Agricultural firm Sasini is looking for new markets in Asia for macadamia nuts after demand in the US dried up, forcing it to close its processing plant in January last year.
Macadamia is among the emerging businesses for the Nairobi Securities Exchange-listed firm after the mainstay tea and coffee.
Sales of macadamia collapsed to Sh151.3 million in the year to September 2023 compared to Sh858.5 million a year earlier as inflation hurt consumers’ purchasing power in the single market Sasini has been depending on.
The sharp sales decline saw the macadamia division post a loss of Sh97.7 million in the review period.
“This was driven by a total collapse of demand in the USA due to inflationary pressure on consumer disposable income which resulted in slow movement of the global nuts sector,” the company says in its annual report.
“Whereas this demand is expected to come back in 2024, we will strengthen our USA trading of nuts by seeking new horizons to market our macadamia nuts in the Middle East and especially in Asia.”
The company added that it will seek to grow new markets to reduce its reliance on the traditional nuts market of the US as it gets ready for most of its new orchards that will go into production in the next 18 months.
Meanwhile, its macadamia nuts processing plant remains closed awaiting a lift in global demand for the commodity used as a snack, among other applications.
Macadamia prices Sasini realised dropped to Sh1,349 per kilo in the review period when it shipped only six containers.
This was down from Sh1,720 per kilo the year before when it exported 27 containers of the nuts.
The lower prices have been attributed to oversupply and reduced consumer purchasing power in developed economies, hurting growers and processors in Kenya to South Africa.
Besides macadamia, Sasini also recorded lower sales of coffee which declined to Sh1.7 billion in the review period from Sh2.8 billion a year earlier. The company said the drop was caused by government-led reforms that disrupted the sector’s supply chain.
Its tea sales, however, registered growth, rising to Sh3.4 billion from Sh3.2 billion.
Overall, Sasini’s turnover shrank to Sh5.7 billion from Sh7.3 billion, leading to net income more than halving to Sh542.5 million from Sh1.1 billion.
Other factors that contributed to the lower earnings include higher debt service expenses.
Sasini says its priorities in the short-term will be to firm up automation besides lobbying for business-friendly policies.
“Our work with rolling out automation across the business will continue in the tea unit and in the other units in macadamia and avocado,” the company says in the report.
“We will continue to engage the government towards having policies that are friendly to business achievement, job creation and protection, and general growth of the economy.”
