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Crossroads are encountered by all businesses, be they micro or global and SugarBytes has navigated a couple to this point. Recently, we have faced a full-on metropolitan intersection, rather than a dusty little crossroad.
The support of this amazing farming community has provided the inspiration to push through the challenging decisions and be brave enough to embark on an exciting journey of diversification.
It is therefore with great excitement that we announce that SugarBytes will hence forth be known as TropicalBytes as it brings you stories that cover all crops feasible in this sub-tropical climate we call home.
The mission is still to bring farmers stories that will serve to enrich and encourage their own agricultural endeavours and I am still going to rely on those selfless leaders to open up their operations so that we can Learn – Teach – Share what we find there.
As it is important that I know just a smidgen about the crop in focus, I won’t be jumping from crop to crop. We’ve spent about 2 ½ years in sugar and now we’ll start to cover macadamias. When it comes to the point where the added value of the articles is diminishing, we’ll move on to another crop.
To kick off, I am going to do my best not to repeat too much of the article I wrote almost a year ago, in July 2018. http://www.sugarbytes.co.za/2018-12-macs/ but need to respectfully introduce the nut everyone is talking about; Mac.
If I was going to meet, and get to know Mac, I had to find out where he was. Mac Headquarters, in SA, turns out to be an organisation called SAMAC. South African MACadamias. SAMAC is the body that oversees the industry. They collect industry data and provide stats to their members. All mac farmers, marketers, handlers etc belong to SAMAC. By belong, I mean that they are registered with them, pay a subscription and receive industry information and support in return. Growers produce the nuts, Processors convert the nuts into marketable form, Marketers sell the nuts … Handlers are entities that support the growers and take the nuts from them when their part has been played. SAMAC lists 13 registered Handlers.
SIZE OF THE MARKET
This has been a considerable topic in the dash-to-mac. Very few things in life are infinite so when will the mac market be satiated and where are we now?
Usually ‘size’, in this industry, is measured in tonnes of nut-in-shell produce. As the ‘dryness’ of the product affects the weight, a standard 1,5% moisture content is referenced. This moisture content level relates to the kernel. SAMAC estimates that 58 500 tonnes will be produced, in SA, in 2019. That is 5% more than 2018, which ended off on 56 500 tonnes. About 30% of this weight is actually nut as the shell accounts for 70% of the nut-in-shell product. Globally, there has been a growth of 40% in macadamia production over the last 5 years and that is anticipated to accelerate to 100% for the next 5 years. So, there’s no doubt about the growth in supply.
On the consumption side, currently the demand continues to outstrip the supply. There may be a point where the two come in line with each other, especially when China’s substantial orchards come into production over the next few years and that market supplies its own product, thereby reducing the demand internationally. Macadamias currently occupy 1 to 2% of the world nut market which is fascinating as it is an incredibly versatile nut and therefore has many potential markets/uses. The prevailing thought is that macadamias are really at the foot of their growth curve, with so many market opportunities that have neither been adequately developed or satiated. So – NO, it is not predicted that demand for macs will slip in the foreseeable future.
Will there be price shifts? There’s no short answer to that because price fluctuates with the market forces of demand and supply but, as we have established that both demand and supply are growing, it is realistic to expect prices to remain good, bar any unexpected market shifts. It is also thought that macs are ‘price inelastic’ which is an economic term for a product or service whose price is not severely affected by variations in demand or supply. Perhaps that is because it is generally a luxury item whose consumers are not the type to question price?
Another factor in the sustainability of this market is humanity’s general gravitation towards plant-based food sources, especially amongst the high per capita income sector. This will continue to drive demand for many years to come. I imagine that, if their demand is met ie: supply catches up with demand, prices may drop a bit before stabilising in the short term. The slightly lower prices could possibly unlock demand in the middle-income sector and ignite a new demand, which could see prices increase slightly until the same pattern is realised ie: demand is met, over-supply results in lower prices and finally, the market settles. But, it is completely feasible that demand for these healthy, versatile, alternate-protein, convenience snacks will continue to grow and sustain the demand, and current price, well beyond our lifetimes.
Another stimulant to demand will be the cleverly crafted marketing campaigns that will seek to stimulate demand down the line, in anticipation of the impending catch up with demand. SAMAC is already collaborating with mac organisations in other countries to create a non-origin marketing campaign that will sustain long term demand.
World production continues to grow at a substantial pace but South Africa is not alone in meeting the world’s demand for macs. China’s orchards reach bearing age over the next few years, and Kenya and Australia’s industries are also booming – 2018 international production figures below.
|South Africa||56 550|
|World Total||223 537|
While global demand exceeds supply, the other producing countries are of little concern but the day is coming when buyers are more selective. We need to prepare to be the preferred suppliers by ensuring that only top-quality value for money is what leaves our shores. Securing top position as the best country from where to source macs internationally will play a big role in our industry’s success going forward. Knowing that our South African farmers are amongst the very best in the world gives reassurance that we can retain the top spot and excel for generations to come.
Perhaps that is enough on the general market and it’s time for some detail:
TropicalBytes will continue the same successful formula of interviewing top farmers with the purpose of learning from their experiences. Only now, the farmers will remain anonymous. As much as I have loved presenting the personal angle, it’s time for a new take; one that focuses more on the technical aspects of farming. The topics we will cover will include, but not be limited to:
- Cultivars – characteristics
- Producing trees – nurseries, grafting, rooting etc
- Orchard preparation and planting
- Pre-production care – moisture, food, protection
- Pre-production sustainability strategies – inter-row crops
- In-production care – moisture, food, protection, pruning
- Maximising yield – quantity and quality
- On-farm processing – dehusking, polishing, drying, sorting
- Support facilities – administration, anti-theft, technical support, strategic support
If anyone has suggestions of additional topics, please just drop me a mail and I’ll be sure to assess it. email@example.com
For this edition, I am going to cover a little on Cultivars, but first need to clarify some of the industry jargon:
Financial success, as a mac farmer, is decided in terms of the macadamia KERNEL and your ability to produce quantity (big yields) of a high quality (sound produce) to meet customers needs (size, whole or pieces, taste) within your environment.
- Quantity is measured in terms of Wet-in-Shell (WIS), Dry-in-Shell (DIS) and Total Kernel Recovery (TKR).
- Quality is measured in terms of Sound Kernel Recovery (SKR). The relationship between all these measurements is shown below.
- Customer needs vary depending on the use eg: Chinese people seem to enjoy nut-in-shell snacks, in Japan there is a demand for small kernels that are then coated in chocolate. Europe enjoys large, whole kernels. Cereal manufacturers are happy to take in pieces …
- Your Environment encompasses your farm, it’s climate, soil, natural resources, altitude etc; all of which will impact your decisions and optimise your results.
Most farmers are removing the moisture from the nuts before delivering them to the factory. The more drying the factory has to do, the more they charge. Most cracking is done at the factory so it is important that the shells make up as little as possible of your delivery ie: if you are delivering tiny nuts in thick shells, your income is going to go down. This is your Total Kernel Recovery (TKR). And finally, you are remunerated for Sound Kernel only so any unsound nuts will further erode your returns. So, lots of healthy, large, good-looking, tasty nuts with thin shells is the aim. There is no one cultivar that delivers perfectly on all of those requirements, in all environments, so assessing the options and picking the best players for your team is important.
Below are short info sheets on each of the top 10 cultivars currently featuring across our South African landscape. All this information has also been placed into an A1 (594mm across x 840mm high) poster, view here (link to pdf file). If you would like a high-resolution version of this poster, it is available free of charge. We can get it to you one of two ways:
- Physically – Postnet to Postnet, including an A1 poster tube, costs R144.
- Digitally – I can email a high res file that you can have printed at a local print shop in your town.
If you’d like either of these options, just drop me an email with your details – firstname.lastname@example.org (please cc email@example.com in case there are any “new web page issues”)
Meet the Macs:
Next edition we’ll be meeting our first highly successful, commercial macadamia farmer from KZN’s South Coast.