Gene Likhanya stumbled across gold when he learnt about the high potential profits to be made farming macadamias, from his uncle many years ago. Guided by his faith and a good business instinct, he invested in a few macadamia trees despite his lack of knowledge about the industry. Today Gene’s company, Madimbo Macs, operates three macadamia farms in Limpopo’s Vhembe district. Peter Mashala visited Gene to find out about the progress he has made and his plans for the future in this R5 billion industry.
While his army buddies were spending their hard-earned dollars from a peace-keeping mission in Burundi buying fancy cars, Gene Likhanya, CEO of Madimbo Macs, was investing his money in land and a university degree. Smart moves indeed.
Today Gene is producing macadamia nuts off 80ha of orchards on three farms in the Vhembe district in Limpopo from a start that began on a 2.5ha plot in Tshakuma village.
“My family has no history of farming. My dad moved from Venda to Johannesburg for a better life when we were kids,” recalls Gene. He and his siblings stayed with their dad in Soweto for a few years before returning home to their mother in Tshakuma. “I was in Grade 5 when I went back to Limpopo to finish my schooling in Polokwane,” he says.
A lack of funds meant that studying after matric was not an option, so Gene joined the South African National Defence Force. While in the army he volunteered for a UN peacekeeping mission in Burundi where he earned dollars.
“Earning this kind of money made me realise that I had an opportunity to achieve my dreams of going to university and starting a business,” he says.
“When most of the guys were buying cars, I called my dad and asked him to find me a piece of land,” recalls Gene. It was 2004 and his dad found him a 2.5ha plot in Tshakuma for R45 000. “I had no idea what I was going to do with this land at first,” says Gene.
On his return to the country at the end of 2004, Gene had a long chat with his uncle, John Mudau. John had just left his job as a teacher in Alexandra, Johannesburg, and was farming macadamias in Tshakuma on a 5ha plot he had inherited from his father. This conversation started Gene on the road to farming macadamias.
The following year Gene enrolled for a B Comm degree with a major in entrepreneurship at the University of Johannesburg. He came to appreciate the value of education, especially for a person who runs his own business.
He registered Madimbo as a farming business with the initial focus on cash crops, like cabbage and spinach, and set aside a small portion to plant macadamia trees. “I was fortunate in that I could act on what I was learning at school in my business,” says Gene.
But studying full-time and farming cash crops became too demanding. Once he had looked at his options and researched macadamia farming, he decided to focus on the macadamias. Planting the orchards requires capital and then there is a wait before the first commercially viable crop. “It takes a few years before one starts to make money from macadamias,” he says.
In the meantime, no cash crops meant a shortage of cash, so Gene got a job with Old Mutual as a business consultant. He earned good money working for Old Mutual and he used it to buy another 10ha of land, which took his land holdings up to 15ha. He developed and planted the 15ha and started a plant hire business.
MATURING THE TREES – GROWING THE BUSINESS
Gene says macadamias had little value for smallholder farmers in his area 15 years ago. The change, according to him, started between 2008 and 2010 because of investments made by the industry in research and international marketing. He explains that farmers now earn about R450 000/ha/year from 10-year-old to 12-year-old trees.
“Using good agricultural practices, farmers in this area produce anything between 6t/ha to 7 t/ha,” says Gene.
After a seven-year wait, Gene’s investment started paying back in 2014 when the trees matured. His first commercial harvest came to about 1.5t/ha, a yield which has increased every year.
“As macadamia trees mature, so does their production capacity. The tree yields peak when trees are about 12 years old as long as they are properly taken care of,” says Gene. His average yield at Tshakuma is now 3.5t/ha to 4.5t/ha from trees ranging between five and 16 years.
Once his production in Tshakuma had peaked, Gene wanted more land to grow his business. As luck would have it, his brother knew the chief in the neighbouring village of Ha-Mashau. He made a request for land. It was approved by the chief and his council, who gave him an initial 35ha.
Work in Ha-Mashau commenced immediately with the development of 17ha planted with 5 500 trees. Then Gene ran out of money. He needed to borrow money but he was farming on communal land that did not belong to him, so the conventional avenues were closed to him.
“The banks would not finance me, so I approached Livestock Wealth,” he says. Livestock Wealth is a funding initiative that raises money through public investment in high-value agricultural products over a fixed term.
The money he accessed through Livestock Wealth made it possible for him to plant 9,500 trees on an additional 25ha at the Ha-Mashau farm. The funds also helped him with day-to-day operational costs, and setting up a nursery that produces 5 000 seedlings for the local market. “We sell our trees to other growers and run the nursery as an income-generating business,” says Gene.
The chief was so pleased with Gene’s progress and the all-important jobs his business created for the community, that he increased Gene’s access to land to 80ha.
ORCHARD PROBLEMS AND PRODUCTION
Gene buys his own trees from Nelspruit to get fresh genetic material from outside his region. This, according to him, minimises risks in terms of pests and diseases.
He explains that growing macadamias from seedlings is a scientific process that requires diligence and attention to detail.
“We analyse our soil and leaf samples every year to tweak our maintenance plan.” He explains growers can’t just look at their trees and decide what fertiliser they need. “We work according to the results of a proper lab analysis.”
He also needs the data for his annual budget. “Looking after trees can be expensive. We work on about R200/tree per month, which includes labour, irrigation, fertiliser and electricity.” At an average 312 trees/ha the total costs come to about R62 000/ha/year. “Annual operation costs at Tshakuma are at least R1 million,” Gene says.
The trees at Ha-Mashau are only one and two years old; break-even is expected by year 10. “Then we’ll probably start making a profit by year 12.”
The picking season starts in February and goes through to August. “We feed productive trees with calcium-based fertilisers to keep them strong and able to carry fruit to term.”
In late August the trees start flowering and nut set (fruit formation) is in late September. “If a tree does not get the right nutrients, it will not be able to produce and carry nuts when it’s stressed. When the tree gets stressed, it will choose to save itself and start dropping off nuts,” he explains.
Off-season, trees get 2:3:4 or potassium nitrate as a boost before the flowering period. Chemical spraying is done in January and February after nut set when the nuts are building up oil.
“This is when they start attracting pests like the stink bug, a prevalent pest that is a huge problem for the macadamia industry in this region,” says Gene.
Madimbo Macs supplies a few factories in Limpopo. “We take samples to the different factories for tests, and after getting results and a price offer, we decide where we will sell the bulk of the crop,” he explains. Gene says it differs every year.
“Another thing I consider is the payment period. One company may offer to pay me in 30 days while others will offer to pay in 60 days,” he adds.
Most of the South African macadamia crop is exported to Europe and China while locally macadamia nuts are considered a high-value crop and sold to the higher LSM market.
Gene comments that while the largest share of the crop is for human consumption, the demand from the cosmetic and health sectors is picking up, as research shows macadamias have other benefits.
The macadamia industry is still very small and niche, with the crop representing only about 2% of the entire global nut industry. “However, the scope for macadamias is growing, partly because of the research and marketing in the industry at an international level,” he points out.
Last year, Gene went into partnership with a community in Makhado to expand his operation. He leases a farm that belongs to a community property association with 30ha of established trees.
“Unfortunately, the trees have been neglected for years since the land was transferred from the previous owner, so we had to spend a lot of money trying to bring them back into commercial production.”
Gene has applied for the finance to set up a drying facility on the farm. This will cut the nut processing costs. “We currently pick and deliver to factories where the nuts are dried and de-husked. Setting up a drying facility will help me and benefit other smallholder farmers, especially the farmers I’m incubating and mentoring.”
He has 12 smallholder farmers on incubation supported by the SAB Foundation. “We also have offtake agreements with them. I help them with quality assurance and other technical issues so they can grow a healthy, profitable crop.”