Enabling China market access for nut processor, Tzamac
Standard Bank's support, including finance and Africa-China market access initiatives, has helped macadamia nut processor Tzamac upgrade its facilities, navigate the complexities of locating reliable Chinese buyers and secure a lucrative export deal.
The context
Tzamac is a macadamia processing facility located in Tzaneen, Limpopo. The operation was established in 1997 and is owned by three directors who are also growers in the region.
Tzamac currently processes approximately 2,500 tons of macadamia nuts annually for its directors and approximately 40 additional farmers.
The company also handles marketing and distribution on behalf of producers and primarily exports products to China, Europe, and the United States (US), focusing mainly on nut and shell products for Chinese customers and kernel for European and US customers.
The problem
Before the pandemic, global consumption of macadamia nuts was on the rise, prompting local farmers to expand their crops. However, recent global events have dampened this trend.
Tzamac exports roughly 60% of its products to China, where macadamia nuts are traditionally enjoyed during holidays and celebrations such as Chinese New Year and the Dragon Festival. Due to COVID-19 lockdowns, public events were prohibited, resulting in lower consumption and loss of sales.
The Russia-Ukraine war also put pressure on their secondary export market in Europe, where rising gas fees meant consumers had less disposable income to spend on what is seen as a luxury product after paying higher utility bills.
Consequently, there was an oversupply of macadamias in the US market, which resulted in a drop in the price of the nuts and reduced profitability for farmers and processors.
With the pandemic over and a coming crop expected to nearly double in volume from 2,500 tons to 4,500 tons in the next four to five years, it’s critical for Tzamac to establish new trade deals with off-takers to absorb this increased supply.
“We already export roughly 60% of our products to China but given the sheer size of the Chinese consumer market, there is huge potential for growth there. However, there’s always a challenge in finding Chinese buyers. Establishing relationships with reliable buyers is important so we can support our farmers. They have planted many more macadamia trees, and the crop is coming, so we need to find an outlet for this volume.”
– Rogan Schulze, General Manager, Tzamac
The solution
Tzamac has been a Standard Bank customer since 1997.
Recently, the bank assisted Tzamac in acquiring and importing state-of-the-art machinery to enhance its production facilities. This solution entailed commercial asset finance to fund its purchase and end-to-end logistical support to ship, land and transport the equipment to Tzamac’s facility in Tzaneen.
The Standard Bank relationship team also proactively reached out to Tzamac, inviting them to promote their products at no charge in the bank’s African Exporter Profiles Showcase. This interactive guide, available in English and Mandarin, is distributed online and at key events such as the annual China International Import Expo (CIIE), the world’s largest trade show of its kind, and the biannual China-Africa Economic and Trade Expo (CAETE).
Additionally, via its strategic partnership with the world’s largest bank, the Industrial and Commercial Bank of China (ICBC), Standard Bank’s Africa China Trade Solutions team introduced Tzamac to reputable potential Chinese buyers and helped facilitate negotiations.
The outcome
“We've been surprised by the value that Standard Bank has provided us. They offer a matchmaking initiative where we list our products and Standard Bank then connects us with reliable customers in China who are looking for similar products. It makes it a lot easier for us because we don't have to travel to China to look for customers. To date, we've connected with four potential importers and managed to secure one of these customers who is buying large quantities from us.”
– Rogan Schulze, General Manager, Tzamac
Watch the Customer Growth Video
See how Standard Bank’s Africa-China Trade Solutions team partnered with Tzamac to help the company expand its footprint into China and grow its export earnings.