You'd Have To Be Nuts To Go Into Macadamias Now
Sydney Morning Herald
Wednesday November 7, 1990
The sunrise macadamia nuts industry has suffered its first setback.
In the late 70s and early 80s, macadamias were the business to go into. Cashed-up city professionals found it an ideal investment and tax write-off.
Macadamia nut farms sprang up in the hinterland of the North Coast, with Dunoon, a small village inland from Lismore, the centre of the industry. There are now about 7,000 hectares of trees planted.
Prices were high, and the market, mainly in the US, seemed infinite.
As our only commercial native nut, Australia appeared the ideal place to grow it. The idea of international competition hardly occurred to anyone.
Attracted by high profits, traditional dairy and crop farmers began converting their properties into nut farms. With high capital investment, some people spent their life savings, or borrowed heavily. Now the honeymoon is well and truly over.
Prices have fallen severely this year, with returns to growers cut by almost a half and payments from processors being delayed or paid piecemeal.
Once a speciality item, there is now an oversupply of the nuts on the US market.
Only 20 per cent of this year's crop, in comparison to the normal 70 per cent, has been sold.
With economic conditions tightening in the US, consumers are reluctant to buy the expensive nuts. Making the situation worse is a rapid increase in production as large numbers of the slow-growing trees begin to mature.
There is expected to be 11,000 tonnes of macadamia nuts in shells produced this year, an increase of 4,000 tonnes on last year.
Processors have upped their quality standards, and some irate growers are finding their entire crop being rejected.
Mr Keith Ainsbury, president of the Australian Macadamia Society, said some growers who have put their life savings into macadamia farms, or invested heavily in converting from traditional crops, now have to compete on an increasingly tight international market. Countries such as South Africa and Costa Rica now have plantations.
"The halcyon days of macadamia growing are over," Mr Ainsbury said. "We are now an industry in a high cost production country competing with low cost production countries. Only the efficient farms will survive."
Mr Ainsbury said exchange rates and interest rates, hurting other rural sectors, are also damaging macadamia growers.
"Those who borrowed for development are being severely affected," he said. "People are seeing years of their life and effort gone."
With this, the marketing thrust has changed.
Chocolate macadamia nuts are sold in brightly coloured wrapping festooned with pictures of koalas and the Opera House. Macadamia chips are mixed with chocolate into the shape of Australian animals.
Seventy per cent of their business is now retail. Five years ago they were purely bulk sellers.
These commodities sell well to Japanese tourists.
"We are not in the confectionery business, we are in the souvenir business," Mr Ainsbury said.
"We had to get into the retail side of the business to counter the fall in demand for bulk nuts."
© 1990 Sydney Morning Herald