Despite US import tariffs threatening macadamia exports, industry expert Philip Lee says growers must stay focused on the long game as marketers diversify their customer base and processors invest in increased capacity.
As South Africa’s macadamia farmers thought they were out of the big hole after the fall-out from the Covid-19 pandemic and Russia’s invasion of Ukraine, the United States has thrown the squirrel among the nuts!
When President Donald Trump came into office earlier this year, he delivered on his electioneering promise to slap massive import tariffs on countries like China and the European Union. South Africa is not exempted, with a 10% import tariff on all imported goods and a 30% hike expected soon.
The United States is a critical destination market for South Africa’s macadamias, but I would urge farmers – before you pull out your macadamia trees and replant sugarcane or timber – to reflect on what is easily one of the biggest success stories in the country’s notable agricultural history.
In short, let’s look at where the domestic macadamia industry has come from, where it finds itself today, and the leadership it will continue to provide on this continent and abroad.
Riding the price rollercoaster
For farmers who came into the industry after 2010, the price crash of 2020 to 2023 was probably a much bigger shock than for more established growers. The latter would have navigated difficult pricing conditions in the early and late 1990s and in the first decade or so of the new millennium.
industry expert Philip Lee
Figure 1 tracks the average price recorded by the United States Department of Agriculture (USDA) recorded by the Foreign Agriculture Service (FAS) of all macadamia nut kernel imported into the USA since 1987. While the data is not always as accurate as one would like, it provides a useful estimate of wholesale (vacuum-packed raw macadamia kernel in 25lb/11.34kg cardboard cartons) macadamia price movements over time. Major drivers of the price fluctuation are also highlighted in Figure 1. These illustrate how the fluctuation was never influenced by over-production or shortages, but rather by international crises outside the control of the macadamia producer.
And while we must recognise SA’s macadamia farmers were severely impacted by the fast price change from $18.50/kg kernel, equating to a farm gate price of about R75/kg Dry-In-Shell (DIS) nuts and breakeven yield of 667kg DIS/ha assuming total costs of R50 000/ha in 2019, to
$8/kg kernel in 2023, equating to a farm gate price of only R30/kg DIS nuts and breakeven yield of 2 167kg DIS/ha assuming total costs of R65 000/ha in 2023, a positive is that 98% of the crop is exported and that price has increased from the average of $8.63/kg kernel in the 23 years between 1987 and 2010 to an average of $13.88 in the 15 years between 2011 and 2025: the average spanning the 38-year period was $10.65/kg kernel. On top of that, the rand has devalued from R4 to the US$ in 1996 to about R18 today.
For those growers fortunate enough to have had trees aged six years and older between 2011 and 2019 (there were about 3.9 million in 2011 and 6.3 million by 2019 in this age bracket) producing yields of 2.5 to
3 tons DIS/ha using best practice intensive horticultural management systems with production costs in line with industry benchmarks, the pain of the cut prices between 2020 to 2023 would have been cushioned by the cash reserves built up during those years top prices.
On the other hand, new farmers who planted trees from about 2015 onwards would have suffered severe financial stress in the past four years, especially if their business plans were based on the 2015 to 2019 prices, possibly also higher yield targets, higher than benchmark cost levels, and if the new orchards were heavily leveraged by bank loans.
Figure 1. Average price of USA macadamia imports
The marketing challenge
South African processing and marketing companies have done an excellent job selling all of the macadamias produced for the past 28 years with increasing diversification into new destination markets since the 2007 price crash, illustrated in Figure 2. Given the growth in production from 1 000 tons kernel in 1997 to 29 000 tons kernel in 2024, this is some significant achievement. Statistics from the SA Department of Agriculture show macadamias having the highest production value in the subtropical sector, growing from R0.8 billion in 2011 to R3.7 billion in 2023, while banana production value grew from R1.3 billion to R3.2 billion and avocado production value grew from R0.5 billion to R2.9 billion over the same period.
The recently imposed 10% import tariff by the USA, increasing to 30% in July 2025, is very disappointing, but not the train smash some might think it is. South Africa has, after all, been selling increasing volumes of macadamias, both in-shell and kernel, to China in recent years, despite their import tariff of 12% (present level – it was previously higher). While the USA remains an important market, our exports there have declined from a record high of 6 113 tons kernel in 2019 to only 3 704 tons kernel (13% of total production) in 2024, according to the https://www.fas.usda.gov/. So, unless domestic marketers can negotiate with the players in the USA value chain, especially supermarkets, whose mark-up on products like macadamias is 50% to 100%, to absorb some of the added cost of the tariff, Americans will just have to eat peanuts – of which they produce plenty of their own, while South Africa’s industry looks to develop and grow other markets.
The future
With prices returning to more viable levels averaging around $13.50/kg kernel in May 2025 (farm gate equivalent about R62/kg DIS at 33% SKR, implying breakeven yield at 1.1 tons DIS/ha even at the relatively high cost estimate of R70 000/ha) and the domestic industry poised to be the first producing country to hit the 100 000 ton DIS production level, if not this year, then definitely in 2026, the magic is definitely back. South Africa will remain the flywheel of African macadamia production, as illustrated in Figure 3, and the largest supplier of quality macadamia nut products to global markets for at least the next few years.
Figure 3. Actual and projected African production
Figure 2. SA Kernal destinations
Total African production at 160 000 tons DIS in 2024 is expected to grow to 295 000 tons by 2030, based on estimates of tree numbers in the African producing countries. South African production at an estimated 100 000 tons DIS in 2025 is expected to just about double to close to 200 000 tons DIS in 2030. Currently, we have sufficient processing capacity between the 20 or so processing facilities to handle the 100 000 ton DIS crop. So that will need to double in the next five years, meaning significant capital investment – which I have no doubt will come into being.
Already, three of the larger processors are busy creating additional capacity to handle the increasing volumes. What better display of courage and confidence to inspire farmers to get out there and water, fertilise, weed and prune while controlling the pests and diseases to produce three tons DIS/ha each year and enjoy the potential profit of R100 000/ha plus per annum for as long as the price remains where it is now.
