BUSINESS PROSPECTS
TRUFFLE FARMING
COMMERCIALISATION

Intro

Truffle Farming

Truffles are known to human kind since ancient time and the first written reference to it was already recorded in AD 77. For South Africans, however it remains something foreign and a delicatessen only a few of us have enjoyed during visits overseas and then only when dining at the most expensive restaurants in the world.

May the “Truffle Gods” disclose just enough of their secrets to us to enjoy the fruits of it and not allow us mortals to unravel too many of the secrets in the name of science.

By 1960 most of the natural truffle plantations in Europe were heavily exploited and truffle production declined to a record low. A lack of regulation resulted in overuse and abuse of the natural habitat which finally led to natural truffle plantations disappearing. However, what remained was the mystery surrounding truffles and this more than anything led to a more scientific approach to truffle farming to ensure that truffles can be farmed commercially. During the last 30 years great strides have been made by researchers to develop farming models similar to those for fruit trees, but a strong scientific knowledge base is still in the process of emerging. However enough is known today for those who are captured by the mystery of truffles to wander where many will not go. For those who dare and who are prepared to embark on a quest to unravel the mystery and thereby complementing it with a scientific knowledge base from which to develop productive farming models, can however find comfort in the huge financial benefit already realised, despite the lack of comprehensive knowledge base.

It is however the hope of most truffle farmers that our quest for knowledge will never eliminate the mystery surrounding truffles and thereby reducing truffle farming to just another agricultural product.

The Yields

The commercialisation of truffle farming

The commercialisation of truffle farming has been successfully done for the last 30 years. Eighty percent of truffles now produced in France and Spain come from specially planted truffle orchards. In the United Kingdom, United States, New Zealand, Chile and Australia truffle orchards are commercially grown.

Tuber melanosporum will start fruiting in year 4-6

Based on our field visits to the farmers in Spain and their data, Tuber melanosporum will start fruiting in year 4-6 with yields of 5 to 20 kilos per hectares and will reach full production by year 14 with yields between 50 and 250 kilos per hectares at a wholesale price of 400 Euros. Recent research projects conducted with bacteria and specially produced fertilizer for truffles indicate that fruiting might already start at year 4 and reach full production much earlier.

The yield at 50 kilos per hectares at 400 Euros per kilo is R320 000 per hectare. At 100 kilos per hectare it increases to more than R600 000 per hectare. If we can get a sufficient level of production we will establish our own distribution network to sell directly to the end consumer at a much higher profit margin.

The establishment cost of truffle farming in South Africa is around R250 000 to R350 000 per hectare depending if lime stone need to be added to the soil, deep cultivation is required, fencing need to be provided and on the type of irrigation installed. Once the orchard has been established the operating cost is very low and can be as little as R2 000 per hectare per year excluding the option to add truffle spores to the trees for better production from year 4 onwards.

Truffle trees can be productive for more than 30 years with minimum operating cost and sustained production.

The average number of trees recommended for South African conditions is 444 per hectare.

There is a shortage of truffles and the fact that we can produce and export truffles to Europe, the USA and the UK when they have no truffles to buy or sell at an ever worsening exchange rate to the Dollar, Euro and Pound, makes this a lucrative business endeavor. Added to this that Chile and Australia do not prefer to export truffles, because of the fact that they can get 1000 Dollars per kilo locally. This makes truffle growing in South Africa an opportunity that can change the agricultural landscape and economy of the Western Cape and Eastern Cape.

The Demand

INSUFFICCIENT SUPPLY

According to MICOLOGIA FORESTAL & APLICADA the following minimum and maximum production in tons for the best truffle sellers are estimated for Spain, Italy and France.

SpainFranceItalyTotal tons per year
Tuber melanosporum5-8015-8010-8030-240
Tuber aestivum20-3015-3015-3055-120
Tuber uncinatum5-102-52-59-20
Tuber magnatum5-505-50
Tuber mesentericum2-44-94-9

According to Morcillo at the beginning of the 19th century, 1000 tons were harvested in France and absorbed by the market. In 1966 the estimation of production in France was 340 Tons. Nowadays barely 200 tons per year for the whole of Europe is produced. If one takes into account that the standard of living has increased throughout the world and that the population is growing year on year then the demand for truffles will exceed supply by far. Morcillo concludes that there is an increasing demand for truffles whilst truffle production decreases.

demand has always exceeded supply, and still does.

Vittorio Giordano, the vice president of Urbani Truffles in the USA, supports Morcillo’s point of view. According to Giordani, the law of supply and demand applies to truffles especially. Giordano explains that just 65 percent of the demand for truffles is met year to year and that demand has always exceeded supply, and still does. Hence the high price for truffles.

The Market

We segment the market as follows

Wholesale buyers from the Northern Hemisphere

The bulk of our production will be sold to the wholesale buyers in Europe, the USA and the UK, because we produce truffles when they are out of production. Laumont in Spain has confirmed their need for truffles during their out of season months which is our production period.

Top restaurants in the Northern Hemisphere

With the right marketing and quality it will be possible to sell truffles directly to top Michelin-starred restaurants in the Northern Hemisphere. We plan to set up our own retail infrastructure in Europe, the USA and the UK to cut out the wholesaler component.

Local restaurants

It is envisaged that the top restaurants and hotels will buy our truffles as they currently import truffles at a premium price.

Local wholesale buyers of value added product

Truffle value added products such as whole, sliced or diced preserved truffles, oils, sauces, vinegar, butter, salt, honey and beer infused with the truffles is very popular even in the local market and some of our production will be converted into these value added products to ensure enticing the local market throughout the year.

Season 2017 in South Africa

Marcos S. Morcillo conducted research of how Black Truffles have done in the Southern Hemisphere during 2017 and wrote an article on October 23, 2017 on his blog titled “How 2017 black truffle season has gone in the Southern Hemisphere?” which included a piece on each of the following countries, Australia, Chile, Argentina and South Africa:

“Season 2017 has been very encouraging for farmers, harvested a total of 14,5 kg’s across the 5 producing farms, two of the farms are in second year production. Production is improving steadily from last year, although growers are suffering from pests damage (slugs and millipedes) to the truffles. Note most farms in the area have mild winters so insect activity is higher.

All the production was sold locally to restaurants, chefs and hotels. The selling price was 900 Euro/kg.

All the production was sold locally to restaurants, chefs and hotels. The selling price was 900 Euro/kg. There are planted over 80 hectares and expecting to plant a further 120 hectares next year”.