Silver lining despite tough mac market

Even though prices were significantly down last year, GFNC stated that they remain positive and invested in the long-term future of macadamia nuts. Close to 400 macadamia nut growers are associated with GFNC. “The industry has experienced a weakening market over the past 18 months. Although it will not surprise, growers will be disappointed with current prices. “With prevalent supply and
demand dynamics at play, we are doing all we can to cushion this for our growers through a variety of initiatives at the market and factory
level,” says Allen Duncan, CEO of GFNC.

Duncan says that an exponential rise in macadamia supply has come together with the post-COVID global recession, the Chinese market being largely inaccessible, and the war in Ukraine. According to Duncan, these factors have created a slowdown in sales, carryover stock from 2022, and downward price pressure on macadamias. The market has shifted to being a buyer’s market. “Despite having to weather a levelling of prices in the coming two to three years, this is a positive transition for the sector in the long term.

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“An increase in supply and affordability will unlock many additional uses and sales opportunities,” continues Duncan. He says that the sector is reaching volumes and scales that make it possible for businesses to invest in new product development, particularly in the ingredients, confectionary, and snack markets. He adds that rising costs are not limited to on-farm production, these are being experienced at the factories at the processing level too.

“The energy crisis in South Africa continues, electricity cost has gone up around 18.6% and the spending on diesel has risen remarkably to keep factories and farms running through load-shedding. To support growers through this transition processing fees at GFNC will be only slightly increased,” says Duncan. GFNC stated that they are focused on initiatives to minimise impact at the factories like driving efficiency to increase capacity, improving whole nut recovery, increasing nut drying capability as well as various value-add projects to assist farmers in a tough year.

“We are mindful of on-farm challenges. It will take precision farming to improve quality and yields, and prudent financial and cost management for farmers to pull through this time. Prices may settle at a level that is sustainable for consumers and producers at around $12-$14 over time. The fundamentals haven’t changed: nuts and plant-based food consumption will continue to rise over the long term and macadamias are perfectly positioned for this,” concludes Duncan.