Macadamias’ Winning Streak Holds Tight

The sector’s future is bright as Green Farms Nut Company (GFNC) stays in keeping with tradition to be first to market with a strong 2021 price offer to macadamia producers; setting the benchmark for competitor processors. The price offer is based on individual nut styles and grades and is anticipated to hold largely inelastic as demand currently outpaces supply.
This comes together with the buoying news that the business announces an additional bonus of 10% over and above the 2020 price offer payment made to farmers for crop delivered in last year’s season. The “agterskot” is made possible largely due to better US dollar prices achieved by GFNC’s marketing company, Green & Gold Macadamias (G&G), and favourable exchange rate fluctuations. 
“Beyond being testament to the sophistication of our marketing team at G&G, the resilience of macadamias, notwithstanding pandemic storm, is due to growing consumer demand. Customers understand the benefits of the plant-based product, and they steadfastly sustain and place value in making macadamias a part of their daily diet and lifestyle,” comments Allen Duncan, CEO, GFNC.
In further bolstering this news for farmers, GFNC will revert to its usual advantageous payment terms of 65% payment for crop on 30 days with the remaining 35% paid in November and February of each season. This is widely understood to be industry leading amongst established players in the market.
“We are delighted to confirm our new finance partners, Investec Bank, and through this revert back to our longstanding favourable payment terms. Following liquidity issues of the Landbank (our financiers at the time) in early 2020 we were forced to revise payment terms; and the importance of our longstanding and trusted relationships with growers came to fore,” continues Duncan.
Impact of COVID-19 on macadamias last year is a tale of two halves.
As lockdowns spread throughout the planet and people became ever more conscious of staying healthy while the virus rampaged, demand for premium macadamia kernels (snack grades) remained strong, as did prices. Due to the smaller than expected South African crop last year, China (where macadamias are purchased in-shell), was not able to forward-buy inventory as usual. Because of this, the country is likely to have increased appetite for product this year.
The ingredient sector ran into difficulty as restaurants and other food retail outlets stuttered through forced closures, significantly knocking ingredient grade prices, down by as much as 20%. Notable producer, Hawaii, typically relies solely on domestic sales through local tourism. The travel industry was entirely hampered in 2020 also due to the pandemic, and this meant that Hawaii exported all its produce, placing additional dynamic and sometimes strain into the global market.
“G&G is skilled at interpreting the market and through its wide and diverse customer base most stock was committed and sold early in 2020, translating to relatively minimal impact for the company, and ultimately producers. It was proactive and successful in launching new products for the ingredients sector, which ensured continued movement of stock,” comments Alex Whyte, sales manager, G&G. 
“With an optimistic outlook for the year, it is full steam ahead for the industry at large. All three GFNC factories (in Kwazulu-Natal, Limpopo, and Mpumalanga) have undergone capacity upgrades to accommodate increasing supply and efficiently drive throughput. Major outlay has been made at the Kwazulu-Natal facility as this region of the country continues to burgeon. State of the art automation and food safety technology investment will secure tenure and develop new markets and sales channels,” concludes Duncan.