The Booming Agribusiness Opportunity You May Not Know About

Posted on September 21st, 2017
Agriculture Business Opportunities Business Skills & Planning

The growth of South Africa’s macadamia nuts sector could be worth a second look for agri-preneurs under the agribusiness umbrella.

The Booming Agribusiness Opportunity You May Not Know About

“Macadamia nuts are without a doubt, the dark horse in South African agriculture,” says Paul Makube senior agricultural economist at FNB.

“The demand for suitable land for Macadamia nuts production has increased sharply and supplies of plants from nurseries are reportedly tight with orders almost two years ahead.”

“It is more than doubling in organic growth on a year to year basis and with that are new jobs and income streams finding their way into the sector,” says Makube.

According to a Farmer’s Weekly article, the world’s largest, single marketer of macadamia nuts is Green and Gold Nuts, a South African-based company exporting to the US, Europe, Australia, China, and other countries.

South Africa is the biggest producer of macadamia nuts, according to the same article. “The number of trees planted here increased from one million in 1996 to 6,5 million, over an area of 21 500ha, in 2016,” it states.

The sector’s growth makes the product worth watching, says Makube – he breaks down what you should know about its opportunities

Annual Production 
It is estimated that 700 farmers are involved in growing macadamia nuts, supplying 10 cracking factories.

“In terms of output, the industry has seen an exponential growth in the last 10 years, growing production from 4,600 tons in 2015 to 38,000 tons nut in shell (NIS) in 2016,” says Makube.

Export Quantities 
The industry is largely export driven with more than 95% of the annual production shipped to international markets. Approximately 50% of the SA harvest is exported as NIS to Asian countries with Hong Kong taking the lion share of 63.3%, followed by Vietnam (32.3%), China (2%) and others (0.3%).

“The remainder is processed to kernel. The USA and Canada are the largest markets for kernel exports while others include Europe, Japan, Southeast Asia and the Middle East, making this a product that is mainly produced for the export market,” adds Makube.

Annual Financial Incomes 
The total value of macadamia exports in 2016 was R2.72 billion comprised of R1.12 billion and R1.60 billion of nut in shell and kernel respectively. The weighted average price for macadamia kernel was R22.17/ kg and R63.60/ kg when converted to an in-shell basis, while that for the NIS is R75.68/ kg.

Areas In SA That Produce Macadamias 
In terms of market share, the area between Hazyview and Barberton in Mpumalanga is the largest planted area and accounts for 70% of new plantings.

This is followed by the area between Levubu and Tzaneen in Limpopo, and the coastal areas of KwaZulu-Natal. In neighbouring countries, macadamia nuts are produced in Swaziland, Malawi and Zimbabwe.

Employment
Employment in the industry is estimated at 12,500 full time equivalent workers across the macadamia value chain. This includes seasonal workers for harvesting and processing from February through to August.

“The sector is growing organically at an incredible rate, it should further be noted that the area suitable for growing macadamias is limited in South Africa, hence the high demand and surge in the price of viable land. Although macadamia is niche, it has proven incredibly profitable for producers in this sector,” concludes Makube.