Macadamia prices are recovering back from historic lows last year. As the 2024 harvest is about to commence in South Africa, there is optimism about the road ahead. But industry experts caution that now more than ever, the sweet spot for macadamia nut prices needs to be established to keep the sector as a whole sustainable over the long term.
Global Macadamias, a large processor and exporter based in South Africa, saw its sales team traverse the globe over the last few months, stopping in all the major macadamia nut markets in Asia, the Middle East, Europe and the United States. “The feedback we received was consistent: demand has increased, leading to higher prices,” said Roelof van Rooyen, director of Global Macadamias.
Indications across the market are that inshell and kernel prices for macadamias are set to rise by between 10% to 30% depending on crackout style, size and quality. Van Rooyen explained after macadamia prices the world-over reached historic low levels in 2023, buyers especially in China rapidly bought up stock, clearing out warehouses. “Since much inshell is being sent to China, demand for this segment is increasing, leading to higher prices. Kernel stocks on the other hand are set to remain low since more product is being sent inshell to China. Many buyers are finding that the supply of macadamias they thought would be there is not, prices are picking up in light of the low starting supply.”
He believed the peak prices of 2018 would likely have diminished demand for macadamias, because at US$6 per kilogramme of inshell, the industry was busy pricing itself out of the market. “Last year’s prices however were not sustainable for growers. But I believe we are now entering a phase of greater stability in supply and demand boding very well for the future of all macadamia nut stakeholders,” van Rooyen said.
Inshell dynamics
Low macadamia prices paid last year has spurred many farmers to sell directly to China, who are the world largest buyers of inshell macadamias. Buyers often offered immediate payments, aiding cash-strapped farmers. However this has brought a concerning dynamic to the sustainability discussion.
Shane Hartman, CEO of Global Macadamias, cautioned against South Africa ‘exporting processing capacity’ to China, to the detriment of the long term sustainability of the local industry. “Meeting China’s demand for macadamias was positive for the industry last year as it helped to clear warehouse stocks. But over the long term South Africa needs to maintain a robust processing industry so that we are not over reliant on a single market, which in the case of China, is increasingly becoming self sufficient.”
Industry outlook
South Africa’s crop is expected to increase by nearly 14% this year, from 78 091 tons dry-nut-inshell last year to 90 135 tons, keeping the country in the number one spot for macadamia nut production.
The article was originally posted on: freshplaza.com
For more information:
Lindi Botha
Tel: +27 82 494 8005
Email: pr@globalmacadamias.co.za
Meet Gene Likhanya, a visionary leader in macadamia farming. From UN peacekeeper to the mastermind behind Madimbo Agri Group, his story is one of wise investment, and patient cultivation. Photo: Supplied/Food For Mzansi
Fifteen years ago, Gene Likhanya kicked off with a dream and 2.5 hectares. Today, his thriving farm stands as a testament to his unwavering spirit. The humble beginnings have given way to a diversified agricultural landscape, where macadamia trees reach for the sun alongside avocado groves and banana stands
In a new Farmer Mentor podcast on Farmer’s Inside Track, Gene Likhanya, the farm director of Madimbo Macadamia, shares his journey into macadamia farming despite having doubts. His inspiring success story is a testament to the power of smart moves and diversification in agriculture.
About 15 years ago, Gene Likhanya started farming with Macadamia trees on a modest 2.5 hectares in Limpopo. Today, his farming enterprise extends across an impressive 100 hectares, boasting a diversified business portfolio that includes plant-hire machinery and equipment, a macadamia nursery, and the cultivation of avocados and bananas.
More than 20 years ago, Likhanya was inspired by his uncle who left the private sector to venture into farming. At the time, macadamia farming was foreign to villagers in their region.
“The villagers thought he was crazy and that he had lost his marbles,” he explains.
A smart farmer
Like his uncle, Likhanya is not afraid of the unknown, so he too decided to give macadamia farming a go with money he had saved as a UN peacekeeper.
However, Likhanya was smart. While waiting for his macadamia orchard to blossom and make money, he generated cash with bananas and butternuts.
“Over time, our business has grown and diversified. Initially focused on macadamia production, we expanded into plant hire machinery and equipment, facilitating quality land preparations. Additionally, we entered consulting, offering mentorship, business planning, and irrigation design for a fee,” Likhanya shares.
Madimbo Macadamia also has a nursery for plant and seedling production, and they also grow avocados and bananas.
Getting here has been no joy ride. Likhanya has paid his dues. He often reflects on his early days and remembers how he did not know how to work the land, being clueless about budgeting for debushing and soil balancing.
“Acquiring land may seem straightforward, but the reality hits when you’re faced with the challenge of accessing water and obtaining the necessary permits for irrigation systems. I didn’t know how to do these things back then, but I know better these days.”
The article was originally posted on: foodformzansi.co.za
Giraf Macadamia Drink is one of the brands offering a milk-alternative for especially the vegan market and unlocking more value-adding opportunities for macadamia nut producers.
Photo: Lindi Botha
Macadamia prices paid to farmers reached rock bottom last year, leading to many farmers seeking alternative markets for their nuts rather than the traditional approach of selling to local processors.
This is however pushing the split between nut-in-shell (NIS) sent to China and kernel sold elsewhere unfavourably towards the former.
Speaking at the AmberMacs Expo, held in White River, Mpumalanga, Philip Moufarrige, managing director of AmberMacs, cautioned that an overdependence on the NIS market would place South Africa in a precarious position.
“We will be giving any marketing power we have away to the Chinese if we don’t diversify our markets and spread risk.”
He said in addition to selling a substantial portion of the local crop to kernel markets spread across the world, value-adding would be the biggest driver of the industry’s sustainability.
“South Africans are very innovative and resourceful; we are already seeing a range of products coming onto the market (flours, butters, milks, nougats) and there is far more scope to create a sizeable value-added industry in South Africa. This is how we will grow the market.”
With prices dropping below the point of profitability for many farmers, selling NIS directly to international buyers knocking on from gates has been tempting, since prices offered are slightly higher than those offered by processors in South Africa. But he said this was a short-sighted and potentially harmful action since it would cripple the industry in the long term.
“Farmers need to ask themselves what will happen when the buyer disappears with their nuts but fails to pay them, or if the shipment is rejected due to quality issues. These are issues I have faced as a processor – imagine if it happens to your whole crop.”
Economists speaking at the expo predicted that prices would recover this year by at least 15% on the back of improved economic conditions and low stock levels. Juan Winter, managing director of Source BI, said that on average, farmers should be getting around R38/kg of NIS this year.
He noted most of the macadamia trees in South Africa were not yet in full production, meaning that volumes would rise significantly in the coming years, placing pressure on prices. “The wave is only starting now.”
Rising input costs were also affecting income: farmers were receiving nearly R204 000/ha in 2019; this dropped to just over R82 000/ha last year.
“Prices have sky-rocketed while income has dropped. We’ve also seen a decrease in yields, with the average farm in 2019 yielding 3 051kg/ha, while last year it stood at 2 427kg/ha. All these factors influence farmers’ ability to repay loans and stay in business.”
With prices expected to rise, Winter predicted that income should rise to nearly R122 000/ha while production costs would remain stagnant at R67 000/ha.
Winter too cautioned against an overreliance on the Chinese market and said short-term gains in prices needed to be balanced against long-term sustainability.
Both highlighted India as a potentially lucrative market, but much work needed to be done to gain favourable market access.
The article was originally posted on: farmersweekly.co.za