Pros And Cons Of Macadamia Farming In Kenya That New Entrant Farmers Should Note
Macadamia farming offers an important source of income for producers worldwide and especially for smallholder farmers in Kenya. Kenya is currently the third top macadamia producer, with a global market share of 13 percent (7,750 tonnes on kernel basis). The role of macadamia as a cash crop for foreign exchange earnings has steadily increased in recent years.
Consumption of nuts, especially macadamia is associated with reducing the risk factors of heart disease, cancer, diabetes, and weight gain. With these health and nutritional benefits, macadamia consumption is likely to increase as consumers turn to healthy food choices.
Macadamia farming has very minimal labor requirements:
The trees need more care during the first two years after planting. The management activities during this period are watering, pruning, and side-dressing with fertilizers. This makes it an ideal crop for telephone farmers.
Value addition opportunity:
Macadamia consumption is growing gradually in Africa. While the market for raw macadamia locally can be hard to find, many consumers are purchasing packed roasted macadamia. Farmers should take advantage of this opportunity which promises better returns.
Starting a Macadamia Farm
Seedlings Purchase: You can propagate the macadamia seedlings on your own from the nut but you can also avoid the hustle and buy already grafted macadamia seedlings at Farmers Trend nurseries at a cost of Kshs. 350.
Land and water: Macadamia requires well-drained soils with a high presence of organic matter. The soil pH should be between 5.0 to 6.5. Rainfall requirements of macadamia range from 800mm to 1200mm per annum.
Open-field cultivation: Being a tree crop, macadamia can only be farmed under the open-field cultivation method. Under this method, macadamia trees are grown in an open field as opposed to an artificial setting like a greenhouse.
Products and Services
Macadamia integrifolia: The fruit of macadamia integrifolia has an outer smooth texture of the seed coat. This variety has a low sugar content of 4% and a high oil content of 80%. Its flowers are white and arranged in clusters of 6 to 12 inches long. The variety also has 3 leaves per node that are 8 inches long.
Macadamia tetraphylla: Macadamia tetraphylla has a rough and pebbled seed coat with a sugar content of between 6% to 8% and oil content of 65% to 75% oil content. It has 3 to 4 leaves per node with creamish flowers that are 15 inches long.
How to Operate a Macadamia Farm
Key Activities: The key activities in macadamia farming are identifying the right variety to plant, transplanting, weeding, pruning, pest and disease control, and harvesting. Gapping is also essential to achieve the required plant population. The most common Macadamia variety in Kenya is Muranga 20.
Farm Operator: The farm operator’s most critical roles are during the early stages of the tree’s growth. During these early stages, most of the key activities will be performed. It is vital that they be done well as they lay the foundation for a productive macadamia farm. After this, macadamia farming is largely not labor-intensive.
Supply Chain: Purchasing the right seedlings: With only two popular varieties in Africa, macadamia farmers should identify the variety to plant-based on the market’s needs. Macadamia seedlings are sold by Farmers Trend. The grafted macadamia seedlings should be healthy in order to reduce the need for gapping.
Marketing & Sale for a Macadamia Farm
Typical customers: The largest macadamia buyers are companies exporting to European Union nations. Others are companies selling branded roasted macadamia. With macadamia gaining popularity among consumers, you can explore processing and selling roasted macadamia directly to consumers. This value addition method will earn you a better profit than selling to processors and exporters.
Going Big / Scaling: With the main market for macadamia coming from abroad, farmers should do a feasibility study of the market before scaling. In Africa, consumption is still low. However, this trend is likely to increase, occasioning a demand locally. In scaling, farmers must secure more land and capital to expand their operations. For farmers who are considering getting into macadamia value addition, scaling should be a priority as their operation will largely rely on the availability of raw macadamia.
Major Risks in a Macadamia Farm
The high cost of participating in export markets: The bulk of buyers for Kenya’s macadamia produce is the export market. A majority of small-scale farmers do not have the required capital to access the export market. They rely on middlemen and nut companies in Kenya who purchase from them and export the product. Farmers will be able to get better profit margins if they could have direct access to buyers in the export market.
How Much Can You Make in a Macadamia Farm
Estimated Returns: If you apply the recommended best practices, you can expect production of 3 tonnes to 4 tonnes of unshelled macadamia nuts per acre. This translates to approximately Kshs400,000 per acre to Kshs 60,000 per acre based on farm gate selling prices of Kshs200 per kg. By shelling and roasting, however, you can sell macadamia to consumers at Kshs2,000 to Kshs2,500 per kilogram locally.
Who is this business best for?: Macadamia farming is ideal for farmers looking for a long-term investment plan. Macadamia trees reach maturity in 3 years if the seedlings are grafted. If not, the trees reach maturity in 7 years. It is therefore recommended that farmers plant grafted seedlings as they offer a quicker return on investment. Macadamia farming is a good long-term investment plan for farmers. The macadamia tree has an average lifespan of 60 years with an average production of more than 80kg per year.
Step by Step of Starting a Macadamia Farm Business
Step 1: Business Goals It’s important to understand that people start businesses for multiple reasons: (1) be your own boss; (2) follow a passion; (3) financial independence; (4) do something during retirement; (5) have a social impact; (6) etc. Take some time to consider why you want to start a business. Fight the temptation to come up with a laundry list of reasons. Be as clear and personal as possible; and you might be surprised by how this process could help you select what type to business to invest in.
Step 2: Market Research Market research is fundamental; don’t be fooled by the idea that Africa is “green” and as such anything you build anywhere will succeed. There are plenty of failed businesses on the continent; opportunities need to be matched with local realities. Evaluate customer behaviors and economic trends to help you hone your business strategy. Use competitive analysis to determine what is missing in the market and how you might operate your business differently from the competitor. You can gather competitive information by observing transactions at the marketplace, through surveys, focus groups and interviews of potential customers. Through careful market research, you’ll be able to zoom in on your target customers and determine a sale strategy that will succeed.
Step 3: Business Plan Writing a business plan should be part of your planning. Not only will financial partners such as banks require a business plan, but also multiple studies have shown that a business plan helps increase the odds of starting a successful business. A properly developed business plan will boost your confidence in your business idea by answering key risks and opportunity questions; and provide a roadmap for achieving your business goals. But a business does not have to be long nor fully completed before you start your business. However, it strive to answer who, what and how you plan to make money.
Step 4: Business Identity Business name and domain: Invest due time and care in selecting a business name and domain name (if applicable). These are going to be key to how customers find and remember you. Business structure: Decide what legal structure is best for your business: Sole proprietorship, partnership, limited liability company (LLC) or a corporation. This is an important as it impacts your taxes, personal liability, your ability to get funding, etc. Consider consulting with an attorney and accountant to help you make your decision. Business location: Location, location location… depending on your business this might literally make or break your business. You might need to think about issues like foot traffic, parking, distance from suppliers and customers, ordinances, utilities, crime, convenience and nearby competition.
Step 5: Recruiting Build the right team. This is going to be crucial for the success of your business. Don’t rush into partnerships and/or hiring. Make sure you have a clearly defined process and stick to it. Consider how you will motivate and compensate your team beyond providing a living wage. Build strong relationships; in general relationships go much further in Africa than legal contracts.