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The evergreen macadamia tree is native to the subtropical rainforests of south-east Queensland and northern New South Wales, where rainfall is plentiful and small holdings have been the main source of macadamia crops.
However, increased competition from introduced macadamia plantations in Africa and Hawaii, as well as a strong Australian dollar and falling kernel prices, have led to dark times for Australia’s $100 million industry, which went through a boom period from 2003 to 2006.
Andrew Heap, general manager of the Australia Macadamia Society, says that the industry has seen a dramatic fall in its value in the past two years.
“Grower prices have fallen in the order of 50 per cent after a period of very high prices,” Mr Heap says.
“We have seen increased supplies. Australia and South Africa are producing more nut in shell,” he says.
“The language in which macadamias are sold is US dollars, and we’ve seen effectively a 70 per cent depreciation of the US dollar against the Australian dollar in the last 22 to three years, and the weakness of the US dollar is very severe, not only on us but on other industries as well.”
There are currently about 1000 macadamia growers in Australia, many of whom are small scale producers. The Macadamia Processing Company in Lismore, which boasts the world’s largest throughput of macadamias, says that the current prices of around $1.50 a kilo means growers are feeling the pinch.
Larry McHugh, the general manager of Macadamia Processing Company, says that some of their growers are struggling to stay afloat in these lean times.
“There haven’t been a lot that have gone out of business yet, but it has put a lot of pressure on the growers,” says Mr McHugh. “There are some farms that are quite unviable at the current prices and they’re struggling quite a lot.”
Mr McHugh adds that economies of scale are not something that have traditionally gone hand in hand with the macadamia industry’s growers but that times are changing.
“The industry had a lot of smaller growers in it,” says Mr McHugh. “A lot of them were in it for the lifestyle. They were able to make quite good money out of their farms.
"As the economics of the industry changed, people are beginning to see that you need to have large farms in order to have a long term viable investment.”
Victoria Park Plantation is one of Australia’s largest plantations, harvesting 350 hectares of macadamia each year.
General manager Warren Elvery has witnessed the industry’s rise and fall, and thinks that mechanization and favourable growing conditions will help Australia’s troubled industry ride out the storm.
“I’ve been here since a lot of it started,” says Mr Elvery. “I planted a lot of the trees that are here and I hand picked the first crop myself personally – about a tonne and a quarter of nuts – up to the harvesters that we’ve got now where we’re doing in excess of 1000 tonnes every year.
“There’s a lot of people saying the argument that other countries have a better cost structure because they have lower wages,” Mr Elvery says.
“But I think that we’ve got better growing conditions – particularly in this area because we can grow without irrigation so I think efficiency is what it’s all about.”
But the premium land in the hinterland of northern New South Wales where much of the industry is centred, is coming under increasing pressure from developers who have pushed land prices to record highs.
“That’s one of the pressures that’s facing our industry,” says Warren Elvery. “From development and tourism and other people wanting to move into the area.
“I think people will have to buy the cheaper land and grow nuts there and they’ll have to irrigate it,” says Mr Elvery. “And it will become more broadacre, as opposed to growing on smaller holdings in an area as good as this; in an area where we don’t know really what a drought is.”
However, while the industry seems to be under immense pressure from all angles, those in the know believe there is a light at the end of the tunnel.
“Macadamias I believe are currently about 1.5 per cent of tree nuts in the world,” Larry McHugh says. “That leaves a lot of space for us to grow our demand throughout the world, and we are all starting to invest in promotion.
“Europe is one of our main growth areas,” says Mr McHugh. “Germany alone uses probably a quarter of the Australian crop, so given the number of other countries that are in Europe, we can easily sell a lot more kernel there.
“China is the other area that all processors see as the big growth area. It’s a slightly hard market to crack but we’re all in there and hoping that over time we will get another mega market there.”
The Australian industry has also invested heavily into research and development; most significantly into a tree breeding programme designed to create the optimum macadamia varieties for the growers of the future.
In the shorter term though, Andrew Heap believes it will be a slow and steady road to recovery.
“I see some improvement in prices during the course of 2008,” says Mr Heap. “Maybe 15 odd per cent. Mainly because of reduced stock – certainly at lower prices, stock is moving more freely.
“I think the key to it is the positioning of the Australian dollar against the US dollar. I honestly feel that the impact of, if you like, the currency strength will drop relatively quickly.
“Meanwhile we’ll be tightening the way we do things as an industry and stock clearing will continue to take place, and I suspect that the competitive environment will improve a lot more quickly that people anticipate. But in the short term it’s going to be hard work.”
However, increased competition from introduced macadamia plantations in Africa and Hawaii, as well as a strong Australian dollar and falling kernel prices, have led to dark times for Australia’s $100 million industry, which went through a boom period from 2003 to 2006.
Andrew Heap, general manager of the Australia Macadamia Society, says that the industry has seen a dramatic fall in its value in the past two years.
“Grower prices have fallen in the order of 50 per cent after a period of very high prices,” Mr Heap says.
“We have seen increased supplies. Australia and South Africa are producing more nut in shell,” he says.
“The language in which macadamias are sold is US dollars, and we’ve seen effectively a 70 per cent depreciation of the US dollar against the Australian dollar in the last 22 to three years, and the weakness of the US dollar is very severe, not only on us but on other industries as well.”
There are currently about 1000 macadamia growers in Australia, many of whom are small scale producers. The Macadamia Processing Company in Lismore, which boasts the world’s largest throughput of macadamias, says that the current prices of around $1.50 a kilo means growers are feeling the pinch.
Larry McHugh, the general manager of Macadamia Processing Company, says that some of their growers are struggling to stay afloat in these lean times.
“There haven’t been a lot that have gone out of business yet, but it has put a lot of pressure on the growers,” says Mr McHugh. “There are some farms that are quite unviable at the current prices and they’re struggling quite a lot.”
Mr McHugh adds that economies of scale are not something that have traditionally gone hand in hand with the macadamia industry’s growers but that times are changing.
“The industry had a lot of smaller growers in it,” says Mr McHugh. “A lot of them were in it for the lifestyle. They were able to make quite good money out of their farms.
"As the economics of the industry changed, people are beginning to see that you need to have large farms in order to have a long term viable investment.”
Victoria Park Plantation is one of Australia’s largest plantations, harvesting 350 hectares of macadamia each year.
General manager Warren Elvery has witnessed the industry’s rise and fall, and thinks that mechanization and favourable growing conditions will help Australia’s troubled industry ride out the storm.
“I’ve been here since a lot of it started,” says Mr Elvery. “I planted a lot of the trees that are here and I hand picked the first crop myself personally – about a tonne and a quarter of nuts – up to the harvesters that we’ve got now where we’re doing in excess of 1000 tonnes every year.
“There’s a lot of people saying the argument that other countries have a better cost structure because they have lower wages,” Mr Elvery says.
“But I think that we’ve got better growing conditions – particularly in this area because we can grow without irrigation so I think efficiency is what it’s all about.”
But the premium land in the hinterland of northern New South Wales where much of the industry is centred, is coming under increasing pressure from developers who have pushed land prices to record highs.
“That’s one of the pressures that’s facing our industry,” says Warren Elvery. “From development and tourism and other people wanting to move into the area.
“I think people will have to buy the cheaper land and grow nuts there and they’ll have to irrigate it,” says Mr Elvery. “And it will become more broadacre, as opposed to growing on smaller holdings in an area as good as this; in an area where we don’t know really what a drought is.”
However, while the industry seems to be under immense pressure from all angles, those in the know believe there is a light at the end of the tunnel.
“Macadamias I believe are currently about 1.5 per cent of tree nuts in the world,” Larry McHugh says. “That leaves a lot of space for us to grow our demand throughout the world, and we are all starting to invest in promotion.
“Europe is one of our main growth areas,” says Mr McHugh. “Germany alone uses probably a quarter of the Australian crop, so given the number of other countries that are in Europe, we can easily sell a lot more kernel there.
“China is the other area that all processors see as the big growth area. It’s a slightly hard market to crack but we’re all in there and hoping that over time we will get another mega market there.”
The Australian industry has also invested heavily into research and development; most significantly into a tree breeding programme designed to create the optimum macadamia varieties for the growers of the future.
In the shorter term though, Andrew Heap believes it will be a slow and steady road to recovery.
“I see some improvement in prices during the course of 2008,” says Mr Heap. “Maybe 15 odd per cent. Mainly because of reduced stock – certainly at lower prices, stock is moving more freely.
“I think the key to it is the positioning of the Australian dollar against the US dollar. I honestly feel that the impact of, if you like, the currency strength will drop relatively quickly.
“Meanwhile we’ll be tightening the way we do things as an industry and stock clearing will continue to take place, and I suspect that the competitive environment will improve a lot more quickly that people anticipate. But in the short term it’s going to be hard work.”
