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New Chilean hazelnut plantations, covering 17,000 hectares, represent only 1.5% of the global supply, but a steady increase in production and the number of hectares planted is expected. The big incentive for this new market is the excellent prices.. High profitability means leading farmers in this new industry will have very buoyant bank accounts.
Hazelnut is a tree native to Asia, and for centuries, it has been planted from northern England to Iran and Turkey in the south. There are hazelnut orchards throughout Europe.
Turkey is the world’s largest hazelnut producer, accounting for 64.5% of the world’s total production. It has an annual output of 581,000 tonnes over the past seven years, according to various sources. Other major producers include Italy, Azerbaijan, Georgia, the USA, Spain, and Greece.
The enormous demand for hazelnuts by Ferrero, a famous Italian company with global success, has been consistent over the years. See the report of the La Tercera Journal.
In 2014, there was a considerable drop in production in Turkey due to climatic causes, which caused some commotion among hazelnut consumers, especially those of Nutella, a mixture of chocolate and hazelnuts produced by the Ferrero Company.
In early July 2016, the Turkish Minister of Agriculture announced a harvest of 468,000 tonnes that year. Such a figure, even when issued by a government authority, is not credible for most international retailers, especially in London.
Nowadays, it is difficult to predict prices for hazelnuts, at least for the current season. Considering the devaluation of the local currency in Turkey this week, one might expect a lower price on the international market.
Likewise, if the political situation in Turkey alters the normal crop output, there would be shortages, and therefore a rise in prices. The international market for hazelnuts – this time affected by the political situation, an attempted military coup – has no assurances for the moment, while recognising that demand is growing every day.
Comparative advantage of planting hazels
The main attraction is the low dependence on local labour. The harvest can be mechanised. This is not a minor detail in a country where the harvest dates of various fruit crops coincide each year. Many producers rely on a 100% manual harvest, as seen in the cases of berries and grapes.
Another advantage is the value of investment per hectare – one of the lowest among fruit orchards – at around USD 7,000 per hectare.
This is all very well, but what are the obstacles and complications for the conversion of farmland to produce hazelnuts, even when the figures are so outstanding, is considered to be the “Ghost of the Kiwifruit”.
In the 1980s in Chile, many vineyards were uprooted, and so-called “green gold” Kiwifruit was planted by growers attracted by the exceptional price of Kiwifruit at the time. Then the price of Kiwifruit fell well below production costs, resulting in ruin for many farmers, especially those who had recently planted and had high-interest loans.
The lesson is not easily forgotten.
Nutella hazelnuts are home-grown in Chile
Agrichile, the company controlled by Ferrero, will send to their factories this year between 6,500 and 7,000 tons of home-grown hazelnuts from Chile. Also, as a buyer, it will acquire a total of 8,000-8,500 tons from small and medium-sized local producers.
Characteristics of hazelnuts
Like almonds and walnuts, hazelnuts are rich in protein and unsaturated fats. They contain vitamin E, Thiamine, Magnesium, Manganese and Copper.
Hazelnut oil reaches the same high quality as olive oil. At the same time, all hazelnut products are marketable.
It does not contain gluten, so, as flour, it is possible to prepare pasta and pastries, traditionally made from wheat flour or rice.
The hazelnut tree is almost perfect: it consumes few resources, and reduces soil erosion and nutrient runoff.
It has a shelf life of 30 years and does not require pesticides.
It is profitable for stakes and even as wood for making furniture, as well as for its extraordinary flexibility before drying.
The Butterfly Effect on the marketplace of Hazelnuts
The expansion of consumption in Canada exceeds double digits, and in the United States, there is also significant growth potential, driven by the substantial increase in worldwide hazelnut consumption.
Agrichile has invested more than $100 million in Chile, including a peeler plant, which enables the export of hazelnuts ready for processing in Ferrero factories. They have 23 in the world, including a new one in China, where their products are very well received.
Moreover, Ferrero has planted 2,000 hectares in Australia and 300 more in Argentina – the latter of which had been stagnant over the past few years due to political issues. They are also beginning to plant in South Africa.
However, recent events in Turkey, as well as any weather effects worldwide, will necessarily affect the price of hazelnuts for this season and next.
For now, the hazelnut market in Chile has a large buyer, which alone accounts for 90% of the demand. This buyer is excellent, with high labour requirements, social responsibility, and environmental concerns. Every day, many Chilean farmers are willing to meet those demands, not very different from other buyers of Chilean fruit.
The entry of other players into the market is expected in the medium term. Mono-dependence among the Chilean participants has resulted in negative experiences in various agricultural sectors in the past.
So far, all who have tried to compete against Ferrero’s buying prices have failed to be competitive.
From this perspective, Chilean farmers are already considering partnerships to develop part of their production into hazelnut oils and flours, so as not to depend on the price fluctuations of hazelnuts as a raw material.
The global market for hazelnuts is seen as promising for the future. There is a persistent increase in the consumption of nuts, mainly due to the recommendations of the Mediterranean diet, which values nuts as a source of energy and quality nutrients.
Specifically in Chile, as the hazelnut market evolves and matures on its way to reaching its full potential, it will be able to put to rest the Kiwifruit ghost.
English Editor: Audrey van Ryn
Writer & Translator: Mª Verónica Brain
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