The Increasing Presence of Kenyan Macadamias in the Global Market

Macadamia Kernel

Japan

Published Mar 6, 2020

Kenyan macadamias are expecting a good harvest for 2019/2020 due to ample rains last year. Prices increased for the 2018/2019 season as demand for the nuts is at an all-time high. Production and exports are expected to increase with the introduction of a new variety, the Muranga 20. While the temporary ban on controlling the maturity of the nuts is no longer in place, it is not projected to affect the quality.

The demand for Kenyan macadamia nuts is at an all-time high. Macadamias require ample water supply to grow and production is projected to increase in the 2019/2020 season as heavy rains from November 2019 to mid-January 2020 allowed for a flourishing harvest in Kenya.

The harvest season for this year has already commenced and is expected to run from early March to late May for 2020. While a temporary ban by the Agriculture and Food Authority (AFA) on controlling maturity of nuts was lifted in February 2019, it continues to conduct inspections on Kenyan nuts, ensuring their quality before they are exported.

Kenyan Macadamia Production Grows Rapidly in Recent Years

Kenya’s annual macadamia production has increased fourfold over the last decade, from approximately 11K metric tons in 2009 to 40K metric tons currently. According to the AFA, production is expected to increase to 60K metric tons by 2022. Kenya is currently the third-biggest producer of macadamia nuts, after South Africa and Australia. Thirty entities are currently licensed by the AFA to locally process the nuts, compared to five in 2013.

Interestingly, the rapid increase in macadamia production is linked with increases in coffee production, as macadamia trees were originally planted to provide shade for coffee bushes. Prices of macadamia nuts have more than doubled since the late 1960s, which has motivated producers to gradually switch from growing coffee, maize, tea, and sugarcanes to cultivating macadamia nuts instead. While macadamia trees require sufficient water and manure to grow, they are also relatively easier to manage after the initial stages of planting and are less impacted by pests and diseases.

Demand for Kenyan Macadamias at an All-Time High

The demand for Kenyan macadamia nuts is rising rapidly in the global market and prices are expected to increase in the 2019/2020 season. Kenyan macadamia nuts produced in 2018/2019 were sold at KES 220 (USD 2.14) per kg, making it one of the most profitable cash crops in Kenya after tea.

The growing demand for the nuts stems from their versatility, as it can be used in various food products such as cakes and sweets. It can also be converted into oil to be used in pharmaceutical and cosmetics products. In addition, Kenyan macadamia nuts can be bought at a lower price than South African and Australian products, which are sold at a higher price range of KES 400-600 (USD 3.88-5.82), giving them a competitive edge.

Demand is expected to continue growing, as the global macadamia market is estimated to expand at an average annual growth rate of 6.6% between 2020 and 2025. To accommodate the significant demand increase, Kenyan farmers are planning to replace old varieties of macadamia nuts with improved varieties such as the Muranga 20 to produce high-quality products sold at a higher price. The Muranga 20 variety, in particular, acclimates well in different climate conditions, grows at a faster rate, has a higher yield, and boasts a lifespan of over 100 years which makes it a lucrative investment for farmers.

Outlook for Kenyan Exporters

Due to high returns caused by high demand and labor-efficient production, macadamia nuts have the potential to be extremely profitable for low-income smallholder suppliers in Kenya especially with the cultivation of the improved variety.

While the temporary ban by the AFA on inspecting and controlling the maturity of nuts for exports was lifted last year, the AFA still conducts and plans to sophisticate its inspections and issue certificates on exports to ensure that the nuts exported are sufficiently mature. This is after exports of Kenyan nuts were rejected by importing countries in February last year for being premature. The Nut Traders Association of Kenya (NUTAK) has even proposed an appropriate date for harvesting, March 15th, to prevent a similar recurrence.

Kenya exports macadamias in processed, or “shelled”, form as the government prohibited exports of in-shell macadamias and cashew nuts in 2009. This decision was made to encourage domestic processors to employ locals as well as adding extra value to the products before they are exported. Kenyan exports to the largest export destinations of processed macadamias such as the US, European countries such as Germany, as well as Japan and China are expected to increase in the upcoming years.