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Like other nuts, the Macadamia industry has seen a boom since the pandemic. While initially, there was a decrease in demand, this has been overtaken by an increased interest in the nut over the months.

In fact, this has rendered many countries to invest in their macadamia crop. Itโ€™s quite an interesting incentive, and we were able to determine whatโ€™s been going on by looking at some of the market trends.

History of macadamia farming in Kenya

The production of macadamia nuts in Kenya traces its history from 1944 when a European settler called Bob Harries introduced the crop from Australia in his estate near Thika town for ornamental and household consumption purposes.

He would, two decades later, found Bob Harries Ltd. to invest in the widespread expansion of the crop by introducing two key macadamia types โ€“ M. Integrifolia and M. Tetraphylla โ€“ and other hybrids from Hawaii and California.

In 1968, he grafted his own seedling nurseries to create a source for non-African estate owners and African smallholder farmers in Central Kenyaโ€™s coffee growing zones, namely, Embu, Meru, Kirinyaga and Thika.

He also initiated a campaign to have the government commercialise the crop. A feasibility study carried out in 1974 by the Food and Agricultural Organisation (FAO) that gave a nod to the viability of the sector convinced the government to support macadamia processing and marketing.

The government facilitated the creation of a joint venture between Japanese investors led by Yoshiyuki Sato and a Kenyan, Pius Ngugi, in setting up the Kenya Nuts Company (KNC), which today still runs the factory in Thika.

Sato had founded and run a textile factory in Nairobi since 1960 while Ngugi, a large-scale macadamia and coffee farmer from Thika, was in search of a market for his nuts.

The company would build a modern processing plant and establish its own macadamia plantations at an initial nuclear farm of about 400ha. It also set up a nursery for the propagation of adapted and grafted seedlings to supply out-growers.

By 1975, the company was processing nuts from its own estate as well as from other out-growers. It enjoyed a monopoly purchase right for in-shell nuts, sourcing 90 per cent of these from 140 smallholder coffee cooperative societies, as well as 47 additional buying centres.

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Farmers delivered the harvest to cooperatives and collection centres and got a receipt with a pre-agreed price per kilogram. KNC would then collect the nuts when enough quantity has been bunched, and transfer the payments to the cooperative banks, where farmers collected cash by producing their receipts. Cooperative would earn a 10 per cent commission.

Japan continued to support the macadamia sector for over twenty years, culminating in the construction of the National Horticultural Research Centre where agronomists focused more on grafted macadamia seedling varieties. KNC multiplied these in their nurseries and by the time the Japanese left in 1997, it had distributed over 1.5 million seedlings.

Like the cashew sector, the macadamia sector was also affected by the liberalisation of economy. Being part of the private sector, KNC could not be privatised, which salvaged it from the decay that followed the cashew sector. However, liberalisation accelerated domestic competition.

In 1994, Peter Munga, the Equity Bank founder, opened a macadamia processing factory called Farm Nut Co. in Maragua, Muranga district. He had made some foray into buying coffee from farmers and realised that they were also selling macadamia at low prices. He decided to venture into marketing and processing the nuts. Unlike his well-established rival, his firm lacked logistical infrastructure and links to cooperatives.

The idea of brokers, who had played a marginal role by only collecting macadamia from distant locations, came in handy. With the entry of Farm Nut, the role of middlemen became predominant. Like the cashew sector, the macadamia sector was also affected by the liberalisation of economy.

Being part of the private sector, KNC could not be privatised, which salvaged it from the decay that followed the cashew sector. Essentially, brokers would go directly to the farmers, offer better and direct prices than the cooperatives had done.

Consequently, this significantly reduced farmersโ€™ transaction costs of bringing nuts to collection centres as well as collecting their payments from banks. Also, reduced volumes from the cooperatives increased processorsโ€™ transactional costs. It became more convenient for them to deal with the middlemen, and by the early 2000s, the cooperativesโ€™ role in the macadamia supply chain diminished.

In the early 1990s and when the macadamia prices passed Sh30 mark per kilo in 1997, farmers in Central Kenya became more interested in macadamia farming due also to a fall in coffee prices. Production multiplied five-fold within six years only, crossing the 10,000 tonnes threshold in 1998.

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Kenyan Macadamia Production

Kenyaโ€™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 end of 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

The demand for Kenyan macadamia nuts is rising rapidly in the global market and prices are expected to increase. By 2019 Kenyan macadamia nuts produced 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% by 2025. To accommodate the significant demand increase, Kenyan farmers are replacing old varieties of macadamia nuts with improved varieties such as the Muranga 20 macadamia variety 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.

Production of Macadamia in Kenya

Macadamia is pollinated by insects, as most cultivars are at least partly self-incompatible, planting pollinator trees and introducing bees are both important for good fruit set. After flowering the nuts takes about 6-8 months to mature. Some grafted varieties of macadamias begin bearing within 2 years-3 years.

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A young tree raised from a seedling without grafting takes at least 7 years to fruit, while the grafted trees takes 2-3 years to start bearing fruits. The nuts turn brown when mature and one harvest by shaking the tree branches where by all mature fruits or nuts fall down. Sort out the mature nuts from the few immature which may fall down. One can also pick from the tree.

A good tree can yield 45-90 kg nuts on average per year. Harvesting is usually by manual collection of the nuts from the ground or Picking from the crown-picking the fruits which have cracked or turned brown. The husks are removed and the nuts are dried within 24 hours of harvest. Failure to do so initiates undesirable physiological activity which causes fermentation and spoilage. For the production of edible nuts it is important to dry the nuts from an initial moisture content of 45% to between 5% โ€“ 1.5%.

For any question regarding macadamia farming in Kenya, give us a call or pay us a visit. In addition, do your own research and compare notes, this is just to help you.

We also propagate and sell grafted macadamia seedlings. Contact us via 0724559286

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