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Home  »  Ag Sectors

Blue Diamond closing hazelnut packing division

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Capital Press

The hazelnut packing division of Blue Diamond Growers is shutting down operations in Oregon after more than three decades in the industry.

The California-based farmers cooperative is primarily devoted to almonds and decided to discontinue the hazelnut sideline, just as it previously ended its involvement in macadamia nuts and pistachios, said Bruce Lish, its general manager of operations.

"It's a sad chapter to close an operation like that, but it lined up with our strategic objective to focus on almonds," he said.

Blue Diamond's in-shell hazelnut volume wasn't growing and it was difficult to justify the operation given the high price of hazelnuts paid to farmers in recent years, Lish said.

At the same time, adding value with shelled hazelnuts proved to be challenging due to the dominance of Turkish exports in that market segment, he said.

"We weren't able to make inroads in that area," Lish said, noting that prices were largely determined by the Turkish crop. "That made it very difficult competing against them."

The cooperative entered the hazelnut industry in 1979, when it was trying to diversify the business, Lish said. "At that time, our strategy was to put other nut products on the shelf under the Blue Diamond label."

Over time, the macadamia and pistachio businesses faded as the company decided to streamline its product lines, just as major car manufacturers parsed their vehicle makes to avoid competing with themselves, he said.

The hazelnut division hung on longer mostly because Blue Diamond owned the actual packing facility in Salem, Ore., Lish said. The plant will be sold with equipment intact, and there has been interest in it among competing packers.

The cooperative will put the facility up for sale after it ships the remaining inventory and cleans the equipment, he said. The 13 employees have been offered jobs at other Blue Diamond locations in California.

Oregon's hazelnut industry will now have four major packers, as well as some smaller ones, said Mike Klein, manager of the Hazelnut Growers Bargaining Association.

Their facilities should have enough demand and capacity to absorb hazelnut supplies from farmers who had been delivering to Blue Diamond, he said. "If Blue Diamond were to pick a time to do it, this would be the time."

The cooperative has been referring farmers to another packer who can accept the crop, Klein said. "They're doing it in a respectful way to their growers."

Blue Diamond has been losing hazelnut volume in recent years as other packers have been more aggressive with recruiting farmers, he said. "Blue Diamond saw that with the reduced volume, it would be very difficult for them to make money with their cost structure."

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