After hearing farmers' concerns about the macadamia industry's survival in the Northern Rivers, the Lismore App has been investigating the industry over the last two months.These concerns were raised off the record over twelve months ago. No one was willing to go on the record to give their honest thoughts about the state of macadamia farming. Finally, some brave farmers came forward to share their orchard practices and their thoughts on the Northern Rivers Macadamia Industry in 20 years.If those thoughts become reality, what was once the heart of the macadamia industry on the East Coast won't be in 2044.In Part 1, we looked at the industry itself. Learning that certain macadamia trees are native to the Northern Rivers. The first commercial planting was in the 1880s, and in the 1980s, we were the heart of the Macadamia Industry as city people started buying land to plant macadamia trees in the 1970s.There are a lot of macadamia farms for sale, some even saying, "the farm could be worked or the trees removed".In Part II, we looked into the actual farming involved in producing a macadamia crop and the associated costs. The last three years have been particularly difficult, with the price paid to farmers falling to a low of $1.70 in 2023, while at the same time, wet weather reduced the harvest by 20 to 30 tonnes, depending on the size of the farm. A double hit to any farm's profitability.Revenue has increased thanks to a recovery in the price per kilo at 33% premium kernel recovery and 10% nut-in-shell moisture content. In 2024, it is expected to be around $3.20 p/kg. Farmers who have more premium nuts could achieve a higher rate.The breakeven point for most small macadamia farms, which are between 2000 and 5000 trees, is around $3.20 to $3.40. There are many small macadamia farms in Lismore and the Northern Rivers.So, given those numbers, the million-dollar question is, "Will the Northern Rivers Macadamia Industry survive, and where will it be in 20 years"?That question is being influenced by large-scale farms in Bundaberg, four hours north of Brisbane. The Bundaberg area is growing rapidly with farms of 10,000 trees+, so large-scale when compared to the Northern Rivers. Then, there is the overseas industry, with countries like South Africa and China now producing their own macadamia nuts in large commercial quantities.PETER COLBYPeter purchased his 2,500-tree farm in the early 2000s and saw the writing on the wall quickly. He sold it after a few years of operating it because the "Cost of processing had gone through the roof.""So, you have to make a business decision as to whether you want to reinvest back in macas. But then you've got the scalability of what's needed in the plants. So you look at it in a business sense, in the business model, and you go, well, okay, do I take a 10-year view that I'm going to reinvest in this? So after 10 years, I have something that has value, and that's the future of it."In the meantime, you don't earn enough to make a living or to hire someone or people to run your macadamia farm, plus you need to invest a lot of capital to get it to where it can produce strong tonnage each season. As all farmers know, growing conditions are out of the hands of farmers.The 20-year Crystal Ball"If I thought I was serious about it, you have to think about added value. If I'm going to run a macadamia farm, what am I going to take off it? Am I going to take one part of the process, or am I actually going to add two or three parts of the process to the point where I can actually sell my marketable product that has added value?"In any industry, if you only do 1% of it, hypothetically, you'll go broke because you only make 10% of the value of the end product. But if you've got four or five sections of it, you then can take 10% there, 10% there, 10% there. So, at the end of the day, you virtually doubled the value of your outtake of the product."Maybe a lot of farmers need to get on top of the Co-op and start to seriously drive that as to what the added value is. What the market can be delivered to. You go to somewhere like Amsterdam, and you walk down the street, and they've got macadamia nuts for $100 a kilo bag, or 100 euros per kilo bag, right? Fully finished, salted and all that sort of stuff. But they probably came off a farm at $4. All those people that are in the chain are making the money."PAUL MAVISPaul manages a 6000-tree macadamia farm in Alstonville for a Sydney family that has owned the farm since the late 1970s.Paul sells his nut-in-shell to a local processing company, which he thinks sells directly to Woolworths. According to Paul, he gets a better price that way. However, like many other local farms, for the last few years, they have been running at a loss because costs have increased so much, that is, fertilisers, fuel and contractors."I know people who were pulling them out," Paul said, referencing trees being removed from some properties.Large-scale farming is the consensus for future success, and in the Northern Rivers, this is difficult to achieve because of the natural topography. However, Paul has seen some farms down on the flats that used to be sugar cane now planting macadamia trees."There's thousands of acres down there. One place down there's got 1000 acres, and there's a place in Lawrence (near Maclean) that planted 3000 acres, but that's owned by a big consortium. It used to be scrub, old dairy farms, and they bought them all out. They spent a lot of money putting dams in, roads and everything."Paul feels that a lifestyle farmer who has 1500 trees and works during the week can manage the macadamia farm on the weekends. Free time might be the issue in the long term. For anything larger than that and smaller than 6000-8000, profitability is a real concern because you need more time to run the farm and make a living.As Peter Colby said above, Paul also said, "The middle man makes the money instead of the farmer. It's been like that for 250 years in Australia with farming. The farmer is always the one that gets the boot in the arse.""I know a bloke up here; he's got 800 trees on five acres. He was thinking about selling, so spoke to a real estate bloke about selling with the trees on there or without the trees. And he reckons you'll have more chance of selling without the trees than with the trees."I've heard of people who were selling to a bloke on 20 acres out at Dunoon or Clunes, and the people that wanted it didn't want the trees on it. So, he took the trees off."As for the future of the local macadamia industry, Paul feels that most of the farms are owned by people whose farms are their second income. So, if they make a loss in consecutive years, it can be sustained. However, the new people buying land in the Northern Rivers want a lifestyle not a farm."There's a lot of younger people coming out of Sydney and down south that are buying these 20-acre blocks and running horses or a couple of cows and sheep or something on it. They don't want the maintenance or the work involved in running one of these bloody things.""Some of the jobs on here, it's not easy when you buy yourself. When we get a storm through here, that can cause a lot of damage, a lot of limbs come down. They've all got to be chipped up.ANDREW HEAPRuns a small-scale macadamia farm in Alstonville. Andrew has good insight into the industry being a former Australian Macadamia Society Executive Officer and a farmer.Andrew feels that anyone buying a small macadamia farm in the Northern Rivers would need to work the farm themselves and try to eke out a living. Buying one as an investment is more about land value than the value of a macadamia farm."The issue really is smaller farms, where land values are rising because people want to come and live here, are out of proportion now compared to more remote growing areas and Bundaberg," Andrew said.Andrew sees the Northern Rivers macadamia industry moving in two ways. One is the merging or purchasing of farms, so there will be some large-scale producers in the 10,000-plus range and some being sold off for lifestyle blocks to new residents moving to the area."I think on the smaller scale side of things, they'll become more lifestyle. Trees will be removed, become livestock paddocks, fenced off, nice and tidy. I mean, there's some proficiency issues there too. A large lifestyle farm is not particularly useful. Spend a lot of time out on the mower, mowing grass for not a lot of return."So, it will depend on debt. If people don't carry a lot of debt, depending on their age, if they're inclined to work the farm and have a rural background, that will also work in favour of the mix of lifestyle and environment with doing a bit of work like harvesting and working on the farm."But I think the trend overall is the big money will going into larger farms and amalgamation in those areas probably not in these areas because people want to live here."ROSS ARNETTRoss's farm, Malua, in Lindendale, has 10 hectares and about 2000 macadamia trees.Ross is a fifth-generation farmer who got in touch after reading our previous stories and wanted to touch on regenerative macadamia farming, as he believes it is a way to lower costs and thus make a living out of a small macadamia farm.Controlling costs is the key component, as growers cannot control the price they receive.Ross has been through dairy and beef farming before the land was agisted out for 40 years. He has no debt."I lived in Sydney, so when I moved back here, I worked at Southern Cross for a while and then planted my first macas about 20 years ago, and I've been farming full-time for about the last 15."Ross says he is managing his tree size with canopy management, and he grows ground cover through his orchard."I'm trying to get close to 100% and by then growing mixed species cover crops down the road. I get a whole range of diversity of plants, which then provide habitat and food for beneficial insects, which also lowers the cost of soft spraying or less spraying. It also has a huge impact on the soil with nutrient cycling with the soil biology. So, I need to use less fertiliser or no fertiliser and a little bit of compost to keep my orchard running."In dollar terms, Ross says his costs are about $3000 a hectare, whereas conventional farms are running closer to $8-9000 a hectare.Ross' trees are a bit young, so he is not in full production; however, he says he will achieve 20 tonnes, which comes out at around $76,000 gross with a $30,000 cost. That leaves Ross with a $46,000 profit. Still not enough to live on as his primary income, but it is not losing money. Ross claims he can hit 50 tonnes a hectare in the future.Ross does not disagree with Peter, Paul and Andrew when it comes to small macadamia farms in the next 20 years, that they will become lifestyle properties."I think that is true for a number of farms. But there are a whole lot of farms that wouldn't be lifestyle blocks. There are some that are mountain goat country, you know, very steep, that in some ways shouldn't be farmed. The erosion issues we have and the quality of the Richmond River. And it's not just macadamia farmers, there's a whole lot of farming practices that affect that."As you know, there's a whole lot going down on the cane flats and I'm sceptical of how well that works. I think some will survive because they're they're way bigger. It's still to me mounted rows to get out of the water table, so they're high enough. But they're like bowling greens. They're all just mowed at the moment with a herbicide strip down it."The way I look at that, I've seen them putting mulch out. It's phenomenally expensive the way they do it. But, biology does not exist in the macadamia industry. It does, in a superficial way. We put out all that this organic matter and the fungi and the bacteria in that, but that's really superficial."Ross has already seen the start of the 20-year future of the Northern Rivers macadamia industry."I've known people that have farmed and have moved out of macadamias. They're certainly not looking at the macadamias as an income stream.""I think the cost now to pull out a big old farm and redevelop it again is probably not that viable. Bundaberg and that area will keep growing.""I'm not an expert, but from what I see, I think a lot of the land that's suitable for lifestyle blocks will certainly end up going that way. It will be interesting to see what happens down on the coastal flats with farming there. I think some that are really good at it will do okay, but I think a number will fail."MARQUIS MACADAMIASMarquis Macadamias is one of the largest processors and growers in Australia. According to its 2023 Annual Report it has 38% of the Australian macadamia crop.When asked about the Northern Rivers, Marquis agreed that the Northern Rivers predominantly features smaller orchards when compared to those in Bundaberg, and they are typically owned by individual owners. Bundaberg is owned by a combination of local farming families and international investors.Marquis' CEO Ben Adams said the upside for the industry in Australia is strong."Macadamias currently make up less than 2% of the global tree nut market, which leaves substantial room for growth. In 2022, the global market for macadamia nuts was valued at US$1.53 billion, and it's projected to grow at an impressive compound annual growth rate (CAGR) of 11.2% through 2032. This strong demand signals a promising future for growers and the industry as a whole."Which new market is the most promising?"We have been actively investing in the Indian market since trade barriers were lowered, with tariffs reducing each year, phasing down to zero in 2028. In 2023, we secured a contract with one of India’s largest distributors, and now our Australian macadamias are available on both wholesalers’ and retailers’ shelves."While nuts are already popular in India, macadamias remain relatively unknown. As one of the world’s largest suppliers of macadamias, we aim to educate the Indian market about the health benefits and the premium quality of Australian macadamia nuts and establish a foothold in this growing category."Another advantage of Asian countries is the access to cheap labour for the processing of macadamia nuts. Andrew Heap said it was cheaper to ship nut-in-shell macadamias to China to be cracked and then shipped back as kernels. The price farmers get can vary greatly depending on the quality of the kernel. Is it a whole or a half? Is it suitable to eat? Is it suitable for chocolate? Is it suitable for meal? Is it suitable for cereal?SUMMARYThe Northern Rivers Macadamia Industry is definitely changing.Lismore Heights resident Peter Cloutier wrote a prospectus in 1971 called Invest in Macadamias. It outlined the financial plans of investing in and planting an orchard in the days when macadamia trees took seven years to bear fruit (now 2-3 years). Peter wrote, "The investment period for this industry is 9 years, and represents $2,730 per acre, including initial land purchase and interest."This investment can be recovered from profits in about the fifteenth year."Of course, these were the very early days of the Northern Rivers macadamia industry, which led to the golden years of the 1990s and 2000s. The Sydney lawyers and doctors looking to purchase a 10-hectare orchard to make extra money and holiday on the far north coast are gone.It is difficult to think that Peter Colby, Paul Mavis, Andrew Heap, Ross Arnett and Marquis Macadamias could all be wrong.More and more small 1000 to 6000 tree macadamia farms will be sold, most likely with the trees removed. Lifestyle blocks will be the reason why people move to the hills of Lismore and the Northern Rivers, all searching for a tree change.That scenario leads to future development applications being lodged with Lismore City Council as land values increase and the population rises to accommodate the next wave of residents to our slice of heaven.As for the macadamia industry, it will survive and, maybe, thrive as large-scale farms owned by long-standing generational farmers or private equity firms take over. The industry is now set for big business.
