How South Africa’s macadamia industry’s tackles the next chapter in its history will define the longevity of its influence on world markets and production standards, writes Alex Whyte, Executive Chairman of Green Farms Nut Company.
By Alex Whyte
As the world’s leading producer of macadamia nuts, South Africa’s industry must double down on its differentiators if it is to stay ahead of the game.
The next chapter might be defined not by how much the country produces, but by how effectively it positions and grows what it produces. It will require individuals to choose consistent quality as its unique selling proposition, linked to aligned market development and investment.
The industry has come through a difficult time, with even more challenges expected ahead. Margins have been squeezed and for some producers, the pressure was just too much. This is a reality – and pain – that the industry must not overlook.
But there is a longer-term shift directly linked to the natural maturation of the domestic industry after at least a decade of boom-time growth. What we are seeing is the natural maturation of an industry where today – unlike in the pre-Covid years – macadamia farmers have to focus far more than previously on efficiency, technology and cost management.
Those who are optimising their inputs, improving yields and aligning their production to market requirements are building more resilient and sustainable farming operations.
This is reflected in the current planting trends as new development has resumed in KwaZulu-Natal, but unlike the years between 2014 and 2018 when the decline of the sugarcane producing industry saw unfettered orchard growth, now the development is at a much more measured pace. The industry is no longer expanding on optimism alone, but rather, it is adapting to a more disciplined approach, meaning by 2030 we should see strong volume growth as existing orchards mature.
This, of course, then raises the question: how do we make sure that a bigger crop doesn’t equal low prices?
When South Africa’s pistachio industry was faced with a similar scenario, the industry responded by investing heavily, and collectively, in marketing. Their leadership built a global consumer brand, repositioned the nut beyond just a snack option into a versatile ingredient which in turn, gave rise to sustained demand. Not only did the added category absorb the added supply, but it did so while maintaining strong prices. It is a critical shift that our macadamia industry has yet to make.
Historically, South Africa’s industry has successfully sold its crop into existing demand, particularly during periods of short supply. Building demand, however, is a very different discipline. It requires investment, co-ordinated effort and a willingness to think beyond immediate returns.
But there are encouraging signs. The industry is gaining ground in new product development, with major players, such as global food brand and chocolatier Ferrero Rocher, using macadamia nuts in its worldwide product lines. In many ways our increased supply is starting to create its own demand, supported by more accessible pricing and improved competitiveness against other premium nuts.
But this is a trend that needs sustained scale while providing opportunities to explore gateways to new destinations. For example, the Indian market stands out as a significant opportunity, but South Africa is hobbled by a 35% import duty that severely and purposefully limits the access of our agricultural products to what could be a market with substantial long-term potential.
Australian products, on the other hand, enjoy a zero-duty entry into the sub-continent’s ports. This means that without some progress on trade negotiations – particularly as South Africa and India are members of the influential inter government BRICS organisation that aims to foster trade and governance co-operation with other emerging economies – our industry risks being sidelined by its main competitor industry.
While our sector is not short on momentum it is operating in a very complex environment. Global supply has increased, with an added 50 000 tons nut-in-shell becoming available – roughly an increase of about 15%. Most of that growth can be attributed to bigger harvests in China and Kenya, thereby reshaping both the supply base and competitive landscape even though South Africa still holds its position as the top world producer.
On the demand side, consumers are putting out mixed signals. Recent on-the-ground studies have confirmed what desk-top data suggests: despite broader economic pressure, including a weak property sector and constrained consumer spending, macadamia sales are resilient. The nut continues to perform despite consumers tightening their belts.
China’s domestic production has expanded significantly, which means their buyers have become more selective and discriminative on nut imports. They target specific gaps, for example, larger nut sizes and higher kernel recovery material that local suppliers are unable to consistently supply.
After President Donald Trump’s Liberation Day tariff announcement last year, exports to the lucrative markets in the United States were significantly disrupted, particularly in certain kernel segments. While the 30% tariff has left a stock overhang in the system, consumption is recovering but not all segments have rebounded equally. Whole kernels held their ground while halves struggled to keep their value.
While average dollar prices are only slightly down, the impact at the farm gate in South Africa has been acute as a stronger rand against the US currency has translated into a 10%-20% cut in rand returns compared with previous years.
South Africa’s macadamia farmers may have little to no sway over decision-making in what is now a severely disrupted world where the usual rules no longer apply, but they do have control over how they translate the growth and development of the domestic industry into real and sustained value through investment in effective and targeted marketing strategies.
These strategies will allow for an agile industry ready and prepared to respond to the vagaries of the world markets.
It is in this way that the domestic sector will hold its position as the world’s top producer, both in quantity and quality.
