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Why are macadamia nuts so expensive?

Macadamia in Demand – they’re simply the best

It's one of the most sought-after nuts across the world, especially by discerning gourmands. And it can often be twice as expensive as other tree nuts, but why?

With a creamy flavour and texture, macadamia is often the go-to main ingredient or garnish in many sweet and savoury dishes. It's also becoming popularised by many vegan dishes as an alternative to dairy and butter.

Plus, as public opinion towards carbohydrates sours in favour of healthy oils, more and more people are recognising macadamia for their high-value, nutritious fats. 

Economically, their demand is outpacing their supply, with the demand growing at around +8% each year.

So the question is, what exactly is happening in macadamia farming and shelling to stop global supply from being in sync?

In this blog, we’re taking you behind the scenes to help you ascertain exactly why macadamia is the world’s most expensive nut.

Scarcely Farmed – only 1% of tree nuts produced worldwide are macadamia!

One of the main reasons that macadamia nuts are expensive is because of their supply.

Like most tree nuts, macadamia grow on trees, and this leads to a delay from planting to harvest. From the point of planting, trees can take years to reach harvest.

Grown across the world, the different clones and hybrids of two species (Macadamia integrifolia and tetraphyla) are farmed in different environments and the macadamia tree can take anywhere between three and seven years to reach maturity. This means that farmers need to give these trees a lot of TLC before they can expect any return on their investment. 

This limitation to supply isn’t helped by the fact that macadamia trees can only exist in a narrow range of environments or agroecologies, where the conditions are just so.

They originated in the highlands of Queensland, Australia, but have been imported for agriculture into places like Hawaii, California, South Africa, Kenya, and Malawi. In these countries/regions, macadamia suits only those areas that have high altitudes, high rainfall, and temperate climates similar to the biome where they originate. 

The trouble is, this type of land is really valuable agriculturally, and is used for planting other crops like avocados, tropical fruit, and coffee. The land value in these regions also increases due to pressure from real estate and tourism. So, macadamia has to compete for space and its trees have to wait a while before they start bearing nuts – these factors mean that land available for macadamia is restricted, making them valuable as a happy consequence.  

Processing Difficulties – a hard nut to crack

Moving onto the shelling process, this is another major contributor to the high price of macadamia nuts. Macadamia as the saying goes, is a hard nut to crack and for a harvest to be effectively processed this is currently done on an industrial scale. Having to shell at kernel processing factories means that a country/region/community has to first invest in the appropriate facilities, and this high entry point already takes a lot of small scale farmers in developing countries out of the race. Further issues that surround the shelling process itself include:

  • Premature harvesting (farmers can’t see the kernel inside the shell when they pick them, and so might harvest the nuts when they are still developing their wonderful oil), and;
  • Shelling damage to the kernels if not done properly (whole macadamia nuts make up less than 50% of shelled macadamia kernels, the rest being halves or pieces that got damaged in the shelling process).

With high investment costs, farmers playing guessing games, and nuts getting busted in the line of duty, its makes sense that whole, shelled macadamia nuts are as highly sought-after as they are. But there is one last major factor that stifles the nuts’ supply and drives up their price.

Emerging Markets – buy or shell?

Because of the limited kernel produce that macadamia processing factories can output, a secondary macadamia market has emerged in East Asia. This is a nut in shell (NIS) market where macadamia are bought unprocessed apart for a sawn incision in the shell and boiled in salted water before being sold as a snack. The macadamia NIS market of course restricts supply in the shelled macadamia market, further driving up the price of this type of macadamia. 

As mentioned, there is an issue in determining macadamia kernels’ maturity before shelling, which has led to attempt to select the largest macadamia for the NIS market. Consequently, lower quality nuts are pushed into the processed kernel supply chains, which drives up grading shelling and sorting costs. It is estimated that at least 20% of the NIS in Kenya is illegally exported, which is a dangerous prospect for agricultural livelihoods as they are less likely to receive the added value that comes with the shelling process.

Rounding Things Out

Macadamia is a special nut, and it is highly-valued by people across the planet. While expensive, seeing that it is one of the world’s youngest agricultural commodities (only commercialised by Hawaii in the 1950’s), it is fair to say that there is so much potential for macadamia in terms of providing nutritious satisfaction to consumers and viable, sustainable incomes and diversified nutrition to farming communities. It is our hope, in a world where responsible consumption is increasingly valued, that more and more people join Nutcellars on our journey to promote ethical trade and sustainable practices in this industry.

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