Newberg-based Willamette Hazelnut Growers expect a recent price rebound to continue due to healthy demand domestically and globally for the tasty crop.
“I believe we’re getting back to a new normal,” Terry Ross, executive director of the Hazelnut Growers Bargaining Association, said. The organization recently struck the price agreement with several Oregon hazelnut packers.
Although Oregon’s acreage isn’t big enough to impact hazelnut prices on the world scale, growers are regaining the premium that’s historically been associated with the state’s crop, Ross said.
As the supply and demand outlook for hazelnuts solidifies over fall and winter, this year’s crop will likely end up “profitable to highly profitable” when final prices are set next spring, he added.
The 2024 harvest in Turkey — the world’s largest hazelnut producer — wasn’t as bountiful as expected, with stinkbug damage degrading quality in some regions. Meanwhile, production problems are expected to result in small yields in Italy, another major global supplier.
On the demand side, China is only expected to consume about 15% of Oregon’s hazelnut output, down from a peak of 70% in the past. The state’s industry has reoriented itself to selling more kernels, mitigating the effect of high tariffs that have hampered in-shell hazelnut shipments to China.
“It’s become less of an impact on our markets,” Ross said.
It’s important to note that hazelnut processors haven’t sought to raise their fixed fee of 36 cents per pound of hazelnuts, despite enduring 20% cost inflation in recent years, Ross said.
“The current packers are committed to keeping the fee where it is,” he added.
Ross insisted that the goal is to improve profits for farmers and convince them to plant more hazelnuts, thus raising volumes and revenues for the packers as well. Earlier this year, the 36-cent fixed fee was cited by Firestone Processing as one of the hazelnut packer’s reasons for deciding to leave the industry.
Financial problems also prompted the Wilco farmers cooperative to divest its Hazelnut Growers of Oregon processing division.
In that case, however, the HGO assets were recently bought by George Packing, a major processor, which was applauded by the Hazelnut Growers Bargaining Association.
While the bargaining association traditionally didn’t negotiate prices with HGO, it was a signatory to the recent 2024 agreement. More than 85% of the state’s processing capacity is now subject to such bargaining contracts.
“We’re happy to see them folded into the HGBA family,” he said.
Last year, HGO’s payment system was criticized by the association for depressing initial hazelnut prices, which ranged from 45 to 55 cents per pound. The cooperative announced it would play growers an “advance” of 30 cents per pound, which HGO said was intended to be divorced from market conditions for the crop.
However, the bargaining association said the announcement sent a signal of market weakness to Chinese wholesale buyers, hindering the ability of Oregon packers to charge a higher price.
The prior year, hazelnut farmers were guaranteed even lower initial prices of 40 to 53 cents per pound, which were broadly considered below the cost of production. Fluctuations in the value of Turkish currency were partly blamed for the price drop, as the strength of the United States dollar made Oregon hazelnut less affordable in comparison on the global market.
Now that prospects for the state’s hazelnut industry have improved, the good times are likely to have some staying power due to healthy demand for the crop in the U.S. and abroad, according to Michael Severeid, CEO of Newberg-based processor Willamette Hazelnut.
Domestic consumption of hazelnuts is relatively modest but is expected to grow as people tend to become “customers for life” once they become familiar with the crop, Severeid said. “It’s impossible to see too far into the future but we have interest from major buyers in building up Oregon as a major source because we’re more stable. If you want to keep receiving this quality product, you’ve got to pay for it.”
Local News
