Experts are urging macadamia farmers to bring their orchards up to standard in expectation of better times to come, to look beyond the prevailing conditions, and to use the current downturn in the sector as an opportunity to secure future stability.
In a panel discussion hosted at the International Macadamia Symposium (IMS’23) held recently on KwaZulu-Natal’s Dolphin Coast, delegates were reminded of the cyclical nature of the agriculture sector and urged to secure operational stability through good financial planning while maintaining good orchard management standards.
Stephan Schoeman – Soetkalmoes Consulting.
In other words, building up fat in the good times while in the bad times, keeping all aspects of the farming operation lean and fit for purpose, rather than cutting back on costs.
Stephan Schoeman – a leading South African macadamia expert at Soetkalmoes Consulting – who facilitated the session titled “Managing Orchards when Prices are Low”, said continuing to cut costs in a bid to survive the next two years, when prices were predicted to remain at a record low, was unsustainable, and farmers should ask themselves key questions which included:
- How to out-yield the low price;
- How to improve sound kernel ratios per hectare; and
- What influences total kernel on a hectare.
“The reality is, the macadamia industry worldwide is in churning waters,” he said. “In South Africa, we have some unique challenges of our own and what we must find out is how we are going to position ourselves in this time. We don’t know how long the current conditions will last, we don’t know how our bankers’ heads work or how marketers’ market. We have sharpened our pencils, we have cut costs and re-cut costs, again and again. It is time, I think, to look at some different themes and ideas other than simply cutting costs to remain afloat.”
Former South African macadamia expert Rohan Orford, who now lives and operates in Australia, said regimented on-farm husbandry was pivotal. “Cross-pollination is a key aspect in improving quality and yield. Soil condition is another. High yielding orchards require decent organic matter under the trees, a decent cation balance, salinity levels under control, and the continuous development of soil structure. If soils are damaged it can take anything from seven to ten years to restore them.”
Orford said ideally, the inherent condition of the soil should allow trees to leverage nutrients, without undue duress or stress. “Essentially the microbes, bacteria, fungi and earthworms must all be very comfortable and in good balance, which basically means keeping the food chain robust so that the soil has more than enough reserves to be available for the trees’ needs. It is creating those ideal conditions that allows the trees to pull the nutrition they need when they need it,” he said.
Farmers wanting to survive this time, Orford added, had to do more than just one thing right. “They must try to be a jack of all trades and a master of all, at the same time. If farmers can get that right 80% of the time, I believe they will come through.”
Chris Searle – Australian macadamia consultant and expert.
Don’t cut costs in bad times
Craig Lewis, a flower and macadamia farmer in Mpumalanga, said cutting costs to mitigate the falling prices was akin to cutting off your nose to spite your face. “It is critical now to reduce the unsound kernel, which means, for example, focusing on the integrated pest management (IPM) programme in the orchards. Measuring is absolutely everything in precision farming and I would suggest farmers – who have worked to cut back on their IPM – look at the numbers. They will very quickly tell you that good IPM is still warranted in a low-price year because it’s still worth it to get the best return you can in the season, regardless of price.”
Keeping on top of the finances, he added, was common sense. “This is a tough time; we are in a cycle that is not easy to manage but farmers can get through it if they are really careful and precise in managing their finances, and how accurately they forecast yield and cash flow over the next twelve months to two years.”
Schoeman agreed, particularly as input prices had continued their roller-coaster ride since the invasion of Ukraine by Russia – although more recently China has upped fertiliser exports, easing prices somewhat.
Stick to the basics
Quinton Elliot, who farms macadamias and bananas in southern KwaZulu-Natal, warned against delaying the annual pruning regime to save labour costs. “It is short-sighted not to keep all basic good orchard management programmes in place. If the trees are not pruned, the sprays won’t penetrate and keep the pests under control. My advice is: don’t drop your crop and increase the potential for higher unsound,” he said.
Rohan Orford – Former South African macadamia expert now living and working in Australia
In the discussion, old orchards and the tricky question of removing geriatric orchards and crop diversification were also highlighted as opportunities in a down cycle.
Elliot said improving old orchards required a measured approach. “We have learned that by cutting more than 30% of the tree, yield crashes by 20%. If a tree has got away at 15m and it’s cut back to 6m without any branches on the bottom 4m, I think it probably won’t recover. In this instance it is a case of applying a balance to the way the issue is approached.”
Orford said if a farmer were confident an orchard had done its time, he would ask what the costs benefits and gains would be. “You don’t often see growers stripping out cultivars because they are outdated. Benchmarking allows you to quantify by how much the block is under-performing and then to weigh up how much it will cost to remove the trees. I would adopt a staggered approach,” he said.
Diversification over time
On production diversification, Lewis said working over several years to achieve the desired outcome was better than a knee-jerk reaction by farmers. “The basic premise of any investment is to spread the risk. Bio-diversifying is nice and should be part of the farming strategy. But it is not easy to do immediately. A strategy is required for the operation and that needs to be clearly put into pillars and divisions mapped out over a specific time and married to cash flows and projections.”
On cash flow, Schoeman said frequently monitoring – daily and weekly – was critical to understanding working capital, and how prices were changing both revenue and costs. “It is so important not to find yourself in that place where you have to miss a scheduled spray because there is a cash flow problem.”
Brandon Jardim, who farms avocados and macadamias in Limpopo, emphasised the value of benchmarking between neighbours and the industry. “Where we are now is not about cutting costs but about increasing production. It is so important for each grower to look at activity-based costs – what is going into chemicals, pruning and labour – and then measuring that against what your neighbours and the industry are doing.”
In the good years, he said, farmers would have the opportunity to re-prioritise where their money was invested but right now, it was about keeping tabs on where the money was being spent and whether that investment was bringing in returns.
To stress the point, Lewis said the current price cycle required precise and careful financial management, and accurate yield forecasting against expected cash flow, particularly over the next 12 to 24 months.
Orford added that listening to yields bandied about in the local pub was a set-up for failure. “Many have a perceived yield, which is not a weighted average of what they produce. And when I say weighted average, I mean the total crop divided by the total hectares, not the average of a block. Rather than living a lie in your head and thinking that you are doing better than you really are, get all the data and start getting the true value of what it costs you to produce your crop. Benchmarking yourself on costs against your peers is one of the most powerful tools for a sustainable macadamia farming operation.”
