Nut grower hurt by smaller harvest

ML Macadamia reports a wider loss in quarter

ML Macadamia Orchards LPposted a wider first-quarter loss than a year earlier as a smaller-than-normal harvest resulted in a 72.3 percent drop in macadamia nut sales.

The Big Island company, the state's largest macadamia nut grower, had a net loss of $100,000, or 1 cent per Class A unit, compared with a loss of $27,000, or nil per Class A unit, in the first quarter of 2005.

Revenue fell more than half to $1.5 million from $3.1 million as ML Macadamia realized only $600,000 from the sale of 1 million pounds of nuts, compared with $2.2 million a year earlier from the sale of 3.6 million pounds of nuts. Contract farming revenue rose 3.9 percent to $923,000 from $888,000.

Dennis Simonis, president and chief executive of ML Macadamia, said the nut shortfall in the first quarter was mainly a timing of the harvest. "We picked up more nuts in the fourth quarter," he said. "Normally, we would have twice that many pounds in the first quarter."

Simonis said the heavy rains in February and March had little effect on the crops.

"The rains will affect the flowering -- the blossoming -- and the nuts, but by the time we get to this part of the crop, the nuts either are there or they're not," Simonis said. "The outlook for the full year looks pretty decent."

ML Macadamia said its lower production was partially offset by a higher price estimate of 60.1 cents per pound compared with 55.8 cents paid in the year-earlier quarter.

The company said the majority of its earnings will be determined by its third- and fourth-quarter harvest and the final price paid by Mauna Loa Macadamia Nut Corp., a wholly owned subsidiary of Hershey Co.Mauna Loa, which Hershey bought in December 2004, holds the exclusive right to purchase all of ML Macadamia's nuts.

The price that ML Macadamia receives for its nuts is determined by a complex arrangement based half on the processing and marketing results of Mauna Loa, and half on the two-year trailing average of U.S. Department of Agriculture macadamia nut prices. The USDA portion for the current year will be higher by 15 percent, ML Macadamia said.

Four of ML Macadamia's five contracts with Mauna Loa, which account for 15 million pounds, or three-fourths of ML Macadamia's total nut output, expire at the end of this year. The Big Isle company, unhappy with the prices its has been receiving, has signed contracts to sell to other local nut processors beginning next year. The lone remaining contract with Mauna Loa, which covers 6 million pounds, will expire in 2019.