Oregon growers see market in candy, baked goods
By MATEUSZ PERKOWSKI
Sales of hazelnuts took off like a rocket right after the 2011 harvest but then tapered off as Chinese buyers slowed down their orders, experts say.
"There was considerable demand right off the bat," said Mike Klein, manager of the Hazelnut Growers Bargaining Association.
About 4,300 short tons of hazelnuts were shipped in October, when the crop was harvested, and 10,400 tons were shipped in November, he said.
In December, shipments fell by 85 percent compared to the prior month, Klein said.
In 2011, farmers in Oregon, the predominant hazelnut-producing state, harvested about 38,000 short tons of the crop.
"As in most years, there's ebbs and flows to the market," Klein said.
It's possible that demand for hazelnuts was front-loaded due to the earlier timing of the Chinese New Year, said Compton Chase-Lansdale, president and CEO of the Hazelnut Growers of Oregon cooperative.
The holiday, which is determined by the lunar cycle, fell on Jan. 23 in 2012. It usually lands in February.
The buying schedule of Chinese importers may have been accelerated -- accounting for the early boom -- and then sated, Chase-Lansdale said.
China, a major destination for in-shell Oregon hazelnuts, isn't transparent, he said.
"It's hard to know what the real forces are," Chase-Lansdale said.
The Chinese government has tried to stem inflation by moderating the flow of money, potentially hindering smaller and speculative buyers from purchasing hazelnuts, he said. "It's harder to get credit."
The growth rate of that country's economy has slowed, so buyers haven't been as eager to build up inventories of the crop, he said. "It's been more of a just-in-time policy."
Over the long term, though, the outlook for Oregon hazelnuts continues to be positive, barring major trade disruptions with China, Chase-Lansdale said. "The snack food industry has boomed, so Oregon can be optimistic."
While the weaker Chinese economy may limit future growth of Oregon hazelnut exports to that country, it's unlikely to cause a reduction, Klein said.
China primarily consumes hazelnuts as an in-shell snack food, but Oregon is also meeting rising demand for shelled hazelnuts used in baked goods and candy, he said.
Turkey, a major global hazelnut producer that's largely geared toward the shelled market, generated a light crop in 2011, Klein said.
Lower supplies and higher prices of Turkish hazelnuts have helped spur demand for Oregon kernels, he said. "That has been reflected in shipments."
Hazelnut growers and packers have negotiated an initial price of $1.10 per pound for the 2011 crop, though there's still the potential for a final adjustment, Chase-Lansdale said.
In 2010, the final price hit a record $1.19 per pound, compared to $0.81 in 2009, $0.76 in 2008 and $0.99 in 2007, he said.
Strong demand for the crop has prompted shipments of in-shell hazelnuts to China from the nation of Georgia, which means Oregon growers are facing increased competition in the market, Chase-Lansdale said.
"Robust prices attract a lot of attention globally," he said.
The price has also caught the attention of farmers within Oregon, who are estimated to be planting about 3,000 acres a year of the crop, said Polly Owen, manager of the Oregon Hazelnut Marketing Board.
Mindful of the industry's reliance on the Chinese market, many growers have been opting to plant varieties suitable for the kernel market, she said.
"People are extremely excited about the whole hazelnut industry," Owen said.