Time for farmers to go nuts

With local demand for tree nuts increasing, De Wet van Rooyen and Hannes Jansen of Montagu Dried Fruit and Nuts – one of the largest suppliers of nuts in South Africa – are encouraging farmers
to supply this growing market. Denene Erasmus reports.

South Africa is no large player in the international tree nut market, but locally, demand for these tasty and nutritious treats is outgrowing production. In 2012, more than 7 000t nuts were imported. But according to Montagu Dried Fruit and Nuts – one of SA’s foremost nut importers and suppliers – the local market’s hunger is far from being satisfied.

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The company, established 13 years ago, processes and packages a range of dried fruit and nuts. It also markets fruit supplied by a separate company, Montagu Dried Fruit (Pty) Ltd. Established in Montagu some 20 years ago, the latter specialises in drying Western Cape tree fruit and exporting apricots, peaches, pears, nectarines and related products.

According to De Wet van Rooyen, Western Cape director of operations for Montagu Dried Fruit, a large proportion of the nuts handled and supplied by Montagu Dried Fruit and Nuts to the local market is imported. But if they were produced locally, he says, his company would support South African farmers.

An opportunity to grow

“The only tree nuts produced on a commercial scale in South Africa are pecan and macadamia nuts,” says Hannes Jansen, franchise director of Montagu Trading Company, the retail arm of Montagu Dried Fruit and Nuts. He adds that the USA produces about 90% of all pecan nuts consumed in the world, while Australia and Hawaii are the largest producers of macadamias.

Together, almonds and cashews account for about 70% of the nuts Montagu Dried Fruit and Nuts supplies to the local market, followed by pecan and macadamia nuts (7% each). The balance consists of pistachios, Brazil nuts, walnuts and hazelnuts respectively.

“Our almonds, pecans, pistachios and walnuts are mainly imported from the USA, while Brazil nuts come from Bolivia, cashew nuts from Vietnam, India, Mozambique, Tanzania and Brazil, and hazelnuts from Turkey,” explains Van Rooyen. “Our business has grown by 37% over the past five years, while the volume of nuts we handle has doubled over two years.

“These figures should give farmers some idea of how fast local demand is growing. The volume we supply to the local market could double again over the next two years. The major challenge is to secure enough to meet this demand. There’s a real opportunity for South Africa to increase nut production.”

He adds that the Western Cape climate is ideal for almond production. “The largest almond farm in South Africa is in Montagu but its 80t annual production is not nearly enough to meet our demand. We still import more than 200t almonds every year.”

Challenges
The problem with expanding the nut industry, Jansen explains, is twofold: a lack of processing capacity, and not enough nuts being produced to supply the critical volume that would make investment in processing facilities viable. “The opportunity is there, but farmers are cautious about investing in nuts when the processing infrastructure is not in place – although there’s some capacity to process pecans, macadamias and almonds,” he explains.

“We’d like to see farmers planting almonds and cashews particularly. “Nuts are governed by international prices, which fluctuate all the time. Currently, there’s a high demand for nuts worldwide. China, the largest consumer in the world, absorbs any surplus that might arise anywhere.”

In the last four years, the international prices for nuts have been high, Jansen adds. Spurred by strong international demand, the pecan price has doubled to about R53/ kg over this period. The growing demand is closely linked to lifestyle change and consumers who want to eat healthier food. With this potential, it’s not surprising that the National Development Plan has singled out the nut sector as one of the smaller, labour- intensive industries with huge expansion and labour creation potential.

It estimates that roughly 80 000 jobs can be created in these sectors, which include berries, cherries, pecans, figs, rooibos tea and olives. According to Jansen, the Industrial Development Corporation (IDC) has tried to get at least three tree nut projects off the ground: a cashew farm in KwaZulu-Natal, a pistachio farm in Prieska and a walnut farm in Aliwal North. However, despite their potential, they have not been successful up to now.

“One of the barriers to entry is the high cost of establishing orchards and the long turnaround time on investment,” he explains. “Cashew nut trees take about seven years to become fully productive. But once properly established, they remain productive for decades. A farmer should also consider that, in addition to being based on a high-value product with strong demand, farming with tree nuts offers an opportunity to mechanise if there’s enough capital to invest.”

Working with farmers
“Our company is growing and helping to stimulate the local demand for nuts. We’d be happy to buy more locally if enough good quality nuts were available,” says Jansen. “We’re even willing to negotiate take-off agreements. We work closely with local farmers who supply fruit and nuts, and they must follow best agricultural practices and comply with the food safety standards that we honour.

“We’re not interested in investing in primary production but we’re willing to assist farmers by buying the nuts they can produce.”

Email De Wet van Rooyen at [email protected] or Hannes Jansen at [email protected].

This article was originally published in the 12 July 2013 issue of Farmer’s Weekly.