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  • Olam International plans major increase in nut orchard plantings to meet skyrocketing global demand

    Apr 23rd, 2015

    Olam International has indicated plans it could expand its nut orchards in Australia by as much as 25 per cent over the next three years. The nut industry in Australia is now worth around $767 million a year, with almonds ($450m) and macadamias ($122m) leading the field.

    With global demand growing at a gallop, and California in the grip of drought, nut prices are holding strong. The almond industry in Australia has grown from micro to second largest exporter on the planet in about four years. ABARES figures show a 90 per cent increase in production over the past four years. Olam International, the leading player in nuts, bought up the failed Timbercorp Managed Investment Scheme almond plantations in 2009 and sold them (30,000 acres) in a leaseback arrangement last year, for $211 million.

    "It does allow us to invest more and grow more almonds which is what we are happy to take; the production risks of almonds, rather than land appreciation if there is any which, is not of interest to us," the managing director of edible nuts at Olam, Ashok Krishen, told the Australian Nut Industry conference in Sydney this week. lam also grows 7000 acres of almonds in California, which is in the grip of a four-year drought.

    Almonds have come in for criticism for exploiting groundwater, but Mr Krishen said beef took four times the water to produce the same ounce of protein. "Almonds consume 22-23 gallons of water per ounce, an ounce of beef consumes about 105 gallons and lentils consume about 70 gallons of water per ounce," said Mr Krishen.

    Almonds still beat chicken meat, he said, which probably used 35 gallons to produce an ounce. "If you compare like to like protein, almonds consumes the lowest amount of water per ounce of production," he said. Mr Krishen told the Australian Nut Conference that global consumption was driven by a focus on health.

    "They are high in energy, low in saturated fats, high in mono-unsaturated fats. Any nuts are a low glycaemic index food," he said. Australian hazlenuts are forecast to rise from a $1 million industry today to a $40 million sector by 2025 (ABARES 2015.)

    Currently the largest suppliers in Turkey are under pressure to reduce the reliance on child labour to harvest hazelnuts. Nestle, the main market for hazelnuts, committed to a transparent supply chain by 2014, where cases of child labour were identified and eliminated.

    Australia could be a prime site to develop more hazelnut groves in future, and Olam has indicated it is looking at that. But for the immediate future, it is focused on a 25 per cent increase in almond orchard footprint over the next three years in the NSW Riverina and South Australia, to insure against climate risk.