Freeze in Turkey complicates hazelnut trade
By Eric Mortenson
If anyone was questioning Oregon agriculture’s international connections, consider this: A freeze that damaged up to a third of Turkey’s hazelnut crop will result in a greater demand and better prices for Oregon nuts and has international candy and nut spread makers knocking on processors’ doors, but complicates Oregon’s trade with China.
The short-term view is that Oregon hazelnut growers will see good prices for the crop they harvest this fall. The longer view is murky, but might turn in growers’ favor as well.
The dominoes were set in motion in late March and early April when a sharp freeze and hail descended upon hazelnut orchards in Turkey’s Black Sea region, which produces 75 percent of the world’s supply. The weather snapped as trees were blooming or forming nuts. Damage was severe, and is expected to reduce Turkey’s crop this year by 200,000 to 250,000 metric tons. The country typically produces up to 800,000 tons a year, said Mike Klein, associate director of the Oregon Hazelnut Marketing Board.
The losses touched off a scramble for supply. Klein said prices immediately jumped 40 to 50 percent for sellers who still had product from the 2013 harvest and is expected to remain strong when Oregon begins its 2014 harvest in mid- to late-September.
“It’s very significant, it will affect the marketing of this year’s crop,” Klein said. “If we have a decent crop — which is what we expect — it opens new avenues of business for us.
“The larger users will act quickly to guarantee sources of supply,” Klein said. “We assume there will be increased interest in Oregon product as a result.”
Much of Oregon’s hazelnut harvest goes to China as an in-shell snack, but processors are hearing from candy and spread manufacturers who buy shelled kernels. Ferrero, an Italian company that makes Nutella, a chocolate-hazelnut spread, buys 25 percent of the world’s hazelnut production. Smucker’s is another big buyer, using nuts for its Jif hazelnut spread.
As such companies look for supply and are willing to pay a good price for shelled kernels, Oregon growers and processors may withold nuts from the China. Jeff Fox, chief executive of the Hazelnut Growers of Oregon, a growers’ cooperative, said it’s unclear whether Chinese snack buyers will be willing to match what growers can get from candy and spread makers.
“There’s only one particular region in China that consumes them, but it is robust and they do like Oregon hazelnuts,’ Fox said. “Do they want to pay that price? I don’t know.”
Oregon produces 99 percent of the U.S. hazelnut crop, but only about 5 percent of the world supply. However, growers have steadily added acreage over the past decade, and those orchards are beginning to come into full production.