Case studies in walnut industry development; Guangxi, Australia and New Zealand.
Lead Author: David L McNeil, Chair of Agricultural Science, Tasmanian Institute of Agriculture,
University of Tasmania, Private Bag 98 Hobart, Tasmania, 7001, Australia, [email protected]
Key Words: rural entrepreneurship, subsidy, Government support, barriers to development, new
industry, financing,
Abstract:
Purpose: This paper compares the entrepreneurship and other factors involved in the development
of walnut industries in three regions, Guangxi province China, New Zealand and Australia. Two
models are used to help explain the causes of the differences.
Design/methodology/approach: Twenty eight years of experimental, observational and published
data were collected while conducting research and extension aimed at development of walnut
industries throughout the value chain in the three regions.
Results: At the start of the study period all three regions had very small (<200 ha each) cottage style
walnut industries. However, there were complete production packages available for all regions.
These were generated, at least in part, by collaborations among industry players, Universities &/or
Government research agencies. Trees > 100 years old existed in all areas, walnut consumption was a
tradition in all regions and there were ready made local markets serviced from elsewhere in
existence. During the walnut industry development phase some similar scientific and logistic issues
were observed in all three countries. For example, the need for entrepreneurial individuals as well as
a need for a complete chain of production, harvest, processing, marketing and retailing. However,
there were significant differences in political climates (direct government control/investment and
market reliance), financial resources (investment structures and finance availability), farmer wealth
and farm populations (very high to very low) which led to very different rates of expansion and
industry structures. In 2013 there were ~500 ha of planted walnuts in NZ, 3,000 in Australia and
30,000 in Guangxi. An example of the difference is the level of government input. In 2013 there were
no full time walnut RD&E staff in NZ and the last one had retired in Australia that year but personal
observations suggest there were more than 100 in Guangxi. In Guangxi direct government
investment was high. This included RD&E support, direct subsidies, providing trees and financial aid
with planting. In Australia ~40% of the plantings and much of the processing and handling facilities
were developed around agricultural MIS’s (Managed Investment Schemes) with their tax
advantages. Most of the rest was carried out by medium size corporate entities. In NZ there was no
clear Government input or major corporate input. In Australia 80% of the plantings were managed
by a single “nursery to processor” private operation. In NZ most growers were small (generally well
off) recent entrants with other sources of income though ~75% of processing and marketing was
done by a single entity. In Guangxi most plantings were either very small scale or small scale village
cooperatives run by low income, Chinese minority ethnic groups. Thus this paper throws
considerable light on what is necessary and possible in rural development and what are areas of
significant concern in creating whole of chain new agricultural industries in different settings. In
particular it provides a series of case studies indicating entrepreneurship alone was not sufficient to
cause rapid industry expansion. Rather access to capital and personal financial risk reduction,
barriers described by both Kahan (2012) and McNeil were the primary constraints to development.
Research limitations: The observational nature of the paper limits its direct applicability in linking
cause and effect. However, qualitative and quantitative measures of industry size and comparisons
with development of other intensive agricultural industries provide support for many of the
conclusions.
Introduction.
Industry background.
Globally walnut industries and trade have been expanding at a substantial rate (Figure 1; McNeil
2010, Barber 2014, FAO 2014, NBSPRC 2005, Baojun et al. 2010, Tengmin 2011, North and
Warrington 2014, Lawrence 2014, ANIC 2011, AWIA 2014, WIG 2014). This has been associated with
increased production and consumption of tree nuts in both developed and less developed
(particularly China) regions of the world (Table 1). China in 2000/1 averaged net exports of 15,500 t
pa with production of 280,000t. Ten years later the figures were net imports of 28,000t and
production of 1,500,000t pa (FAO 2014). The reasons may lie in walnuts being a more expensive but
preferred meal option in much of the world and increased acceptance of the health benefits of
walnuts (McNeil, 2013, McNeil and Felgate, 2012). Figure 1 also indicates prior to 2004 none of the
three regions being investigated (Guangxi, NZ, Australia) had significant walnut production. All three
regions are intensely agricultural relying on agricultural production and processing for substantial
amounts of regional income. Australia and NZ agriculture is typical of flat, irrigated, advanced,
unsubsidised, western agriculture production systems. The walnut growing area of Guangxi is poor,
mountainous, forested, remote and heavily populated only along the river valleys. Growing of
walnuts has been known to be possible in all locations for a considerable time. The author has seen
walnut trees that were more than 100 years old in all three regions as well as smaller commercial
plantings around 20- 50+ years of age. Being islands, neither Australia nor NZ have nearby walnut
production, however, provinces bordering Guangxi (principally Yunnan) produced 122,000 tons in
2006 (Baojun et al, 2010) providing an extensive local knowledge base for production. To counter
this limited information from nearby production in Australia and NZ research by industry,
universities and government had produced sufficient knowledge that in the late 1990’s there were
production manuals for walnuts in both regions as well as numerous quality extension publications
(listed for NZ and Australia by – McNeil 2014, North and Warrington, 2014; Adem, 2010, WIG 2014,
AWIA 2014). Presently the main areas for walnut production in the three regions are in the hill
country to the north and west of Guangxi, the Canterbury plain in the South Island of NZ and in the
Murrumbidgee Irrigation area (central W NSW) and the NE coast of Tasmania. Potentially all three
regions could expand their walnut production provided the economics was right and resources and
entrepreneurship were available.
Entrepreneurship theory
There is considerable popular and scholarly support for the concept that rural/agricultural
entrepreneurship can lead to the development of new industries and expansion of existing
industries. In addition to the need for entrepreneurial spirit at the individual or cooperative level
Kahan (2012) lists seven barriers to development of entrepreneurial farm enterprises.
1. Poor or absent infrastructure:
2. Unsupportive laws and regulations:
3. Lack of financial support:
4. Social barriers:
5. Lack of training facilities:
6. Lack of support services and trained extension staff:
7. Marketing constraints:
Within TIA we have a strong interest in developing new industries for the state of Tasmania and
have also developed a separate assessment tool based around industry description, risk levels and
barriers to entrepreneurial activity to assist in developing RD&E plans for TIA involvement (Table 2).
Aim
The aim of this set of case studies is thus to describe development trajectories and operating
environments for walnut industries in three different regions which started out at similar low points
in the 1990’s with respect to development of a full chain walnut industry. Once the description is
obtained their three development trajectories will be compared to the needs, barriers and risk
factors presented in the models of Kahan (2012) and the risks and entrepreneurial issues in the
model of McNeil.
Methods
The data collections for the three regions (Guangxi Province China, Australia, New Zealand) are
derived from my extensive personal interactions over the last 28 years with these three and other
walnut growing regions around the world. Data types used include personal communications with
industry, university and government leaders. They also include accessing my own and external
published and unpublished (e.g. individual farm financial plans and data) written information as well
published databases (e.g. FAOSTAT). Wherever possible any numbers provided by personal
communication have been cross checked against personal observations and published information.
For example annual area planting rates provided by Guangxi officials were compared to, and found
to be consistent with, the number of grafted trees I personally observed in nurseries in two Guangxi
counties. In NZ I researched new crops (from varieties through agronomy and processing to
marketing) including walnuts from 1986-2002. I also consulted to industry, developed and owned
several small walnut farms, was the ‘Walnut Industry Group’ research officer and participated in
developing an IPO for ‘Southern Hazelnuts Limited’ developing understanding of corporate capital
availability. In Australia since 2006 I have managed participatory research projects on walnut quality
as well as leading the National Horticultural Research Network’s, ‘Other nuts’ program and have on
numerous occasions consulted to the nut industry. Between 2010 and 2014 I have travelled
extensively through China on 5 separate trips viewing and reporting on Chinese walnut systems to
Chinese host organisations. This includes Guangxi, Shaanxi, Shanxi, Henan and Hebei provinces.
The observations provided above have then been fitted using my best judgement into the two
models of Kahan (2012) and McNeil to produce a value judgement on the factors aiding or hindering
increased industry size and profitability.
Case histories
New Zealand
General information on New Zealand walnut industry is published in McNeil (1999, 2013), North and
Warrington (2014) and on the website of the Walnut Industry Group (WIG 2014). These publications
also review many additional scientific and industry publications on NZ walnuts. Menzies (2013) has
described and evaluated entrepreneurial technology transfer in NZ from government to private
sectors similar to that which has occurred in walnuts. The varieties grown are local selections
evaluated principally at Lincoln University (McNeil and Savage, 2001). Joint industry research has
also covered agronomy (McNeil 1999) marketing (Waitzmann and McNeil 2000), processing (Savage
et al, 1999) and quality management (Osterberg et al. 2001).
Table 3 gives a summary of the
industry. It was small, slow growing and dominated throughout by small holder growers who had
purchased land with funds from other sources. Some growers were University staff, teachers,
accountants, lawyers, research scientists and retired local and foreign professionals. Farm size
tended to be small and funds used for investment were provided by the property owner and thus
scarce. For example several operators saved expenditure by developing their own grafting processes
to provide trees which kept costs low (may even have made a profit through sales). However, this
may have resulted in a shift from 6 months to 6 years to plant out even a small 4 ha orchard. There
was however, a clear entrepreneurial spirit through these small operations with growers developing
their own processing lines (Aylesbury walnuts), walnut liqueurs
(http://www.newzino.co.nz/products.html), organic systems (Cracker of a nut), grafted trees
(Peninsula Tree Nursery) oil press producers (http://www.aquariusnz.co.nz/about-us), nut handling
systems (Wyma) and other walnut product developments ([email protected]). All these
developments were created with the intent of increasing profits from relatively small operations.
One operator (Cracker of a Nut, 2014) developed a processing operation in conjunction with their
organic farm that provides a range of specialty products (oils, sized material, by products, flours)
associated with specialty services (e.g. time from shelling guarantees, coalescing small lines from
around NZ, quality based payments, customer specific packaging and products etc.). Marketing was
backed up with scientific testing of quality but expansion was slow and controlled to manage risk.
They are now handling and marketing about 75-80% of the NZ production. To gain an idea of their
development in 1998 they carried out the first commercial press of walnut oil in New Zealand, then
in 2005 and 2007 they won Gold Medals at ‘The Royal Show’ for their KerNelZ gourmet walnut oil.
They were the 2002 winner of the inaugural ‘Cuisine Matua Awards of Innovation and Excellence' &
their products were used by the NZ chef of the year winning recipe 2005 and in the NZ VIP lounge at
the world Expo in Japan.
It seems that the operations were maintaining capital value (often due to rising land values) and
slowly shifting to profitability by achieving high prices for local, market oriented, high quality
products. As a result of this the size of some of the more recent new entrants was increasing and
some existing growers were increasing plantings. The Industry association (WIG 2014) continued to
work alone and with Lincoln University in particular to improve the production packages for growers,
albeit with small total investment. However, industry investment remains low in spite of the high
levels of innovation and entrepreneurship demonstrated. It seems the main limiting factors were
lack of financial resources for expansion and lack of Government support.
Australia
General information on Australian walnut industry is published in McNeil (2014), Kenez (2010),
McNeil and Evans (2012), Adem (2010), Goullet and Titmus (2010) and on the website of the
Australian Walnut Industry Association (AWIA 2014). These publications also review many additional
scientific and industry publications on Australian walnuts. The varieties grown are imported
selections evaluated principally by commercial companies (McNeil, 2014). Joint
industry/Government/University research has also covered quality (McNeil and Evans 2012),
Agronomy (Adem 2010) and industry planning (Evans and Adem 2010). Table 3 gives a summary of
the industry. Originally it was small, slow growing and dominated throughout by small holder
growers who had purchased land with funds from other sources and some farmer diversification.
Growers had entered with a diverse set of prior skills including farming, horticulture and unrelated
professions. Farm size tended to be small (Kenez 2010) and funds used for investment were
provided by the property owner and thus scarce. In most ways this was similar to the New Zealand
situation.
This changed in the early 90’s when larger capital injections commenced via corporate and MIS
means. Vecon Pty Ltd (a major onion exporter) commenced developing walnuts in Tasmania in the
early 1990’s. Their assets (including a grafting business, 540 ha of walnut plantings underway and 80
ha of joint venture plantings) were acquired in 1996 by Webster Ltd another mid-size company. In
2004 they expanded in NSW establishing and managing 250 hectare for a private investor, (Griffith,
Motspur Park Pty Ltd). Between 2005 – 2009 they established & maintained 1365ha for Gunns’ MIS
(2 properties; Tabbita and Leeton, NSW) and planted under direct ownership 400 ha in the Riverina.
In 2011, they acquired (below cost) the Gunns' walnut assets in the Riverina (Gunns eventually
failed). They have subsequently became ‘Walnuts Australia’
(http://www.websterltd.com.au/walnuts/) had a $20 million (2012) capital raising and in 2014
opened a large shelling plant. Plans for continued expansion are underway. Presently 85% of product
is exported mainly in shell. There is in addition still a range of smaller scale walnut growers
producing organic oils (Wellwood), in shell and shelled product (Ardmona Walnuts, Brigadoon
Walnuts, Gapsted Walnuts, Harcourt Valley Walnuts, King Valley Walnuts, QWP, Somerset Park
Walnuts, Weston's Walnuts). There are also contract shelling and shellers from other industries who
are processing walnuts (Walnuts Australia, Quality Walnut Producers, Goulburn Valley Walnuts (6
grower cooperative), King Valley Walnuts, and Stahmann).
Walnuts Australia has also been awarded the 2012 Austrade’s National emerging exporter of the
year award and the 2013 Australian Export Awards national winner for agribusiness. These indicate a
clear entrepreneurial spirit through both the main and small operations. In general the diversity of
product lines and systems lags behind that of Cracker of a nut in NZ but the size and international
links are greater.
As in NZ it seems that most small operations were maintaining capital value (often due to rising land
values) and slowly shifting to profitability by achieving high prices for local, market oriented, high
quality products. The larger early and MIS investors have had a more problematic time though
Walnuts Australia now seems to be in a strong financial position. As a result of this the size of some
of the more recent new entrants was increasing and major existing growers are increasing plantings.
There are also a number of plans for more and larger corporate developments (McNeil 2014). The
Industry association (AWIA 2014) continues to work alone and with the University of Tasmania in
particular to improve the production packages for growers. Investment remains moderate in spite
of the high levels of innovation and entrepreneurship demonstrated. It seems the main limiting
factors are some lack of financial resources for expansion and lack of Government support.
Guangxi
General information on Guangxi and its recent rapid growth is available on line from the Chinese
Internet Information Centre (http://www.china.org.cn/english/features/ProvinceView/167754.htm)
and information specifically on the Guangxi walnut industry is published in McNeil and Liming Zheng
(2013) with more details available on the website of the Guangxi Ministry of Agriculture news
(http://www.sourcejuice.com/knowledgecenter/en/Guangxi-AGRI---News/). However, most of the
information provided here has come from direct observations and discussions with approximately 50
researchers, extensionists, growers, processors and village leaders while travelling in Guangxi during
2013. In Guangxi walnut developments are in the stony hill country which at the start of the 21st
century was poor with land managed by small farmers, had poor infrastructure, education and
resources even in comparison with the rest of Guangxi. Thus the following discussion of the present
reality will loosely follow the needs and limitations of Kahan (2012). It is worth pointing out that
Alsos et al (2011) claim high levels of entrepreneurship by small scale farmers in general. Kahan
(2012) suggests entrepreneurship can be extensive in small scale developing country farmers given
the right conditions. More specifically in China Huang (2008) claims that “the most dynamic, risktaking, and talented entrepreneurs in China reside in the countryside. These rural entrepreneurs
created China’s true miracle growth in the 1980s, first by dramatically improving agricultural yields
and then by starting many small-scale businesses in food processing and construction materials.” He
claims these disappeared in the 1990’s with a shift to the main cities of the emphasis on
development. However, in the 2000’s for Guangxi the implementation of massive (~1Billion Yuan pa
Decai, 2007) development plans (including agricultural plans) for the underdeveloped rural areas recreated opportunities (including walnuts) for this entrepreneurial group. Fan (2014) also describes
the efforts to improve rural financing and innovation in Guangxi. It seems to be the changes in legal
status of land, infusion of capital, extension, infrastructure, training & markets overcoming the
limitations of Kahan (2012) rather than a new entrepreneurial spirit that led to the massive
development of walnuts. Walnuts were not the only option others included mulberry, meat,
chestnuts, star anise etc.
The major rural investment efforts seem to be succeeding. In 2013 Guangxi farmers' per capita net
income was 6,791 Yuan, an annual increase of 13.0%, higher than the national average increase of
0.6 percent (GMA 2014) but still relatively low in absolute terms. The Guangxi Autonomous Region
People's Congress, has aimed to double farmer’s net income via, 1) paying close attention to
employment and entrepreneurship of farmers, 2) building a comprehensive agribusiness industrial
system, 3) reform rural land ownership, 4) implement policies to preferentially benefit agriculture, 5)
vigorously training new agricultural business entities, 6) highlight key difficulties in poverty reduction,
7) strengthen farm related organizations and leadership. Demonstrations of the aide to
entrepreneurs were seen in various villages. An example was a private wood fired drying plant hired
to other villagers, a village that had developed branded quality packaging for their in shell product, a
university researcher who had established a private walnut orchard, and development of organic
walnut orchards (GMA 2010).
With respect to the individual developments walnuts are described as one of the three major
industries in Luocheng county GMA (2011). The nature of walnut planting in Guangxi is described by
GMA (2009) for Fengshan a stony karst dominated county. This county has promoted walnut
planting reaching approximately 5,000 ha by 2009. The planting program began in 1999 following
extensive demonstration development based primarily on Yunnan varieties and research. The state
has provided free seeds & seedlings, an extensive technical extension services network, extensive
scientific research support, a planting subsidy of 230 Yuan per mu (`£350/ha, covers most of the
upfront costs where trees cost 1/5 to 1/10 of Australia NZ prices). A typical village plan will plant
300-600 mu (~20 ha) and in 2009 there were 80 village plantings in Fengshan county alone. Walnuts
are indicated to produce 2000 Yuan per mu (Xinhuanet 2010). State sponsored grafting nurseries
were also developed in the counties. Two I observed in Fengshan and Hechi were producing and
estimated ~1 million trees pa of high quality and low price. However, the highly entrepreneurial
individual business managing a large proportion of the product were not present in Guangxi. Much
of the real entrepreneurship was present in the organisations capturing resources for rural
development.
Discussion and conclusions
In these case studies similar initial industry positions lead to very different outcomes. Four issues
were identified as being different among the cases. 1) Entrepreneurship, 2) Number of participants,
3) Capital availability and 4) Government input. While entrepreneurship was present and well
demonstrated in all three systems and indeed an absolute requirement for expansion the form of
that entrepreneurship and the payback in terms of industry development was very different among
the systems due to differences in the other factors. In NZ entrepreneurship revolved around
production, processing, processes and marketing with little financial entrepreneurship due to limited
capital availability. In Australia most of the entrepreneurship was involved with production,
corporatisation and marketing with financing dominating and ongoing development following. In
Guangxi control of resources was where entrepreneurship flourished. Much of the
entrepreneurship was within the public sector where state and county public servants put together
programs and villages collaborated with those programs to control available resources. Thus the
barriers of Kahan (2012) and the risks and control issues of Table 2 were the major
impediments/promoters for differential rates of expansion in these case studies. Entrepreneurship
worked in all 3 cases but the level of reward for that entrepreneurship depended heavily on level of
financial backing.
Ultimately therefore very rapid rates of expansion resulted where there was entrepreneurship,
access to capital, strong government direct (subsidy) and indirect (RD&E) support with a large
number of participants. Other barriers (eg production risk, social licence, infrastructure, financial
risks, marketing issues etc.) were not of concern in any of the three cases. In other situations these
other barriers may dominate and prevent industry expansion (eg UK walnut industry where
production risks are high). Therefore efforts to promote entrepreneurship in a particular industry at
a specific location and time require a full assessment of each case against the full set of criteria of
Kahan (2012) and McNeil. A final corollary unanswered by these data is whether increased financial
inputs (corporate or government) in the presence of entrepreneurship can succeed in developing an
industry where one of the other factors (eg social licence) is lacking.
Table 6 indicates it is possible to create a general description of the walnut industries in the three
regions. Interestingly it is then possible to assess other new industries in the same regions against
the descriptions. Under those circumstances there is a tendency for both Australia and NZ to have
‘NZ’ type industries in the early stages of development. Profitable Australian industries then
generally shift to the more corporate form at a greater rate than in NZ. In China the wealth of a
region tends to determine whether a ‘Guangxi’ or ‘Australian’ type industry results. The
impoverished rural areas generally need government capital infusion by subsidies whereas the richer
areas (eg. Guangxi lowlands for macadamias) can access SOE (State Owned Enterprise) and FDI
(Foreign Direct Investment) investment.
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Table 1. World and regional consumption of tree nuts (FAOSTAT, 2014).
Region
World
China
Northern America
Europe
Australia & New Zealand
Consumption of Ratio
Tree nuts
g/capita/day
1999
2009
4
2
8
8
9
6
6
10
11
14
1.5
3.0
1.3
1.4
1.6
Table 2. New Industry assessment tool. Each measure is assessed as meeting need, Less than
optimal or of significant concern. Where values meet need they suggest a viable industry. Issues that
do not meet need indicate areas for policy development.
Description of industry
Measure
Size
Expansion rate
Value retention
Profitability
Entrepreneurial businesses
Quality of Entrepreneurship
and Innovation
Potential size
Need
Present value of the industry $/ha/employment
High
Change in size per year
High
Proportion good investments from historical investments
High
Level of return on present and future capital/labour/resources
High
Existence
Many
Number & diversity of products, branding, vertical & horizontal
High
relationships in key businesses
Possible future value of the industry $/ha/employment
Larger
Risk management
Production risk
Ability to sustainably produce a crop in most years due to
Adequate
adequate climate, production & environment knowledge and
knowledge
needed materials (e.g. varieties)
Financial risk
Market risk
Societal risk
Government support
Likelihood of losing existing capital
Low
Certainty of a market where industry has an advantage
High
Presence of licence to operate issues, ie low community support
Subsidy, tax/policy/licensing etc. systems support, RD&E support
Low
High
a) Existing owners keen to invest in capability
High
b) New owners keen to buy and develop capability
High
Entrepreneur access/control
Land/processing capability
Overall
a) &/or b)
High
Market
Finances
Societal values
Unfilled opportunities visible
Certainty
Risk capital available
High
Issues with Entrepreneurs
Low
Availability of Entrepreneurs
High
Planted area
ha
Farm Mean
area
ha
Oldest
observed
tree age
Years
Year
1990
2013
1990
2013
2000-13
Guangxi
~200
~30,000
<1
<1*
200
Main
Cultivar
source
Yunnan
Agron.
package
available
No. of
Govt./Univ.
RD&E staff
Specific
Govt.
input
Businesses
for 75%
handling of
product
Grower origins
Main
product
Destination
/Main local
source
'90's2014
2000
2013
20002013
2013
1990
2013
2013
2013
yes –
Some
ND
>100
Direct
subsidy
100+
Farmers,
Village
Coops
Farmers,
Village
Coops
Fresh, In
shell, Hand
shelled
Within
Province/
China
1-2
0.5
MIS@
1
New
entrants
In shell
Local &
export/
Imported
1-2
0.25
Minimal
1
New
entrants
MIS, New
entrants
Large
corporate
New
entrants
In shell,
shelled,
processed
Local/
Imported
Yunnan
Australia
~150
3,000
~5
##
150
USA
yes –
AWIA
New
Zealand
~50
498
<5
~5
>100
Local
yes –
WIG
* Average Co-op size was 100 – 600 mu (7-40 ha)
## One business managed ~70% of planted area in 3 main farms plus 70% of production
@Agricultural Managed Investment Scheme provided tax benefits and a system for bringing many smaller investors together
ND exact data not available
Table 3. Summary of walnut industries in the three regions. ( Data summarised from personal observations and a wide variety of sources)
NZ
Australia
Guangxi
++
++
++
Processing
Processing
Roads, processing
± ―> ++
++
± ―> ++
++
-- ―> ±
± ―> ++
--
±
++
Social barriers
++
++
++
Lack of training facilities
++
++
++
Lack of support services and
trained extension staff
Marketing constraints
±
±
++
++
++
++
Entrepreneurial spirit (need) at
Individual or cooperative level
Poor or absent infrastructure
Unsupportive laws and
regulations
Lack of financial support
++ Not an issue, ± ―> ++ becoming less of an issue, ± an issue, -- a major issue.
Table 4. Evaluation of the fit between the walnut industries in the three regions and Kahan’s
(2012) one need & seven barriers to development of entrepreneurial farm enterprises.
Description
Measure
Size
Expansion rate
Capital value
NZ
Australia
Guangxi
ha
500
3000
30000
~ha/yr over 10 yrs
30
300
3000
Proportion sound investments
Moderate/ high
Moderate
ROI
High
High
High
Existence
Yes
Yes
Yes
Number & diversity of products,
Highest
Middle
Least
Large(export)
Large(export)
Large (export &
Small(local)
Moderate(local)
local)
Low
Moderate/
a
b
High
retention
Profitability
Entrepreneurial
businesses
High quality
Entrepreneurs and
Innovation
Potential size
processes, vertical & horizontal
relationships
Tonnes
Risk management
Production risk
Financial/Environmental/
Moderate/ low
c
Agronomy viable opportunity
Financial risk
Operations losing capital
low
Moderate/
Moderate/
low
high
Low
b
Market risk
Local production/consumption
Low
Low
Low
Societal risk
Licence to operate issues
Low
Low
Low
Level
Low
Moderate/ low
High
Existing owners
Low
Low/moderate
High
New owners
High
High
Low
Overall
High
High
High
Opportunities
High
High
High/Moderate
Risk capital available
Low
Moderate
High
Low
Low
Low
Government input
Entrepreneur
access/control
Land
Market
Finances
Society
Issues with Entrepreneurs
d
f
Availability of Entrepreneurs High
High
High
a) Approximate based on observation and personal communications
b) Losses by early entrants (Vecon, Gunns) but assets remain, high Govt. input in Guangxi, low $ input NZ.
c) Production packages available in all locations but climate issues in NZ & Guangxi.
d) In other more developed Chinese provinces/regions this can be high.
e) Enhanced by major rural road development projects.
f) Both many landholders with small inputs & large Govt. direct input.
Table 5. Evaluation of the fit between the walnut industries in the three regions and
McNeil’s (Table 2) classification method. Black backgrounds indicate major issues and gray
backgrounds possible lesser issues.
e
Australian type A
few large/corporate
investors
New Zealand type NZ
many small private
investors
Guangxi type –
G
Govt. /many small
private investors
some Co-op
some minor Co-op
many moderate Co-op
large
small
small
Corporate - capital
markets
Private – resources
Govt. /Private
resources
Vertical integration - low shifting to high
main businesses
high
low
Growth rate Primary
Growth rate –
Second tier
moderate
low
high
low
-
low
Australia@
New Zealand
Guangxi
Macadamias
A
NZ
(Mac Nuts)
A (Nanning Mac. Co.)
Hazelnuts
NZ# (no leader)
NZ*
(Hazelz)
nr
Chestnuts
NZ
(no leader)
NZ
(CO NZ)
G
Pecans
A
(Stahmann)
(NZ)^
Eucalyptus trees
A
(Gunns)
NZ
Pyrethrum
A
(TPC)
nr
Viticulture
A
(several large)
A
Players
Businesses
(several large)
(G)^
(Spec. Timb.)
A (FDI)
nr
(Montana)
nr
@ Names in brackets indicate the major industry players in that country.
* Southern Hazelnuts Ltd had an unsuccessful corporate float in 2002.
# New corporate start up suggests shift to type A in 2015.
^ Very initial stages only.
nr not relevant as no industry exists.
Table 6. Description of the industry development types for the three regions and
comparison with author’s assessments of other new industry developments in the same
regions.
4000
Production Tonne (walnuts with shell)
4,000,000
3,500,000
World (left axis)
3500
China, mainland (left axis)
3000
3,000,000
Australia (right axis)
2,500,000
Guangxi (right axis)
2500
2,000,000
New Zealand (right axis)
2000
1,500,000
1500
1,000,000
1000
500
500,000
0
1985
1990
1995
2000
2005
2010
0
2015
Year
Figure 1. Production of walnuts world wide, China, Guangxi, Australia and New Zealand. (ANIC 2011, Baojun et al, 2010, Barber 2014, North
and Warrington 2014, Lawrence 2014, McNeil 2010, FAO 2014, AWIA 2014, WIG 2014, Tengmin 2011, NBSPRC 2005)