Over the past two seasons, macadamia nut farms have encountered financial difficulties due to falling prices and rising input costs, with little expectation of immediate improvement. This situation necessitates a reassessment of orchard management strategies to ensure sustainability. The global market for macadamias has seen a decline in prices following three years of consecutive decreases post-COVID-19, attributed to reduced consumer spending on these luxury nuts.
Orchard expansions, which occurred globally when prices were rising in the mid-2010s, are contributing an extra 10% annually to global stocks, exerting additional pressure on the market. Despite these challenges, demand is showing signs of recovery, as noted by Roelof van Rooyen, director of Global Macadamias. "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." However, Van Rooyen warns that prices may not return to the peaks of 2018, though he anticipates more stability as the market matures and product range inclusion expands.
Currently, farmers are facing financial constraints due to the adverse effects of the past three years. Juan Winter, managing director of agriservices company Source BI, highlights the compounded impact of skyrocketing input costs and low prices. "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," Winter explains. This outlook is based on the age distribution of macadamia trees in South Africa, with a significant proportion not yet at full production, thus limiting income potential.
The Source BI benchmarking tool reveals that the largest group of trees, constituting 23%, is between five to six years old, with 18% around eight years old, and 13% only four years old, indicating a period of waiting before these orchards reach peak productivity.
Source: Farmers Weekly