expensed or added to inventory over the remainder of the year. At

December 31, 2016,

all farming costs

not

expensed to cost of goods sold were allocated to inventory.