Irrespective of the droughts in South Africa and Malawi, one of the world’s biggest macadamia processors and marketers, Green Farm Nut Company of South Africa still foresees record macadamia nut prices in the 2016/17 season. This forecast is based on consistent production levels elsewhere in the world as well as increased demand from the Unites States and China.
Alex Whyte, sales manager of Green Farm Nut Company which owns a factory in Ramgates and two others in South Africa claimed that the drought in South Africa will cause its crop to be 10% lower than last year and 20% lower than the 2016 industry’s forecast. Despite normal production levels from the rest of the globe, Whyte argued that South Africa being the World’s largest producer of macadamia nuts would with its reduced production cause a global shortage of the crop.
On the other hand, South Africa’s biggest market and buyer China has over the past few years significantly increased its demand and currently insisting on high quality for the crop than before. China is reported to be specifically looking for large “in-shell” with low levels of unsound kernel. In many cases, droughts in South Africa have only resulted in the kernel being smaller than what the Chinese prefer. While this condition seems to hamper South Africa’s exports to China, Whyte still argues that South Africa can set the price if it offers the right quality. Even so, he further argued that the overall prospects of the 2016 season are so positive resulting to the prediction of record prices.
However, farmers need to plan ahead because an end in the drought could result in a sudden over supply and falling of world prices. This is because irrespective of the drought, macadamia nut tree are continuously being grown which could double South African’s production in year 2020. To cope with the predicted supply and price situation, Whyte believes that the industry needs a collective rather than a fragmented approach to easily exploit the market. The industry’s focus should be on expanding existing markets and creating new ones. For instance, the South African Macadamia Nuts Association was about to launch a macadamia nuts promotion campaign locally and globally.
In addition, as a plan for the future, Green Farm Nuts Company was already discussing with food and beverage product development teams worldwide in prospects that the macadamia crop could make superior health and taste contributions to items such as bread, biscuits and ice cream. Whyte also warned single suppliers intending to break the vast upcoming ingredient market by explaining that quality and food safety requirements for the ingredient industry were far more tedious than the snack industry and that no processor on its own could offer the guarantees of supply customers demanded.
Source: MITC, 27th May, 2016