"This is not a vote of no confidence in Subtrop."

South African macadamia association secedes from umbrella body

The Southern African Macadamia Growers’ Association (SAMAC) has overwhelmingly voted to leave Subtrop, the umbrella organisation that also includes the South African avocado, mango and litchi growers’ associations.

Together with the South African Avocado Growers’ Association (SAAGA), SAMAC contributes about 80% of Subtrop’s budget through membership fees and a statutory levy. Macadamia producers and processors have felt that they are not getting their contributions’ worth in the form of research and development, technical services and marketing. A proposal for a stand-alone macadamia association was put to members in December and at the end of January the four major macadamia-producing regions voted with an 81% majority to leave Subtrop, effective from 1 March 2018.

Barry Christie, operations manager for macadamias at Subtrop, explains the decision thus: “There was a perception that SAMAC’s membership fees paid to Subtrop, approximately 40% of SAMAC’s budget, was too much, leaving inadequate funds for research, generic marketing and other important projects. It was put forward that the South African macadamia industry, a R4 billion (about €290 million) industry, will be able to function better on its own. The main reason is probably that our members feel the need for an organisation 100% focused on macadamias.”

“This is definitely not a vote of no confidence,” says Ian Williams, SAMAC representative for the Lowveld (Mpumalanga) region. “Subtrop was the correct vessel for SAMAC for a long time, but that time has come to an end. We’re a R4 billion industry aiming to be a R8 billion (about €580 million) industry over five years. We now need dedicated staff to support the industry.”

Christie believes that, in the long run, service delivery will improve through a stand-alone macadamia organisation. The organisation will be able to devote all its resources to a number of aspects, among them negotiations with China for more favourable import tariffs.

A source within the macadamia sector says that the industry is now “in chaos” because the macadamia industry had expected too much, too quickly from Subtrop. “They wanted Subtrop to pull a rabbit out of a hat to, for instance, get the current import tariff to China reduced. They were getting impatient but the macadamia industry is a very young industry and they will realise that they don’t have Subtrop’s established networks and experience.” 

Subtrop CEO, Derek Donkin, was unavailable for comment but is quoted in a SAMAC press release as expressing some misgivings: “With SAMAC’s current levy income, the organisation will probably not be able to achieve more as a stand-alone organisation, but there appears to be a willingness amongst growers to increase their contribution to SAMAC.” Barry Christie is of the opinion that levies should be at least three times higher than currently but that members would be amenable to such an increase.

The Southern African Mango Growers’ Association chairperson Jaco Fivaz says the decision was the wrong call. “A lot of work was done to lobby for the whole industry at the level of government, the Perishable Products Export Control Board (PPECB) and research institutions. Subtrop has cultivated a good relationship with government and it would be a pity if the organisation fragmented.” He points to the advantage of sharing Maximum Residue Level (MRL) data from the EU among all members of Subtrop, whereas now SAMAC will have to procure and process that information for itself. Furthermore, he says, the situation creates employment insecurity among Subtrop staff.

Macadamia processors currently pay a statutory levy of 23c (€0.07) per kg nut in shell on behalf of growers and according to governmental regulations, 70% of this levy must go towards “the objectives of the levy” which, as SAMAC sees it, are the objectives of the macadamia industry. Of the remaining 30%, 20% must be spent on creating opportunities for black South Africans within the sector and 10% on administration. SAMAC represents more than 500 growers.

Another industry source, who regards the secession as a positive development, says that after administrative costs, only about R1.8 to R2 million (€130 000 to €144 000) remain for research into, for instance, combating stinkbugs which are responsible for kernel damage that causes annual losses of more than R220 million (almost €16 million) to the industry. 

The South African Avocado Growers’ Association was not available for comment due to their annual research symposium, underway in Tzaneen.
SAMAC was one of the four founding members of Subtrop in 2006, at a time when the macadamia industry was approximately a third in size of what it is today.

Expectations of SAMAC, striking out on its own, will be high. Ian Williams: “The new stand-alone SAMAC will have its work cut out to prove itself to farmers but I'm confident that they're up to the task.”

For more information:
Barry Christie
Southern African Macadamia Growers' Association
Tel: +27 15 307 3677

Jaco Fivaz
Southern African Mango Growers' Association
Tel: +27 15 307 3677

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