Macadamia grower narrows loss
ML Macadamia Orchards LP, the state's largest nut grower, swung to a third-quarter gain of $118,000 after settling a nut price dispute that brought the partnership an additional $552,000.
However, a drought reduced the Big Island company's harvest.
The company, which lost $817,000 in the year-earlier quarter, received approximately 3 cents more per pound for its nuts after objecting to some costs calculated in nut purchase contracts with the grower's exclusive buyer, Mauna Loa Macadamia Nut Corp.
Dennis Simonis, president and chief executive officer of ML Macadamia, said the main part of the dispute centered on the way that Mauna Loa's purchase of kernels from outside regions were treated in the nut calculation. After the adjustment, the average price that ML Macadamia received for its nuts from Mauna Loa was increased to just more than 53 cents a pound from just under 49 cents.
ML Macadamia has a complex pricing arrangement based half on the current-year processing and marketing results of Mauna Loa and half on the two-year trailing average of U.S. Department of Agriculture macadamia nut prices.
Without the one-time payment, which took nearly nine months to resolve, ML Macadamia would have lost money in the quarter -- albeit a narrower loss from the year-earlier period. ML Macadamia's harvest also was down 17 percent last quarter from a year earlier.
Despite the lower harvest, Simonis said the thrust behind the company's financial struggles is the low price it is getting for its nuts.
"We're still getting a nut price substantially below market price even with the adjustment," said Simonis, noting that the market price is 85 to 95 cents a pound.
The continued drought on the Big Island hurt ML Macadamia's crops last quarter, with its harvest of 4.2 million pounds down 39 percent below the historical average. The drought resulted in a smaller crop in the Keeau region and a late harvest in the Kau region, which may result in some deferred deliveries to 2006 from this year. ML Macadamia does the bulk of its harvest in the fourth quarter, Simonis said.
Total revenue last quarter rose 14.1 percent to $3.7 million from $3.3 million. Macadamia nuts sales gained 12.7 percent to $2.8 million from $2.5 million while contract farming revenue rose 19 percent to $897,000 from $754,000.
