Despite indicators showing that world prices for macadamia nuts may soon firm up, Kenyan farmers may not benefit because of poor crop quality.
Producers project that macadamia nut prices are set to improve in coming months. Australian macadamia producers, accounting for about 45 per cent of global supply, are seeing significant new enquiries for the nuts, although Australia's crop is down by at least 10 per cent this year, largely due to weather conditions.
Macadamia nuts hit record high prices in 2005, thanks to strong demand driven by health trends in the US. But prices of the nut, already the most expensive of all tree-nuts, plummeted last year, shaving about 40 per cent off the price.
Local prices of the nut fell by 75 per cent, from Sh80 ($1.20) last year to Sh20 this year, causing worries among beneficiaries. Daniel Kanyugo, a manager at Kenya Nut Company, said the sharp fall in local prices was because "Farmers harvested premature nuts and those we bought were returned due to their poor quality." Premature nuts have low oil and high sugar content and are usually discarded during processing.
An Australian expert said the market will benefit from both new interest in the nut generated by lower prices and a reduced output in major producing countries. "I expect prices to be firming up in the second half of the year and to be at a reasonable level by the start of the next season," he said.
In South Africa, new plantings will bring the country's output to a similar level with Australia, up from about 4,000 tonnes of kernel to 12,000 in 15 years time. In Australia too, farmers are flocking into the macadamia industry, setting up new orchards to diversify from other more labour-intensive crops. In one area of the east coast, around the city of Bundaberg, farmers are expected to plant about 1 million more trees in the next three years, doubling their current orchards.
Patrick Logue, industry development manager at the Australia Macadamia Society, said the industry has succeeded in reducing labour needs from five labourers per 10 hectares five years ago to just one person per 20 hectares, thanks to increased mechanisation and innovative equipment. "This makes us competitive with third world countries," he said.
But producers are under pressure to boost consumption. Currently, the market is too dependent on the US, which accounts for half of global demand, said an official of the Australian macadamia representative body, AMS. "Unless we spread our markets more broadly, we're going to have to be very careful about prices. As soon as the nut-in-shell price goes over $3 then the Americans stop buying."
An Australian processor said kernel prices must rise by 20 per cent or more in order that growers have a viable future. However, caution should be exercised so that they do not reach the highs of recent years, which led to a consumer backlash that slowed demand at the retail level.
But as the least consumed of all nuts, some say there is huge potential for growth in macadamia demand. Several European markets still barely recognise macadamia nuts and increasing wealth in emerging economies like India and China should also be tapped.
Macadamia growers are also working on a plan to set up an International Macadamia Association to oversee global output and ensure proper marketing of the product creates sufficient demand and decent prices.
Stakeholders of the industry in Kenya are pushing for the creation of a regulatory body for the nuts. "There is no regulator in the nut sub-sector and there are no set guidelines on how it should be exploited," said Kanyuga. A sessional paper, which seeks to create regulations and guidelines for macadamia and cashew nuts, is already in Parliament, he said.
Business Daily
To ease your site search, article categories are at bottom of page.
