Australia’s increasing production
Australia’s 2021 Macadamia season ended on a high, with production at a record 51,500 mt in-shell basis, 10% higher than the previous year. Australia’s macadamia production has been on the increase for decades and according to the Australian Macadamia Society (AMS), could reach an incredible 70,000 mt by 2030. Currently, Australia has about 11 million macadamia trees of varying ages, with more and more being planted. Macadamias take 5 to 10 years to enter commercial production, and many of the existing trees are only now coming into commercial production. According to Australia’s Agriculture Minister, Mark Furner, another 2.5 million trees will be planted in the next few years. Australia’s macadamia production is thus expected to increase by at least 40% over the next ten years.
*AMS reports macadamia production at 10% moisture, compared to 3.5% moisture more commonly used.
Source: AMS, Minstery of Agriculture
Export markets for increased production
With this in mind, Australia will need to increase its exports to balance supply and demand for Macadamia. Luckily, international demand has been strong, and East Asia will most likely remain Australia’s target market. The Australian macadamia industry was able to evade the wrath of the global Covid-19 pandemic, and exports in 2020 were a record 16,766 mt (converted to a shelled-basis), and fairly strong at 13,498 mt for the first ten months of 2021. However, the question still remains as to where the extra supply will be heading in the future.
China has by far been the largest destination for Australian macadamias, importing a massive 9,239 mt in 2020 (converted to a shelled-basis): meaning 55% of Australia’s macadamia exports in 2020 went to China. After the large sales to China in 2020, Australia’s exports edged down in 2021 and were 13,498 in total for the first 10 months of 2021, of which 7,283 (54%) went to China.
Meanwhile, China imports 75% of their macadamias in-shell and they are de-shelled in the country. With China’s own macadamia crop also expanding, there is likely to be more investment in macadamia processing facilities. This means their demand might remain largely based on in-shell macadamias. Australia on the other hand has also been expanding its own macadamia crushing capacity. In 2020, 70% of exports were shelled compared to 50% just 5 years before. Since Australia is focusing on exporting shelled macadamias, it remains to be seen if China will stay the focus of its marketing campaigns. Given that production in countries without processing capacity is increasing (e.g., Kenya, Malawi, Zimbabwe) China might look to source in-shell nuts from them instead.
Japan is Australia’s second-largest destination for macadamias. More than 60% of Japan’s macadamia comes from Australia. Virtually all macadamias imported by Japan are imported shelled, which is good news for Australia. Australia has the edge, being geographically closer to Japan, than most of their competition. This means Japan could well be a potential target for increased exports from Australia in the coming years.
Source: AMS, ITC Trade Map
*In-shell volumes for 2014 not available
Source: AMS, ITC Trade Map
Stiff competition from other producers
Australia’s exports to China and Japan make up 60-70% of its total export, but more than 40 other countries also buy Australian macadamias regularly. Nearly all these countries could potentially increase their imports, but Australia will most likely keep its focus on East Asia, where South Korea, Taiwan, Singapore, and Thailand could be its main target. The Middle East, Europe, and the US, remain potential markets however, there is stiff competition from the world’s largest exporter, South Africa, as well as an anticipated increase in global production. According to the newly established World Macadamia Organization, world production doubled in the last ten years to reach 227,000 mt in 2020. It estimates production to double again in the next 4 to 5 years, and triple by 2030, when global production could reach 660,000 mt. This means, just like Australia, all major macadamia producers will have to plan for an increase in global supply.
Sources
International Nut and Dried Fruit Council: Global Statistical Review, Macadamias
Queensland Country Life: Macadamia industry on track for record harvest