Macadamia Market Recovery

Are we at the turning point?

May 29, 2024

2022 Headlines...

"The macadamia industry has offered highly attractive investment opportunities during the past few years. With prices increasing significantly and an apparently insatiable demand, the crop has provided good returns for farmers..." - Farmer’s Weekly (South Africa)

2023 Headlines...

"After decades of growth, there are now concerns that demand for macadamias might have peaked. Prices have fallen for the first time in almost ten years as supply has increased..." - Adama (Syngenta Group)

The 2024 reality...

A multitude of industry-wide factors are at play this season - as always. And it’s a delicate game of tug-of-war between market forces.

The market experienced a significant downturn in 2023 due to low prices and reduced yields. But 2024 hints at a promising rebound. The current sentiment is cautiously optimistic. Positive signs of recovery exist though; all while uncertainty seems to lurk around every corner.

AUSTRALIA - Macadamia producers have forecast a crop increase of 16% compared to the previous year. Reaching about 56,000 tonnes in-shell at 3.5% moisture. The improvement driven by favourable growing conditions and a positive grower sentiment. A smaller crop produced in 2023 has also normalised levels of kernel inventory, heading into 2024.

“2024 is looking like a better season, with good conditions experienced during flowering ... While recent rainfall in some regions will make the start of harvest a little challenging. With good growing conditions we expect to see an improvement in kernel recoveries, which is very encouraging.”
- Clare Hamilton-Bate, CEO at Australian Macadamia Society

SOUTH AFRICA - The World's largest producer of macadamia nuts, is anticipating a 14% increase in production. From 78091 tons dry-nut-in-shell last year, to 90135 tons in 2024. This would keep South Africa in the number one spot for macadamia nut production.

The Global Macadamias sales team travel has been traveling extensively over the past few months. As a prominent processor and exporter located in South Africa, they keep a close eye on market trends and sentiment. Their team visited key macadamia nut markets in regions such as Asia, the Middle East, Europe, and the United States. They believe we are now entering a phase of increased stability in supply and demand. This bodes well for the future of all macadamia nut stakeholders, especially as they recover from the historic lows of 2023.

"The feedback we received was consistent: demand has increased, leading to higher prices," reports Roelof van Rooyen, Director of Global Macadamias.

Globally, the market is experiencing increased demand, particularly from the U.S., China, and Europe, leading to a general price increase of 10% to 20%. Ultimately, this depends on crack-out style, size, and quality. Similar to the situation in Australia, much of the 2023 inventory (in-shell inventory) bought by China, has made for a low starting supply. With relative scarcity and a general increase in demand, prices are starting to rise.

Although the South African macadamia industry’s most important export partner, China, has dramatically ramped up domestic planting ...with 2020’s estimate of 240'000 projected hectares reaching 300'000ha by 2030... low macadamia prices last year prompted many farmers to sell directly to China.

The Chinese demand for healthier snacks has significantly contributed to this demand. This in-shell demand has created a tighter supply for kernels, as more nuts ship as in-shell rather than processed for kernels. While reduced kernel supply increases prices... vast export quantities of in-shell could undermine local industry sustainability.

"Meeting China's demand for macadamias was positive for the industry last year as it helped to clear warehouse stocks. But over the long term South Africa needs to maintain a robust processing industry so that we are not over reliant on a single market, which in the case of China, is increasingly becoming self sufficient," cautions Shane Hartman, CEO of Global Macadamias.

KENYA - Thanks to favourable weather conditions improving both yield and quality, is expected to recover with a 12% production boost in 2024 compared to the year prior. However, with shifts in market dynamics, export policy changes have been impacting local pricing structures.

China's imports from Kenya have notably surged, growing 20.8 times in the past three years . This growth underscores Kenya's rising prominence in the international macadamia market. A significant portion of its produce being exported, with 93% of its total output being sold to overseas markets. The main export destinations include: the U.S., Germany, Netherlands, mainland China, and Hong Kong.

Consumer Awareness and Nut Quality

The World Macadamia Organisation is doing well to drive macadamia awareness. This includes awareness around health benefits, and around what makes this one of the best (if not the best) nuts around. A strong marketing push from The House of Macadamias, and Dan Mace have also made a big impact on awareness both in South Africa and in areas such as the US. Dan is a creative and visionary, Filmmaker, Youtuber, and Chief Creative Officer for Beast Philanthropy.

Macadamias are a superfood that forms just 2% of the total nut market, so while there is cause for short-term concern, there is certainly room for recovery long term, if a sound marketing strategy is employed. - Jillian Laing, CEO of the World Macadamia Organisation (as noted in 2022)

As consumers become educated in what a high quality macadamia nut is all about, they expect to get quality produce for their spend. And as quality will fetch the best prices this year, and in the seasons to come, it's worth a farmer's while to produce a quality crop.

Excluding consumer demand and production supply, several factors are contributing to quality yields. Namely sound practice, new technologies, and smart farming methods. These factors together influence crack-out style, size, and the kernel quality of macadamia nuts to a large extent.

Common Knowledge + New Technologies

In terms of output and quality; which factors, technologies and farming methods are important for macadamia farmers? Below I explore a few that come to mind.

Factors

Climate and Soil Conditions:

Optimal climate conditions with well-distributed rainfall and mild temperatures are ideal for macadamias. The ideal temperature for macadamia nut farming is between 16 and 25C, and the nut quality is superior when grown at an altitudes of 600m or lower.
It is vital to consider soil characteristics such as fertility, pH levels, organic content, and water retention. Macadamias prefer deep, fertile, soils with a pH of 5.0-6.5. It's important to consider soil samples when planning a farm and selecting the land intended for growing macadamia trees.
It's also important to ensure that soils in any macadamia farming area are not only as deep as possible, but well-drained. Well-drained, fertile soils rich in organic matter enhance nut quality, and reduce the risk of soil borne diseases like Phytophthora.

Orchard Management:

Regular planned pruning to manage tree height and shape helps ensure good light penetration and air circulation. Both of which are vital for good flowering, nut quality and size. Good air circulation furthermore lowers the risk of pathogen issues in the canopy.

“Pruning the fruit bearing trees is crucial for opening up the canopy to allow sunlight in, to improve spray efficacy and allow for the development of the bearing wood for the next season’s crop. - Andrew Sheard, Mayo Macs

Proactive work focused on reducing orchard variance across a host of metrics is key. This ensures a more homogenous orchard regarding tree health, and canopy characteristics. Low variation orchards are easier to manage, and ensure crop estimates are not a shot-in-the-dark set of guesstimates.

Technologies

Precision Agriculture:

Remote sensing - Using drones and satellite imagery to monitor tree health and stress. Drone data specifically can also provide insights into soil health. These bird's-eye view maps and statistics help farmers to make data-backed decisions. Quick interventions are the name of the game. And follow-on surveys gauge intervention effectiveness. In-Data interpretation based field work might include changes to irrigation, fertilisation, and pruning. Drone data can ultimately help to enhance nut size and quality when used properly. Each drone survey is in essence a data investment. Real time value as well as important archival information.
A certified drone pilot conducts surveys over macadamia orchards. Image source: Agmo Drone Services
Smart sampling - Drone data provides the means to plan precise in-field sample points. Areas of concern are assigned waypoints for inspections and scouting. The "smart sampling" use cases include: soil, leaf, and profile-pit sampling locations. Sample route waypoints are tailored on either zonal or per-tree information, or auto-generated.
Variable Rate Applications - An innovative way to apply inputs, becoming increasingly popular. Sprays, Granular’s, or organics are variably applied according to a drone-data metric datasets. Zonal canopy area maps, tree volumes, stress metrics, and so forth. In this way, farmers are able to decrease input costs substantially. All while improving orchard homogeneity. Vehicle options include spray rigs, granular spreaders, spray drones, bio-spreaders, and autonomous units.
Examples: Aerobotics (drone data), John Deere (spraying), Red Ant (granular), DJI Agras T50 (spray drone), Agri-Spread (Bio-spreading), GUSS (autonomous)

Automated Irrigation Systems:

High-tech irrigation systems such as drop irrigation, ensure optimal water distribution. Reducing water stress on trees and improving nut development and quality. Smart irrigation systems can adjust water application based on soil moisture levels.
In-field strategies used to determine soil moisture (and scheduling irrigation accordingly) are commonplace. Tensiometers and capacitance probes, etc. Furthermore, monitoring of the weather conditions. (i.e. the variables that influence tree evapotranspiration). Weather Stations add an additional layer of data, enabling precise watering strategies. Example: Netafim
Nutrient Management Systems:
- Advanced soil testing and nutrient management software. These can help farmers apply the right amount of fertilisers, at the right time. Strategic nutrient management improves the overall health of the trees. Nutrient management software can also utilise remote sensing information and inform VRA strategies. Example: Traction
Technological advancements are paving the way to better more precise practices. However, in the context of Macadamia farming specifically we are still in the early days. Select few are taking advantage of all the new-age innovations out there. But the vast majority are slow to catch-on.

This is a real pity, as Macadamia trees respond well to targeted and precise interventions. And due to their growth habit, and cultivation areas, are well suited for remote sensing. This is especially apparent with regards to water use.

An excerpt from a recent publication on the topic sums it up well:

"A number of promising technological innovations could further help to improve the sustainability of water management in macadamia orchards. For instance, better weather forecasts through improved climatic models would help to plan irrigation accordingly. Similarly, the increasing availability of more affordable weather stations and soil moisture probes shall facilitate the on-field monitoring of climatic conditions and soil water dynamics.
Remote sensing and especially aerial photography are likely to play an increasingly important role, since they are proving to be very useful and labour-friendly tools to detect problems in the orchard.
Farm management apps and portals will facilitate sharing information between macadamia growers and consultants. ...In fact, according to macadamia expert Barry Christie, although increasing, the adoption by macadamia growers of most of the above-mentioned innovations is still low.”

- Management Options for Macadamia Orchards with Special Focus on Water Management and Ecosystem Services (Sina M. Weier, Et al.)

Farming Methods

Integrated Pest Management (IPM):

Pest and disease control is a crucial aspect of macadamia nut farming. Macadamia trees are susceptible to various pests and diseases. These risks can significantly impact the yield and quality of the final crop.
Macadamia specific IPM strategies, include biological control, selective pesticide use, and cultural practices. These help manage pest populations and reduce damage to yields. Advanced training courses help farmers in utilising the latest in scouting techniques. While guided scouting platforms and mobile applications increase efficiencies and efficacy. Examples: Centre for Excellence (training), Land Diary (guided scouting)

Cover-cropping and Mulching:

Using cover crops and organic mulches helps to maintain soil moisture. Improved soil fertility, and a reduction in weed competition. Practices contribute to improved water use, and enhanced soil health over time. Healthier soil makes for healthier trees and better nut quality and yields.
Cover cropping not only protects the soil, but helps the land to sequester rainfall. This prevents excess run-off, as well as topsoil erosion. Cover crops can easily be turned into mulches by rolling, or "mowing and blowing" to the sides of tree rows. Examples: Ritlee (mowers), Weed Discs (coconut coir mulching discs)

Regular Harvesting Practices:

Timely and frequent harvesting reduces the risk of fallen nuts becoming contaminated or damaged. Additionally, proper handling and storage post-harvest are critical to maintaining nut quality. Nuts with husks removed should cure in drying bins on-farm for at least five days. And nuts delivered to the processing plants or depots should be at a moisture content (MC%) of 10% or less.

“Mature nuts should be harvested every 7-10 days and de-husked on the same day. Nuts left in their husks can increase their temperature significantly if left for longer than 24 hours.” - Andrew Sheard, Mayo Macs

Overall, the outlook for the macadamia nut market in 2024 is positive. Rising production and recovering prices indicate a period of greater stability ahead. We may see significant growth for the industry in the coming months as a result.

By integrating technologies, and farming methods, macadamia farmers can enhance the crack-out style, size, and quality of their nuts. Ultimately leading to higher market values and better returns on their efforts on-farm.