South Africa's macadamia industry is moving from expansion to consolidation, with tighter margins and structural pressure on the value chain. Speaking on 5 February at the Ambermacs Macadamia Expo in White River, Mpumalanga, Duncan Allen, executive head of Green Farms Nut Co, warned that rising exports of in-shell nuts to Asia could weaken domestic processing capacity.
Allen said the export of high-cracking-value nuts shifts value addition offshore. "If we export our nuts with the best cracking values and keep the lower-margin material here, South Africa loses the most valuable part of the value chain," he said. "We then become just a supplier of an unprocessed commodity."
South Africa remains the largest global macadamia producer, with most volumes exported to Asia, Europe, and North America. The sector historically focused on local cracking, sorting, and kernel exports. However, demand from Asian buyers for in-shell nuts has increased.
Allen described this shift as a "one-way door". "Once local processing capacity becomes underutilised, fixed costs start to bite, factories close, skills disappear, and banks downgrade assets. Once buyers get used to in-shell nut prices, kernel margins won't easily return," he warned.
He acknowledged that offshore processing can offer short-term relief when capacity is stretched, but stressed it should not become the dominant channel. "For the long-term resilience and bankability of the industry, it is essential to retain kernel processing in South Africa."
The sector expanded rapidly between 2010 and 2022, with Africa's macadamia orchards increasing from around 17 000ha to more than 80 000ha. Investment in orchards and processing was supported by high prices and accessible finance. Since then, weaker demand, economic pressure, and rising supply have reshaped the market. "The biggest mistake we can make is to think prices will simply return to the peaks of the past. If that happens, it would be a miracle. In the short term, profits must come from efficiency, not price recovery," Allen said.
He expects consolidation to accelerate between 2026 and 2028, with asset write-downs and farm sales. Supply growth is forecast to stabilise by around 2032. Producers in established regions such as KwaZulu-Natal and parts of Mpumalanga and Limpopo, with lower cost structures and improved cultivars, are likely to remain active.
Allen stated that operational efficiency will drive the next phase. "The next phase won't be driven by brilliant ideas. It will be driven by hard, necessary efficiency gains," he said. Precision management, irrigation scheduling, fertiliser optimisation, and improved cracking percentages were highlighted. Market development and value-added kernel segments were also identified as revenue levers.
The message to growers was clear. Recovery depends on cost control, maintaining local processing, and disciplined market development rather than price rebound.
Source: Farmer's Weekly
