Required Report - public distribution

**Date:** 3/11/2005

**GAIN Report Number:** GT5003

GT5003

**Guatemala**

**Tree Nuts**

**Macadamia Nuts**

**2005**

**Approved by:**

![](media/image1.wmf)Steve Huete, Ag Counselor

U.S. Embassy

**Prepared by:**

Daniel Orellana, Marketing Specialist

**Report Highlights:**

Guatemalan macadamia production and exports have increased around 5% in
the last year. Growth is expected to continue as more trees begin to
bear fruit. Exports are expected to grow by 10% for 2005.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Guatemala \[GT1\]

\[GT\]

Table of Contents

[**Executive Summary 3**](#executive-summary)

[Production 3](#production)

[Consumption 4](#consumption)

[Trade 5](#trade)

[Stocks 5](#stocks)

[Policy 6](#policy)

[Marketing 6](#marketing)

# Executive Summary

Guatemala's macadamia nuts are exported at 1.0 to 1.5 percent humidity
levels. Macadamia kernels are vacuum packed in 25-pound bags for export.
Guatemala's macadamia nut exports for 2004 reached 6510 MT (wet-in-shell
basis), up from the calendar year 2003 exports of 6184 MT (wet-in-shell
basis). This represents an increase of 5% over the previous year. In
2004, 5208 MT (wet-in-shell basis) were exported to the U.S. and the
rest was distributed between Japan, Hong Kong, Sweden and Norway. The
increase in international prices has motivated farmers and this year
over 30,000 new trees were planted. Local producers are expecting to see
export increases as by as much as 10% for the next year thanks to new
trees bearing fruit. The largest exporter (Patzulin) planted 25,000 more
trees in the year 2004. There is only one-major
producer/processor/exporter company in Guatemala. In the past there had
been two, but one (Nueces del Pacifico) had some major financial
problems and is no longer a major force. Patzulin has taken advantage of
this opening and is buying from most of the small and medium farmers and
controls 60-70% of the export market.

In 2004, 80 percent of production was kernels ready-to-eat and 20
percent other finished goods. For the year 2005 the same trend is
expected. In the macadamia industry the diversification trend to
finished products such as oils, cosmetics and confectionaries continues
but at a slow pace. In 2004, consumption remained steady and the trend
is expected to hold for 2005. A local liquor company is also trying to
produce an alcoholic beverage from macadamia nuts, but it is in the R &
D stage and is using less than 10 Metric tons for its research.

  -------------------- ----------- ---------- ---------- ---------- ---------- ----------
  PSD Table                                                                    

  Country              Guatemala                                               

  Commodity            Macadamia   In Shell   Basis (MT)            (HA) 1000  
                                                                    TREES      

                       2003        Revised    2004       Estimate   2005       Forecast

                       USDA        Post       USDA       Post       USDA       Post
                       Official    Estimate   Official   Estimate   Official   Estimate
                       \[Old\]     \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]

  Market Year Begin                01/2003               01/2004               01/2005

  Area Planted         3990        4097       4105       4313       0          4463

  Area Harvested       1775        2042       1860       2150       0          2389

  Bearing Trees        278         349        291        367        0          408

  Non-Bearing Trees    380         380        380        380        0          380

  Total Trees          658         729        671        747        0          788

  Beginning Stocks     50          50         80         50         0          19

  Production           10290       6373       10780      6668       0          7335

  Imports              0           0          0          0          0          0

  TOTAL SUPPLY         10340       6423       10860      6718       0          7354

  Exports              9900        6184       10450      6510       0          7161

  Domestic Consumption 360         189        360        189        0          210

  Ending Stocks        80          50         50         19         0          17

  TOTAL DISTRIBUTION   10340       6423       10860      6718       0          7354
  -------------------- ----------- ---------- ---------- ---------- ---------- ----------

# Production

The Guatemalan nut crop for 2004 is estimated at 6668 MT (wet-in-shell
basis) up by around 5% from the 2003 production of 6,342 MT
(wet-in-shell basis). In 2005, production is forecast to increase to
7,334 MT (wet-in-shell basis). The Ministry of Agriculture carried out
these production estimates through a national agricultural survey, and
the industry representatives concur. The PS&D tables were created using
these estimates. The conversion factor utilized to convert from
wet-in-shell basis to shelled kernel is 19 percent.

In 2004, weather conditions didn't adversely affect the macadamia
industry and diseases were present at a lower than normal level. Average
yields for 2004 were estimated at 5.8 MT/Hectare, steady from the
previous year's average. In 2005, average yields are expected to remain
steady. Some increases in yields are expected in the next couple of
years as new plantings begin bearing fruit, new trees are planted and
older trees mature. The average output per bearing tree in 2004 was 26
lbs.

Guatemala's planted area for macadamia nuts during 2004 was estimated at
4,313 hectares, of which 2,150 hectares were harvested. Planted area for
2005 is expected to increase to 4,463 hectares as new trees are planted.
Harvested area is expected to increase to 2,389 hectares as young trees
begin bearing fruit. The majority of macadamia plantations in Guatemala
are at intermediate elevations along the Pacific slope, in the
departments of Sacatepequez, San Marcos, Quetzaltenango, Suchitepequez,
Santa Rosa, Huehuetenango, Solola, Alta Verapaz and some in Quiche.
Guatemalan macadamia nuts are harvested throughout the year, but peak
months are May, June, July and August. Flowering begins between late
August and early September but most flowering occurs during the months
of October, November and December.

Currently, there is only one significant producer/processor/exporter
company in Guatemala, Agronomicas de Guatemala (Patzulin), which
accounts for 60-70 percent of the market. They purchase macadamia nuts
from individual producers for processing and export to other countries.
There are over 350 macadamia producers in the country, ranging from
small to large plantations. Most of the macadamia production is
intermixed with other crops such as bananas, plantains, beans etc., but
according to producers most of it is now being intermixed with coffee as
shade for the coffee plant. With coffee prices in somewhat of a slump,
farmers are turning to macadamia production and yield improvements to
compensate for the loss in income. Several years ago coffee prices were
high and many coffee producers invested in improved agricultural
practices in coffee plantations so they do not have to invest much more
on agricultural inputs to improve macadamia production.

Macadamia processors divide the shelled nuts according to their size and
appearance. The initial grading of kernels for size and color is done by
machine, with a final classification conducted by hand. Classification
table follows:

Style 1 - large whole kernels

Style 2 - 90% large kernels 10% halves

Style 3 - 50% whole kernels 50% halves

Style 4 - halves

Style 5 - large to medium nut pieces

Style 6 - medium to small nut pieces

Style 7 - small nut pieces

Style 8 -- powder

# Consumption

Macadamia consumption in Guatemala continues to be at a low level
because of high market prices the low purchasing power of most
Guatemalans, and lack of consumer awareness. Most of the Guatemalan
population is not familiar with macadamia nuts and their uses, but that
is starting to change. The brand John Macadamia had found some
acceptance for macadamia by-products such as oils, confectioneries,
processed nuts and especially cosmetics, creating a niche market for
macadamia. However its ready-to-eat kernels were forced of the shelves
last year due to low sales. Local retail prices for macadamia are around
\$9.00 bottled/pound. In 2004, Guatemala consumed 189 MT of wet-in-shell
macadamia nuts. In 2004, local consumption is expected to increase
slightly to 210 MT.

## 

# Trade

  ----------------- ------------------ ---------------- -----------------
  Export Trade                                          
  Matrix                                                

  Country           Guatemala                           

  Commodity         Macadamia, In                       
                    shell Basis                         

  Time period       Jan-Dec            Units:           Metric Tons

  Exports for:      2003                                2004

  U.S.              4947               U.S.             5208

  Others                               Others           

  Japan             300                                 300

  Sweden            200                                 300

  Norway            137                                 102

  Hong Kong         600                                 600

                                                        

                                                        

                                                        

                                                        

  Total for Others  1237                                1302

  Others not Listed                                     

  Grand Total       6184                                6510

                                                        
  ----------------- ------------------ ---------------- -----------------

Macadamia nut exports for calendar year 2004 reached 6,510 MT
(wet-in-shell basis), around a five percent increase from 2003 exports
of 6,184 MT (wet-in-shell basis). In 2004, exports to the U.S. were
5,208 MT. In 2005, total exports are forecast to increase further to
5728 MT (wet-in-shell basis). In 2004, 80 percent of exports were on a
ready-to-eat kernels basis and 20 percent as other finished goods. In
2004, the same ratio is expected. Guatemala's macadamia nuts are
exported at 1.0 to 1.5 percent humidity levels. Macadamia kernels are
vacuum packed in 25 pounds bags for export. There are no export policies
that subsidize or encourage exports.

The average macadamia kernel export FOB price during 2004 was between
US\$ 2.38/lb and US\$ 2.90/lb. In 2005, the average price is expected to
remain steady at US\$ 2.50. According to the major exporting company,
their market efforts for the next five years will be to increase
exports, especially to their strongest market, the United States.
Producers are receiving technical assistance from the exporting
companies in order to improve nut quality.

# Stocks

Guatemala does not hold large volumes of macadamia nuts in stock because
most are exported immediately. Ending stocks for 2004 were 19 MT
(wet-in-shell basis), a decrease from the ending stocks for 2003 of 50
MT (wet-in-shell basis).

In 2004, ending stocks are forecast to decrease again to 17 MT
(wet-in-shell basis) due to a larger demand for product. In Guatemala
the exporter owns Macadamia stock.

# Policy

The Guatemalan Government has no policies of subsidies or assistance to
producers or exporters. However, the Guatemalan Coffee Association
encourages coffee producers to utilize macadamia nut trees as shade for
coffee plants to help the environment and at the same time help farmers
to diversify their agricultural practices and sources of income. The
Guatemalan Coffee Association has provided some technical assistance.

# Marketing

The market is experimenting with other finished goods such as oils,
liquors and cosmetics, but at this time most of the product is being
shipped as ready-to-eat kernels.

Locally there are now three different brands on the supermarket shelves,
but supermarket executives commented that the product rotation is still
slow in comparison to other snack nuts.

The brand John Macadamia was not able to survive in the supermarket
shelves and was removed from the supermarkets in December 2004.
According to supermarket executives the rotation was too slow.