A concise summary of Georgia’s hazelnut sector, from local investment bank Galt and Taggart.
Worth reading in its entirety, the government estimate for establishment cost of hazelnut orchard is in our opinion underestimated. Clearing and elimination of woody weeds can cost almost half the budget provided. Also, tissue-cultured seedlings are significantly more expensive than conventionally produced seedlings budgeted for, but have the advantage of great consistency, longevity and freedom from infections.
Hazelnut production in Georgia increased at a compound annual growth rate (CAGR) of 6% over 2006 – 2014, from 24,000 to 37,000 tons. If Georgia is able to integrate efficient farming practices in order to increase quality and productivity and expand the planted area, the country has an opportunity to land a place among the top 3 hazelnut suppliers in the world, after Turkey and Italy. The American hazelnut industry, even though technology-intensive, is facing difficulties at growing and harvesting the hazelnut, as the hazelnut type most demanded on the world commodity market is being affected by a region-specific disease. USA has only 1.4% of total hazelnut planting area (~12,200 ha), but its yield is much higher than in Georgia, as American hazelnut growers integrate innovative farming and best practices.
Turkey is a price setter on the hazelnut market. In 2014 when the hazelnut harvest suffered from a severe frost in Turkey and output almost halved, hazelnut prices on the world market doubled from US$ 5.5 to US$ 11.5. This was rather beneficial for other nut exporting countries, including Georgia. In August 2015, prices were back to $4.5-5.0, and dipped further in September as the harvest outperformed forecasts. In 2015, according to the Istanbul Exporters Union, Turkey has already earned US$ 2.67bn in 7M15 and exported 208,000 tons of hazelnut. Georgian hazelnut exports in 1H15 increased 163% y/y in dollar terms and generated US$73.4mn in export revenues, up from US$ 28mn last year. Roughly ¾ of Georgian hazelnut exports went to the EU, where prices were 43% higher on average than in the CIS countries (2014 World Bank estimates). Italy, Germany, and Spain jointly imported 46% of hazelnuts exported from Georgia. The largest importer from the CIS countries was Kazakhstan, accounting for 8% of Georgian hazelnut exports.
From “Hazelnut – Georgia’s Precious Commodity“. Georgia Today