Required Report - public distribution

**Date:** 1/28/2004

**GAIN Report Number:** GT4005

**Guatemala**

**Tree Nuts**

**Macadamia**

**2004**

**Approved by:**

![](media/image1.wmf)Stephen Huete, Agriculutral Counselor

office of Agricultural Affairs

**Prepared by:**

Douglas Ovalle, Agricultural Specialist

**Report Highlights:**

**Guatemalan macadamia production and exports have increased around five
percent in the last year. In addition, the Guatemala nut industry is
capturing the value added by manufacturing macadamia by-products.**

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Unscheduled Report

Guatemala \[GT1\]

\[GT\]

Table of Contents

[Executive Summary 3](#executive-summary)

[Production 4](#production)

[Consumption 5](#consumption)

[Trade 6](#trade)

[Stocks 6](#stocks)

[Policy 7](#policy)

[Marketing 7](#marketing)

# Executive Summary

Guatemala's macadamia nut production increased around five percent in
the last year in comparison to 2002. In 2004, nut production is expected
to increase by around 5 percent as new plantings start to bear fruit.

Guatemala's nut production for 2003 is estimated at 10290 MT
(wet-in-shell basis). Production in the year 2004 is forecast to
increase to 10780 MT (wet-in-shell basis). During 2003, weather changes
did not affect nut production. In 2003, average yields were 5.8
MT/Hectare, steady from the 2002 average yields. In the year 2004,
average yields are not expected to change.

Guatemala's macadamia nut exports for 2003 reached 9900 MT (wet-in-shell
basis), up from the calendar year 2002 exports of 9500 MT (wet-in-shell
basis). In 2003, 5300 MT (wet-in-shell basis) were exported to the U.S.
and the rest was distributed between Japan, Taiwan, Hong Kong,
Singapore, Canada, Sweden and Norway. Increases in exports and
production compensate for decreases in price, leaving processors and
producers in fairly good shape for 2002. It is expected that the same
trend will follow for the year 2004.

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.
There are no policies that subsidize or encourage exports. There are two
producer/processor/exporter companies in Guatemala. both companies are
planning to continue to increase exports as well as production. In 2003,
25 percent of production was kernel and 75 percent finished goods. For
the year 2004 the same trend is expected. In the macadamia industry the
diversification trend to finished products such as oils, cosmetics and
confectionaries continues. In 2003, consumption remained steady, with
great emphasis in the cosmetics area. Domestic consumption is expected
to remain steady for 2004.

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

  Country              Guatemala                                                  

  Commodity            Macadamia,                                    (HA)(1000    
                       Inshell                                       TREES)(MT)   
                       Basis                                                      

                       2002         Revised    2003       Estimate   2004         Forecast

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

  Market Year Begin                 01/2002               01/2003                 01/2004

  Area Planted         3875         3875       3990       3990       0            4105

  Area Harvested       1690         1690       1775       1775       0            1860

  Bearing Trees        265          265        278        278        0            291

  Non-Bearing Trees    380          380        380        380        0            380

  Total Trees          645          645        658        658        0            671

  Beginning Stocks     110          110        50         50         0            80

  Production           9800         9800       10290      10290      0            10780

  Imports              0            0          0          0          0            0

  TOTAL SUPPLY         9910         9910       10340      10340      0            10860

  Exports              9500         9500       9900       9900       0            10450

  Domestic Consumption 360          360        360        360        0            360

  Ending Stocks        50           50         80         80         0            50

  TOTAL DISTRIBUTION   9910         9910       10340      10340      0            10860
  -------------------- ------------ ---------- ---------- ---------- ------------ ----------

# Production

The Guatemalan nut crop for 2003 is estimated at 10290 MT (wet-in-shell
basis) up by around five percent from the 2002 production of 9800 MT
(wet-in-shell basis). In 2004, production is forecast to increase to
10780 MT (wet-in-shell basis). Since no official data are available, the
PS&D table was developed using data obtained from industry
representatives. The conversion factor utilized to convert from
wet-in-shell basis to shelled kernel is 19 percent.

In 2003, weather conditions didn't adversely affect the macadamia
industry and diseases were present at a lower than normal level. Average
yields for 2003 were estimated at 5.8 MT/Hectare, steady from the
previous year's average. In 2004, 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.

Guatemala's planted area for macadamia nuts during 2003 was estimated at
3990 hectares, of which 1775 hectares were harvested. Planted area for
2004 is expected to increase to 4105 hectares as new trees are planted.
Harvested area is expected to increase to 1860 hectares as young trees
begin bearing fruit. Planted area and harvested area vary since many
plantations are not yet in production due to new trees planted.

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 are two significant producer/processor/exporter
companies in Guatemala, Nueces del Pacifico which accounts for about 40
percent of the Guatemalan macadamia nut export market and Agronomicas de
Guatemala (Patzulin) which accounts for 60 percent of the market. They
purchase macadamia nuts from individual producers for processing and
export to other countries. There are over 100 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 Macadam has found acceptance for
macadamia by-products such as oils, confectioneries, processed nuts and
especially cosmetics, creating a niche market for macadamia. Local
retail prices for macadamia are around \$9.00 bottled/pound. In 2003,
Guatemala consumed 360 MT of wet-in-shell macadamia nuts. In 2004, local
consumption is expected to remain steady at 360 MT of wet-in-shell, due
to stalled consumption of higher valued items in response to the rough
economic situation that most of the Guatemalan population is
experiencing.

Traditionally, most macadamia nuts in Guatemala were consumed as snacks.
Nowadays, Plantaciones Nuez del Pacifico, which sells under the John
Macadam brand, is marketing and selling cosmetic macadamia by-products,
oils and confectionery in addition to the traditional bottled or
packaged snacks. John Macadam processed macadamia nuts are placed in
jars and is being sold in grocery stores.

## 

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

  Country           Guatemala                           

  Commodity         Macadamia,                          
                    Inshell Basis                       

  Time period       Jan-Dec           Units:            metric tons

  Exports for:      2002                                2003

  U.S.              5000              U.S.              5300

  Others                              Others            

  Japan             1000                                1100

  Sweden            1200                                1200

  Norway            1200                                1200

  Canada            600                                 600

  Taiwan            300                                 300

  Singapore         200                                 200

                                                        

                                                        

                                                        

                                                        

  Total for Others  4500                                4600

  Others not Listed                                     

  Grand Total       9500                                9900
  ----------------- ----------------- ----------------- -----------------

# Trade

Macadamia nut exports for calendar year 2003 reached 9900 MT
(wet-in-shell basis), around a five percent increase from 2002 exports
of 9500 MT (wet-in-shell basis). In 2003, exports to the U.S. were 5300
MT. In 2004, total exports are forecast to increase further to 10450 MT
(wet-in-shell basis). In 2003, 25 percent of exports were on a shelled
kernels basis and 75 percent as 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 2003 was between
US\$ 2.80/lb and US\$ 2.90/lb. In 2004, the average price is expected to
remain steady at the US\$ 2.80/lb level. According to the two exporting
companies, 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 both exporting
companies in order to improve the Guatemalan macadamia nut quality.

# Stocks

Guatemala does not hold large volumes of macadamia nuts in stock because
most are exported immediately. Ending stocks for 2003 were 80 MT
(wet-in-shell basis), an increase from the ending stocks for 2002 of 50
MT (wet-in-shell basis).

In 2004, ending stocks are forecast to decrease again to 50 MT
(wet-in-shell basis) due to a larger demand for product. Macadamia stock
have been owned by the exporter.

# 

# 

# 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. Some
technical assistance has been provided by the Guatemalan Coffee
Association.

# Marketing

Plantaciones Nuez del Pacifico, which is represented by the John Macadam
brand in the last years, has begun penetrating new niche markets with
different macadamia by-products such as oils, cosmetics and
confectionery. There is a relatively small yet growing up-scale end of
the food and small market in Guatemala. The increase in quality hotels,
and tourism will add the local consumption of macadamia nuts and further
processed products. In addition, Plantaciones Nuez del pacifico is
currently manufacturing for the Roland brand out of New York.
Plantaciones Nuez del Pacifico is using the remaining macadamia powder
from the oil extraction to process granola bars in order to produce a
healthy snack. In addition, recently Plantaciones Nuez del Pacifico
closed the negotiations for a joint venture with the U.S. based company
Caldac from California.