KAILUA, KONA, Hawai'i — Another bumper macadamia-nut crop is expected this year, but Big Island farmers' biggest problem may be finding someone to buy Hawai'i's signature nuts.

With only a handful of processors on the island and one of the biggest temporarily out of the market, hundreds of independent farmers are concerned. They produced a healthy 56 million pounds last year, and many appear to be on track for a good crop this year, too.

The concern started with a June 7 letter to mac-nut growers from MacFarms of Hawai'i, one of the largest growers and processors on the island.

In the letter, MacFarms president Hilary Brown and vice president Mark Crawford announced: "We have concluded that until further notice, MacFarms will not be offering to purchase macadamia nut-in-shell from independent farmers."

MacFarms, which expects a bumper crop from its own orchard, cited last season's very large crop and costs associated with handling it.

"We have quite an inventory of nuts right now," Brown said. "Also, prices have dropped this year, demand has slowed and we are expecting a large crop this year. That said, if the situation changes, we might be back in the market."

MacFarms of Hawai'i, owned by Tennessee-based Sparco Management LLP and California-based Greater Pacific Food Holdings, grows nuts on nearly 4,000 acres of orchards in South Kona and employs 200 people.

'THERE ARE OPTIONS'

In addition, the company has agreed to buy at least 5 million pounds of nuts next year from Hilo's ML Macadamia Orchards LP. But Brown said that deal was not the major factor in the decision.

ML president Dennis Simonis said Macadamia Orchards is considered the world's largest individual mac-nut farm, with more than 4,000 acres of trees. Despite the ML name, the company is not affiliated with Mauna Loa Macadamia Nut Corp., which is owned by mainland conglomerate Hershey's.

Judy Magin, executive director of the Hawai'i Macadamia Nut Association, said she has been seeking other processors to help the association's 100 members.

"It did surprise everyone, but people shouldn't panic," she said of the MacFarms announcement. "There are options. Some of the other big processors are telling us 'We need Hawaiian nuts.' "

Richard Schmitzler, president and owner of Hamakua Mac Nut Co. and an association board member, said his company still is buying mac nuts and will continue to support independent farmers.

"We are going to do everything we can to help these farmers," he said.

Hamakua Mac Nut Co. does the processing for private labels that are marketed on the Mainland and in Guam, Taiwan and Japan.

"We're continuing to build our value markets," he said, also noting plans to open a visitors' center for the company.

Although Australia is the world's largest mac-nut producing country, Hawai'i-grown nuts generally are the most highly regarded.

"Hawai'i nuts are the best. They taste the best and have the best oil content," Simonis said.

Some processors, however, are tempted to include lower grade, non-Hawaiian nuts in their products.

"Unfortunately, some processors will buy foreign nuts and market them as Hawai'i products," Simonis said. "Hawai'i marketers should be supporting Hawai'i farmers."

Schmitzler, Simonis and Brown insist they offer only Hawai'i nuts.

"Everything we sell in Hawai'i is Hawai'i-grown," Brown said.

Magin said part of the association's mission is to promote Hawaiian nuts and protect against misinformation and untruthful labeling.

"That's always been a consideration and concern for us," she said.

Schmitzler, who has 20 years experience in the industry, said he would like to see laws protecting all Hawai'i products by mandating that packages clearly identify where the product was grown or produced.

"We need a country-of-origin law," he said. "If we had that, we'd be in much better shape."

Schmitzler said he is encouraged that Rep. Ed Case, D-Hawai'i, has introduced legislation to add macadamia nuts to the 1946 Peanut Act, which requires country-of-origin labeling on peanuts.

A MAJOR ISLAND CROP

Macadamia nuts are grown by 650 to 700 independent farmers in Hawai'i. Since trees were first planted in the 1940s, they have become one of the state's top crops. Mac nuts are a popular snack, selling in local stores for about $4 for 5 ounces, and are considered a gourmet addition to cookies, coffee, ice cream and other goodies.

"It's a lot more important to our economy than people realize," Schmitzler said.

Last month, the National Agricultural Statistics Service Hawai'i Field Office reported the 2005 crop amounted to 56 million pounds, up from 53 million pounds the previous year.

The farm value was reported at $40.1 million, up 24 percent, due to an increase in demand. The price farmers are paid has been going up in recent years to more than 70 cents a pound. Processed nuts retail for $8 to $12 a pound in Hawai'i.

Most U.S. mac-nut exports go to Japan, with most of the remainder to Canada, South Korea, France, the Netherlands and Hong Kong, according to the U.S Department of Agriculture.