Loss narrows
at ML Macadamia
The Atkins' diet craze wasn't enough to help ML Macadamia Orchards LP's earnings this time around.
The Big Island company, which credited the popular protein diet for robust nut sales in its fourth quarter, said the usual harvest timing of its annual macadamia crop resulted in a narrower first-quarter loss of $95,000, or 1 cent a unit. A year ago, ML Macadamia had a net loss of $143,000, or 2 cents a unit.
"Demand is still very strong for macadamias, but our sales figure really is a function of what is harvested," said Dennis Simonis, president and chief operating officer of ML Macadamia. "There's still a very acute shortage. Hawaii processors are paying a premium for kernels."
ML Macadamia said total revenues in the quarter fell 11 percent to $2.1 million from $2.3 million as contract farming revenue decreased nearly 30 percent to $896,000 from $1.3 million. Nut sales, though, improved 12.1 percent to $1.2 million on the sale of 2.4 million pounds of macadamia nuts from sales of $1 million a year ago based on 2.3 million pounds of nuts.
In the first quarter, the partnership received an average price per pound of 48.8 cents compared with an average price of 45.1 cents a year earlier. ML Macadamia has a complex pricing arrangement based half on the current year processing and marketing results of Mauna Loa Macadamia Corp., its exclusive purchaser, and half on the two-year trailing average of U.S. Department of Agriculture macadamia nut prices. ML Macadamia said the USDA portion for the current year will be 2 percent lower than a year ago while the Mauna Loa portion is estimated to be slightly better than last year's price.
The partnership, which owns or leases more than 4,100 acres of orchards on the Big Island, said the estimated nut price it expects to receive this year will be significantly below the spot market price for macadamias due to the financial performance of Mauna Loa and the lagging effect of the nut purchase contracts.
"Right now, if you have nuts available that are not under contract -- if you're an independent grower -- you can get 80 to 85 cents a pound," Simonis said. "What we're getting is 30 to 35 cents less because we don't get paid market price.
"We get paid based on Mauna Loa's financial performance, which is based on its marketing costs and its administrative costs. It's basically a profit-sharing agreement, and because its not performing that well -- at least according to its estimates -- we're getting paid a much lower price."
Simonis added, though, that the USDA component of the nut price should benefit ML Macadamia in the future because of the high price of nuts now. The USDA money ML Macadamia receives now is based on prices from 2002-03.
