Nut merger moves

Nut merger moves


Business
Macadamia Processing Company general manager, Larry McHugh, could treble his company’s current nut sales if it could get the raw supplies – a problem he hopes to solve by expanding the company to handle up to 40 per cent of the national crop.

Macadamia Processing Company general manager, Larry McHugh, could treble his company’s current nut sales if it could get the raw supplies – a problem he hopes to solve by expanding the company to handle up to 40 per cent of the national crop.

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TWO large-scale mergers within the processing and marketing sectors of the macadamia industry are setting the scene for significant growth in Australian production on the back of greater marketing stability for growers.

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TWO large-scale mergers within the processing and marketing sectors of the macadamia industry are setting the scene for significant growth in Australian production on the back of greater marketing stability for growers.

The country’s largest processor, the Northern Rivers-based Macadamia Processing Company (MPC) has acquired 50 per cent of Queensland’s Consolidated Nuts.

Within five years MPC expects to be turning off 14,000 tonnes of nut-in-shell, or 40 per cent of Australia’s macadamia crop.

MPC is a grower co-operative owned by 170 producers with a factory at Alphadale, near Lismore, while Consolidated Nuts, which trades as Pacific Gold Macadamias, is now half owned by big Australian nut growing company, Capital Commercial.

Consolidated Nuts operates the only macadamia processing plant in the rapidly-growing macadamia region of Bundaberg and has already started building a new, state-of-the-art, multi-million dollar factory to allow it to double production.

To market the output from the two factories, a new jointly-owned company called Macadamia Marketing International (MMI) has been formed and the plan is for it to also source nuts globally.

Meanwhile, Queensland’s Suncoast Gold, based in Gympie with 150 suppliers located from Cairns in North Queensland to Byron Bay, has set up a joint marketing venture with South Africa’s largest processor, Green Farms, called Green and Gold.

The two mergers will account for the majority of world macadamia processing and are being touted as a significant move towards taking the industry away from its traditional “boom and bust” price cycle.

Suncoast Gold’s director of marketing and sales, Brian Loader, and MPC’s general manager, Larry McHugh, both said the Australian industry’s biggest challenge as being able to guarantee supply from its small-sized processing and marketing businesses.

“Retailers have been consolidating and we have been required to supply larger customers with greater amounts – to do this we must participate in the growth cycle,” Mr Loader said.

“Not only do we have a responsibility to develop the business from a marketing side, but we have a responsibility to provide a stable platform for growers so that both our suppliers and our customers are able to better predict their futures and make appropriate investments.”

Mr McHugh said demand for macadamias was “very strong” but there was a need to create price stability to entice more growers and increase the production levels to meet that larger demand.

“We could sell three times more than we are at the moment if we could get that supply,” he said.

A huge expansion in macadamia product lines in the past three years has seen the native Australian nut used in chocolates, biscuits, breakfast cereals, ice cream and sell as an organic line for MPC.

However, the growing marketing avenues now face a shortage of crop due to unfavourable weather.

“We have been forced this year to spread kernel distribution very thinly and that is a problem because customers start to look for alternatives,” Mr McHugh said.

“This merger will allow us to talk longer-term with our customers.”

He said the new MMI joint venture planned to forge global alliances.

The processor rationalisation has by and large been welcomed by growers, according to Australian Macadamia Society chief executive officer, Jolyon Burnett.

“It important that processors have sufficient economies of scale to keep their costs down,” he said.

“There is the concern that if rationalisation goes too far, there could be a lack of competition for nuts, but the larger picture is all about creating a consistency of supply and price so that the industry won’t lose customers to alternative foods.”

This season, NSW growers are expecting strong average prices of $3.30 a kilogram for standard quality nut-in-shell.

The story Nut merger moves first appeared on Farm Online.

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