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Exporting macadamia nuts to Europe

Takes 25 minutes to read

European macadamia nut imports are increasing, driven by the health trend. Germany, the Netherlands and the growing markets in Baltic countries, Central and Eastern Europe offer opportunities for developing country suppliers. Food safety certification supported with frequent laboratory tests and joined with corporate social responsibility (CSR) standards can provide a great advantage to European markets suppliers.


1 . Product definition

Macadamia nuts are the fruit (edible seed) of the evergreen macadamia tree which belongs to the genus Macadamia of the Proteaceae family. Only three of the species are of commercial importance, namely Macadamia integrifolia, Macadamia ternifolia, and Macadamia tetraphylla. Macadamias are native to Australia but today they are grown in many areas in the world, such as South Africa, Kenya, Hawaii, Guatemala, Malawi, Zimbabwe, Costa Rica and Brazil. Recently macadamias have been planted in China too.

Once planted, the macadamia trees need five years before being able to carry their first fruit – their maximum carrying capacity is reached after ten years. The macadamia trees require warm temperatures and good annual rainfall to yield a good crop. The biggest threats to annual production come from droughts and heavy frost.

The nuts themselves grow encased in a hard, woody shell, which is protected by a green-brown fibrous husk that splits open as the nut matures. Macadamia nuts are harvested mechanically in different periods throughout the entire year, depending on the country of origin. In European winter months they are harvested in Africa and Hawaii, while during spring and summer months harvesting occurs in Australia and Central and South America. The kernels undergo a lengthy drying process over the course of several months. Dried shells are very hard and are typically removed with cracking machines that have steel rollers or rotating knives.

Whereas In Australia, the USA and Japan the product is frequently used as an ingredient, in Europe macadamia nuts are still mainly used as a snack product (roasted and salted). However, as the world supply is growing, the interest in various industries in Europe is increasing, with macadamia nuts increasingly used for the production of butter, for chocolate coating and as an ingredient in the confectionery industry. The high levels of omega-7 fatty acids also make macadamia nuts a desirable ingredient in many cosmetic products, especially for the production of oil.

Picture 1: Macadamia nuts kernels
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Source: Wikimedia Commons.

Picture 2: In-shell macadamia nuts
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Source: Flickr.

This study covers general information regarding the market for macadamia nuts in Europe, which is of interest to producers in developing countries. Please see Table 1 with the products and their product codes.

Table 1: Products in the product group of macadamia nuts

Combined Nomenclature Number

Product

08026200

Fresh or dried macadamia nuts, shelled

08026100

Fresh or dried macadamia nuts, in shell

Product specification

Quality

The basic quality requirements for macadamia nuts are defined by the following criteria.

  • Style: whole, mixture of whole and pieces and pieces
  • Absence of insects, mould, rancidity or damages
  • Characteristic taste and flavour free from foreign smell or taste
  • Moisture content of kernels not exceeding 2%

Specific macadamia-nut quality requirements are defined by the following criteria.

  • Class – Classification of macadamia nuts is not officially defined in the European Union. However, the classification by the United Nations Economic Commission for Europe (UNECE) is widely used, where macadamia nuts are classified into two main classes: ‘Class I’ and ‘Class II’. This classification is made according to the allowed defects.
  • Grading – Grading categories for macadamia nuts are not officially defined in the European Union. The most frequently used grading classification comes from UNECE. In this standard, size is determined by the maximum diameter of the equatorial section of the whole nut. Eight different categories are defined for wholes, halves, mixtures, chips and fine grains. For in-shell macadamia nuts four categories are defined.
  • Special characteristics – In practice quality and price of product is usually determined by the characteristics of macadamia nuts which combine style of the product (whole, mixtures or pieces), look of the kernel, grade and variety.

Tip:

Labelling

The name of the product must be shown on the label, and read either ‘macadamia kernels’ or ‘in-shell macadamia nuts’. It is common practice to place variety, class, size and a crop year on the label.

Information about non-retail packaging has to be given either on the packaging or in accompanying documents. Bulk packaging labelling must contain the following information:

  • name of the product
  • lot identification
  • name and address of the manufacturer, packer, distributor or importer
  • storage instructions (storage and transport instructions are very important due to high oil content, which can negatively influence the quality of product if not handled properly).

However, lot identification, and the name and address of the manufacturer, packer, distributor or importer may be replaced by an identification mark.

In the case of retail packaging, product labelling must be in compliance with the European Union Regulation on the provision of food information to consumers. This regulation defines nutrition labelling, origin labelling, allergen labelling and legibility (minimum font size for mandatory information) more clearly. Please note that according to this regulation, macadamia nuts are listed as products causing allergies or intolerances and therefore allergen advice must be clearly visible on the retail packaging (see Picture 4).

figuur_3_en_4.jpg

Packaging

There is no general rule for the export size of the packaging of macadamia nuts, but the most common type of export packaging are vacuum bags (poly liners or alufoil) placed in cartons. The most common size of packaging used is 25 lbs (11.34 kg) but some exporters deliver nuts in sizes of 10 kg.

Tip:

2 . Which European markets offer opportunities for exporters of macadamia nuts?

The Netherlands, Germany and the United Kingdom are currently the largest import markets and offer good opportunities for developing country exporters of macadamia nuts. Furthermore, large markets opportunities can be found in the growing markets of Central and Eastern Europe. The introduction of macadamia nuts seems to follow a similar pattern as that of cashew nuts, which started in the same northwest European countries and then gradually spread across Europe.

Imports

Increasing imports from developing countries

  • In the long term, the European market for macadamia nuts is expected to grow steadily. This growth is likely to be driven by changes in consumption patterns of European consumers, including rising demand for vegetable sources of protein to replace meat.
  • Regular fluctuations in imports will continue to be influenced by the harvested crops rather than changes in demand.
  • European imports of macadamia nuts into Europe increased annually by an average rate of 19% in value and 10% in volume, indicating an increase in import prices. In 2016, imports reached €140 million and 9.5 thousand tonnes.
  • Developing countries are gaining market share on the European market for macadamia nuts over leading suppliers from the rest of the world, such as Australia and the USA. This is mainly due to higher investment in production in South Africa.
  • Approximately 95% of macadamia nuts is imported in Europe as kernels. Only some 570 tonnes were imported as in-shell nuts. Those quantities are processed in the few countries which have processing facilities, such as the United Kingdom and Luxembourg.

Germany and the Netherlands leading importers

  • The European import market for macadamia nuts is very concentrated and the two largest importers (Germany and the Netherlands) accounted for 60% of total imports. Both countries are not only consumers of macadamia but also transit countries for other European destinations.
  • Large shares of macadamia nuts are re-exported from the Dutch port of Rotterdam to other European countries (around 1.7 thousand tonnes). Other important ports for macadamia nuts are Hamburg in Germany and Felixstowe and Tilbury in the United Kingdom.
  • Baltic countries and Central and Eastern European countries are increasing imports of macadamia nuts faster than western Europe. Within Europe, the countries with the highest annual import growth in quantity of macadamia nuts over the last five years were Estonia (82% average annual growth rate), Lithuania (63%), Bulgaria (54%) and Czech Republic (30%).
  • Examples of macadamia nuts importers are Global Trading, Catz International, Voicevale, Richard Janssen, Free World Trading, HWB Nussfrucht and Orienco.

Australia and South Africa the leading suppliers

  • The leading supplier of macadamia nuts to Europe is Australia, followed by South Africa and Kenya. In 2016, Australia reached the highest ever export volume to Europe at 27 thousand tonnes, which is 2 thousand tonnes more than in 2015. However, all developing countries are also increasing their share of the European market.
  • Among the leading 20 macadamia nuts external suppliers to Europe, the most significant annual export growth in the last five years was from Kenya (61% annual growth), which increased its export to Europe from €3 million in 2012 to almost €20 million in 2016 (i.e. 1.4 thousand tonnes).

Tips:

  • Identify who the biggest importers of your product are in selected large or fast-growing markets. You can start by searching the internet or reading more about supply chains in Europe in our study on market channels and segments for edible nuts and dried fruit.
  • Besides aiming to export to Germany and the Netherlands, which are the largest European suppliers, consider countries that are facing growth in imports such as Baltic countries and Eastern and Central European countries.
  • Learn from developing country exporters who are increasing their share of the European market, such as ones from South Africa or Kenya. Information about the macadamia nut industry and export strategies of fast-growing countries can be found on websites of their sectoral associations (for example the Australian Macadamia Society or South African Macadamia Growers Association) as well as via main market information portals such as IEG Vu.
  • Invest in mechanised processing in order to add value to your product and to increase chances of supplying European countries directly, rather than through major processing countries.

Exports

The Netherlands largest re-exporter of macadamia nuts

  • As the European climate does not allow intensive macadamia nut cultivation, exports usually entail re-exporting imported products. However, large quantities of macadamia nut kernels are not simply re-exported but first undergo further processing. The most common processing method is roasting and baking the raw kernels (although other operations also take place, such as blanching, salting, dicing, sieving or grinding). Therefore, the largest European exporters can be potential competitors to developing country suppliers of processed macadamia nuts, but on the other hand also act as partners in supplying raw macadamia nuts.
  • In terms of value, since 2012 European exports (including intra-European trade) of macadamia nuts have grown at an annual rate of 27% and reached €615 million in 2016. In quantity, exports grew by 11% and reached 3800 tonnes in 2016. A faster rate of export value growth compared to increasing quantities indicates an increase in export prices.
  • European exports are very concentrated, with the Netherlands, Belgium and Germany accounting for more than 90% of total European exports. Dutch exports mainly concern re-exporting macadamia nuts imported from African countries.

Switzerland the main external export destination

  • The main European Union external export destination for macadamia nuts in 2016 was Switzerland, followed by the USA, Hong Kong (China) and Israel.
  • In the range of the largest European export destinations, the highest annual increases in macadamia nut exports from the European Union in the last five years were to Israel (301%), China (212%) and Norway (58%).

Tips:

  • Besides targeting your export to the Netherlands or Germany, you can also learn from Dutch and German exporters and their target markets within Europe. The main Dutch export target markets for macadamia nuts within Europe are Germany, France and Poland. The largest German export destinations for macadamia nuts within Europe are Luxembourg, the Netherlands and France.
  • Serving packers directly requires a different set of capabilities than simply exporting to traders, including the ability to deliver smaller quantities to the warehouse of the client and meeting all necessary quality standards.
  • You can also find opportunities in growing markets for macadamia nuts supplied by European traders and processors such as Israel, China or Norway.
  • Learn more about your competitors in our study on competition in edible nuts and dried fruit.

Production

Processing of macadamia nuts in Europe is increasing

  • Due to climate conditions, raw macadamia nuts cannot be produced in Europe and must therefore be imported. However, macadamia nuts are often processed in Europe by blanching, roasting, salting and spicing. One of the top processing countries within Europe is Luxembourg.
  • Processing of macadamia nuts in Europe is increasing driven by the increased consumption of all tree nuts which are considered a healthy source of protein.

Note that the figures above are for the production of manufactured goods, which includes intermediate goods as well as final goods. This implies that it is possible that there is an overlap in production data and import data, since raw materials may be imported and further processed.

USA and Brazil increasing production

  • Following the previous seasons trend, 2016 world production of macadamias (kernel basis) was raised for 1,300 tonnes compared to 2015. Almost 70% of world macadamias production was concentrated in Australia, South Africa and Kenya.
  • Australia led the production, accounting for 15,600 tonnes, up by 16% from the year before; followed by South Africa and Kenya.
  • Although relatively smaller producers, the USA and Brazil production rose by 22% and 20% compared to a year earlier, respectively, the highest growth among producing countries.

Tip:

  • Consider supplying European macadamia nut processors. Processors need regular supply and they can be ready for long-term cooperation if your product fulfils their specifications.

Consumption

  • The outlook for the consumption of macadamia nuts in Europe is positive, with stable growth expected. A driving factor in this expected growth is an increased interest in healthy eating, as macadamia nuts are a source of protein, fibre, vitamins, minerals and unsaturated fats. They are also considered a source of Vitamin A, iron, protein, thiamine, riboflavin, niacin and folates.
  • As raw macadamia nuts are not produced in Europe, apparent consumption is calculated as the difference between exports and imports.
  • In terms of value, apparent consumption of edible nuts in Europe is increasing by an average annual rate of 19%. There was a slight decrease in consumption in 2016, compared to 2015, which was not caused by the lower demand but by lack of availability of macadamia nuts on the market due to the very low harvest in South Africa.
  • The largest European consumer of macadamia nuts in Europe is Germany, which had a total consumption of 1.87 thousand tonnes and estimated consumption of 0.116 kg of macadamia nuts per capita in 2016. However, due to processing facilities, Luxembourg is the largest European consumer of macadamia nuts per capita at 1.4 kg. Other major consuming countries are the United Kingdom (with a total consumption of 639 tonnes), Spain (284 tonnes) and Italy (244 tonnes).
  • Macadamia nut consumption as a snack is seasonal in Europe and in winter months it reaches a peak, with consumption then falling towards the summer. The winter macadamia-nut consumption peak is connected with the Christmas and New Year holidays in European countries.
  • Macadamia nuts belong to the highest luxury segment of nut snacks, together with pine nuts, and command much higher prices than, for instance, peanuts. The Australian Macadamia Society concluded extensive research on Facebook to identify profiles of typical consumers in the major macadamia nut consuming countries. Findings define the macadamia consumer in Germany as female, aged between 18 and 24, who view macadamia nuts as delicious, crunchy and nutty, and consume macadamias as a boosting snack around 3 pm.

Tip:

3 . Which trends offer opportunities on the European market for macadamia nuts?

Consumer demand for vegan, gluten-free and natural food offers opportunities for exporters from developing countries.

Food safety certification supported by frequent laboratory tests, together with adherence to corporate social responsibility standards, can also be a great advantage to European markets suppliers.

Specific trends for macadamia nuts:

  • Nuts, including macadamia nuts, enjoy a good reputation among European consumers. Consumption of nuts is expected to experience the highest growth in the snack segment. In major macadamia nut-consuming countries, macadamia nuts are considered a healthier alternative to other savoury snacks such as crisps and extruded snacks, but also to be more beneficial to health than peanuts.
  • Developing country exporters can join forces with European traders and finance medical research proving the health benefits of macadamia nut consumption. In 2017 global macadamia nut industry players financed research costing €200 thousand to enhance an understanding of health benefits of macadamia nuts. This research is co-financed by producers from Australia, South Africa, Kenya, Malawi and Brazil. A clear and easy to understand health message is important to help customers include macadamia nuts in their diet.
  • Macadamia nuts are also becoming an ingredient in various healthy food and functional food products, such as macadamia breakfast biscuits (Weet-Bix Go), breakfast cereals (Byron Bay), macadamia nut butter (Alnatura) and chocolate products with macadamia nuts (Ritter Sport).

Forecasts

  • In Australia, the 2017 macadamia nut crop has been forecast to be the same as in 2016, which is around 48,600 tonnes of in-shell macadamia nuts. The South African macadamia nut industry is still suffering from severe drought, which decreased production in 2016. Production in South Africa for 2017 is forecast to be to 41,430 tonnes which is still lower than the 46,000 tonnes produced in 2015. Therefore, the high export prices are expected to continue to exist. At the time of writing this report (August 2017), there is a lack of macadamia nuts on the market and the prices are likely to remain high until May/June 2018, when the first produce from Malawi and Kenya is expected.
  • World production of macadamia nuts is forecast to significantly increase in the next several years, leading to more stable prices. For example, just in South Africa in 2016, 1.1 million trees were sold, which is equivalent to more than 3.5 thousand hectares.
  • In the long term a stable increase of consumption of macadamia nuts is expected in the European markets. This trend is driven by the increasing consumer awareness of the nutritional value of macadamia nuts. The highest rate of the increase in macadamia nut consumption in Europe is expected in Central and Eastern European countries.
  • In the long term, diversification of imports from Australia can be expected. Import is expected to shift toward African countries and to China. However, this shift cannot happen very quickly as China has just started to invest in growing areas. China also lacks processing capacity and the majority of macadamia nuts are traded as in-shells due to consumer preferences.
  • Consumption in Asian countries such as China and India is expected to increase, creating more market alternatives for developing country exporters.
  • The United Kingdom’s intended withdrawal from the European Union (the so-called Brexit) can have various consequences regarding predictions for the macadamia nut trade. The British Prime Minister has announced that the Brexit will take place no sooner than 2019. Negotiations between the United Kingdom and the European Union are still in the initial phase. In the short term, no significant changes are expected, apart from the weaker pound. In the long term, consumers in the United Kingdom will continue to consume macadamia nuts and the volume of direct imports, rather than through intermediaries, is likely to increase.

Tips:

  • Regular information about macadamia nut crops, processing and the market situation can be found on IEG Vu, the leading European information service for processed fruit and vegetables.
  • The best way to monitor industry trends, but also to find potential prospects, is to participate in the leading European food trade fairs. So be ready to visit or exhibit at Anuga, SIAL or Food Ingredients Europe.
  • Concerning macadamia nuts, an extensive study about European market trends is already available. See our study about trends for processed fruit and vegetables.
  • Compare your price offer of macadamia nuts with cashew nuts, hazelnuts and almonds. If macadamia nut prices increase too much compared to those of other tree nuts, there is a risk that consumers will switch to other nuts because they believe that all types of tree nuts offer similar health benefits.

4 . Which requirements should macadamia nuts comply with to be allowed on the European market?

In addition to the quality requirements mentioned in the product description, for the general overview of the buyer requirements in the European Union please refer to our study about buyer requirement for processed fruit and vegetables.

Legal requirements

All foods, including macadamia nuts, sold in the European Union must be safe. This applies to imported products as well. Additives must be approved. Harmful contaminants, such as pesticide residues, and excessive levels of mycotoxins or preservatives are banned. It should also be clearly stated on the labelling whether a food contains allergens.

Food safety

The incidence of mycotoxins is very rare in macadamia nuts compared to other crops, such as groundnuts or maize. Most sources agree that aflatoxin is not an issue in macadamia nut production. However, macadamia nuts must comply with the increasingly strict legislation regarding the maximum allowed levels of contaminants.

Several new pieces of legislation concerning various pesticide residues have been introduced or announced in 2017. New residue limits relevant for tree nuts, including macadamia nuts, have been set for cymoxanil, phosphane, bifenthrin, carbetamide, fenpropimorph, tolylfluanid, cyantraniliprole, fluxapyroxad, fenpyroximate, triadimenol, triadimefon, chlormequat and tebufenpyrad. Review your treatment practices in order to confirm that your macadamia nut kernels will not contain pesticide residues above the newly set limits.

Packaging requirements

Packaging used for macadamia nuts must:

  • protect the appearance, taste, flavour and quality characteristics of the product. Macadamia nuts in bags must not be stowed together with fibres or fibrous materials, since oil-impregnated fibres accelerate self-heating processes and rancidity
  • protect the product from bacteriological and other contamination (including contamination from the packaging material itself); when container transport is used; damage due to moisture may arise if the water content of the cargo is too high
  • not pass on any odour, taste, colour or other foreign characteristics to the product; macadamia nuts are sensitive to unpleasant and/or pungent odours.

The safety of food contact materials must be evaluated and it must be ensured that there is no migration of unsafe levels of chemical substances from the material to the food.

The use of materials, particularly of paper or stamps bearing trade specifications, is allowed, provided the printing or labelling uses non-toxic ink or glue.

Labelling requirements

The obligation to provide nutrition information for consumers applied from 13 December 2016 on, when a new European Union Regulation on food labelling went into effect. The new labelling legislation forbids misleading consumers. Moreover, claims that a food can prevent, treat or cure a human disease may not be made.

Another change is allergens labelling, where allergens have to be highlighted in the list of ingredients. Requirements regarding information on allergens now also cover non-prepacked foods, including those sold in restaurants and cafés. The list of allergens includes macadamia nuts.

Nutrition information is now also mandatory for macadamia nuts.

Common requirements and niche requirements

  • Food safety certification is often requested by European importers. The most common certification schemes accepted on the European markets are IFS, FSSC22000 and BRC.
  • Environmental protection, organic and fair-trade certification schemes are becoming more and more popular in Europe. In order to be labelled within the European Union with the EU organic logo, producers from developing countries must meet European organic farming requirements.
  • The European Union regulates both organic food and drink produced and/or processed within Europe and organic goods from elsewhere (Commission Regulation (EC) No. 1235/2008 with detailed rules concerning import of organic products from third countries).

Organic products can readily be imported from non-European countries whose rules on organic production and control are equivalent to the European Union's – currently Argentina, Australia, Canada, Costa Rica, India, Israel, Japan, New Zealand, Tunisia, Switzerland and the United States.

For all other non-European countries, importers can have their organic products certified for export to the European Union by independent private control bodies approved by the European Commission.

Tips:

  • Get food safety certification. However, check with the importers and experts if the food safety certification your company has engaged in, is recognised by the European buyers. Examples of the independent international accredited certification companies include SGS, CIS, TÜV and Bureau Veritas.
  • Consult the EU Export Helpdesk where you can find European Union legislation for your selected products under the corresponding codes.
  • For information on commonly requested standards, check the International Trade Centre's Standards Map, an online tool which provides comprehensive information on over 210 voluntary sustainability standards and other similar initiatives covering matters such as food.
  • Refer to Codex Alimentarius for practical guidelines that can support you in fulfilling requirements on European food safety legislation. For macadamia nuts consult the Code of Hygienic Practice for Tree Nuts.
  • For an example of an independent certification programme aimed at environmental protection and corporate social responsibility, see the Corporate Social Responsibility page of Intersnack, a leading European company in the savoury snacks segment.

5 . What competition will I be facing on the European macadamia nuts market?

Macadamia nut products competition on the European market includes all other types of edible nuts. Macadamia being an expensive nut, the immediate competition is from other luxury or ‘tree’ nuts such as almonds, pistachios and cashew nuts. Major company competitors are from the primary producing countries such as Australia and South Africa, but also from all other emerging macadamia nut producing countries.

For more information about competition on the European edible nuts market see our extensive competition study.

6 . Which channels can you use to put macadamia nuts on the European market?

Many importers of macadamia nuts are also packers and, in addition, conduct trading and wholesale activities. After importation, products reach different segments of the market as described in Chart 1.

Currently, 80% of macadamia nuts are consumed as a snack, while the remaining 20% is used as an ingredient. With other nuts, like almonds, it is the opposite: 80% is used as an ingredient and 20% consumed as a snack. For macadamia nuts, this ratio is a symptom of an immature industry and provides the opportunity to develop more market segments in the near future.

In some cases, developing country exporters can also supply different segments directly, without the importer as intermediary. However, in the majority of cases specialised importers (wholesalers) serve the supply chain as the first entry point for macadamia nuts from developing countries.

Chart 1: European market channels for macadamia nuts, 2017
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Tips:

7 . What are the end-market prices for macadamia nuts on the European market?

An indication of margins according to final retail prices for macadamia nuts is not very precise as the entire sector has varying macadamia nut product prices for various origins. Therefore, developing country exporters only have a very rough general overview of the price development. Macadamia nuts originated from Australia usually achieve the highest prices in European markets.

When this report was being written (August 2017), FOB prices for Australian and South African macadamia nuts were above €19 per kg. At the same moment European wholesaler offers were the following:

Origin Grade Crop Price USD/kg
Malawi Style 0 2016 21.5
Kenya Style 1 2017 18.9
Australia Style 1 2017 21.2

Current retail prices in most European supermarkets vary between €4 and €5 for 125 g of branded salted macadamia nuts. Roughly calculated this means that retail price of 1 kg can vary between €30–40.

Roughly speaking, the Cost, Insurance and Freight (CIF) price of raw macadamia nuts kernels represents around 50% of the retail price of a retail package of macadamia nuts. In cases when a final retail product is sold directly to retail chains, the share is much higher.

Tip:

  • The best option to monitor prices is to compare your offer with the offer from the largest competitors.

A very rough breakdown of the prices is shown in the table below:

Table 2: Macadamia nuts retail price breakdown

Steps in export process

Price margins

Farmers, traders and shipping

8%

Shelling and processing

40%

Shipping and warehousing

45%

Roasting, packing and distribution

50%

Retailers margin

100%

Please note that the share of the retail price which is paid to farmers varies a lot between producing countries. It will also vary from year to year, depending on market conditions.

If the farmers add value to their produce through differentiated quality, food safety, certification and processing steps, their prices will be higher. For example, organic and Fairtrade certification and improved operations such as mechanised shelling may add value to the products.

Please review our market information disclaimer

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