Managing macadamia production when margins are low

Macadamia nut farms have been in dire straits over the past two seasons as prices have dropped and input costs have risen. With little relief on the horizon, orchard management needs to be revised to maintain sustainability. Lindi Botha looks at the options available to farmers to reduce their costs.

- Lindi Botha

Global macadamia prices experienced three consecutive years of decreases post-COVID-19 as consumers had little excess to spend on this luxury nut. Orchard expansions, done en masse worldwide when prices started climbing in the mid-2010s, are adding an additional 10% per annum to global stocks, creating further pressure on the market.

However, demand is recovering and, according to Roelof van Rooyen, director of Global Macadamias, farmers should start feeling some relief this year. "The in-shell market saw much movement at the start of the year, as the Asian appetite was whet by low prices. With these stocks mostly sold for the season, the attention has now turned towards kernel, bringing good demand for this important aspect of the supply."

But Van Rooyen cautions that prices are unlikely to reach the highs seen in 2018, although farmers can look forward to greater stability, as this market matures amid volume increases and expanding inclusion in product ranges.

Right now, however, farmers have little cash to bank on as the last three years took their toll. Juan Winter, managing director of agriservices company Source BI, notes that farmers have faced big losses since skyrocketing input costs compounded the effect of the low prices. And it does not appear as if this part of the equation will rectify itself anytime soon.

"Production costs for 2024 should be similar to the past two years, averaging around R69 000/ha. As things stand, it should be another four years of struggle before things start looking better," says Winter.

He bases his prediction on the fact that the vast majority of trees in South Africa have yet to reach full production (year seven), meaning that income, if any, is still low.

The Source BI benchmarking tool shows that the biggest pool of trees in South Africa, at 23%, is around five to six years old. Some 18% of trees are around eight years old, while 13% are only four years old.