The agreed upon prices are well below last year’s initial level of 96.5 cents per pound.

Original post in Capital Press

by Mateusz Perkowski

Minimum initial prices for Oregon hazelnuts will range from 62 cents to 91 cents per pound this year under a new tiered pricing system.

Those prices are all down from last year’s initial level of 96.5 cents per pound and the 2016 initial price of $1.18 per pound.

The downward pressure on prices in 2018 is due to significantly increased tariffs on hazelnuts in China — a major market for Oregon’s crop — as well as a devalued currency in Turkey, which has effectively reduced prices for hazelnuts from the world’s predominant producer.

The Oregon Hazelnut Bargaining Association, which negotiates prices with processors, agreed to the three-tiered system on Oct. 2, partly to encourage planting of high “shell-out” varieties, such as Casina, McDonald and Sacajawea, which have a higher proportion of kernel within the nut and will earn at least 91 cents per pound this year.

Mid-shell-out cultivars, including Lewis, Willamette, Santiam, Dorris, Yamhill, Clark and Wepster, will receive at least 81 cents per pound.

In-shell varieties such as Jefferson and Barcelona, which have a relatively low ratio of kernel to shell, will earn at least 62 cents per pound.

“We’ve been talking as an industry about separating out the kernel varieties and the in-shell varieties for a few years now,” said Terry Ross, executive director of the bargaining association.

Though in-shell hazelnuts headed to China will continue to be important to the industry, growers have enough of those cultivars planted to supply future needs, he said.

Meanwhile, more kernel varieties will need to go in the ground to meet kernel demand among candy producers and other food manufacturers, Ross said.

“The kernel markets are going to be a greater focus as the industry grows,” he said.

While the effect of Chinese retaliatory tariffs and the devalued Turkish lira were “devastating,” there’s still a possibility of an “upside” for growers when final prices are established next spring, he said.

“The markets were frozen and we needed to set a floor to thaw the markets,” Ross said.

Recent progress in trade deals with Canada and Mexico has made the industry optimistic about trade negotiations elsewhere, he said. “We’re hoping that will continue with China.”

Barcelona trees were long the “staple” of Oregon’s hazelnut industry but were susceptible to Eastern Filbert Blight, a fungal pathogen, and have often been replaced with Jefferson, another in-shell variety resistant to the disease, said Garry Rodakowski, a farmer near Vida, Ore., and chairman of the Oregon Hazelnut Commission.

“There’s not going to be any profit made there,” Rodakowski said of the initial prices for in-shell cultivars. “It isn’t the first time I haven’t made money. That’s farming. Anybody in production agriculture knows you can’t control price.”

To deal with the lower prices, Rodakowski said he will likely reduce nitrogen fertilizer applications and apply a less expensive fungicide to his orchards.

“Everybody’s management practices are going to need to change a little bit,” he said.

All the same, Rodakowski doesn’t expect growers who’ve made a deposit on new trees and prepared fields for planting will pull back on new orchards due to this year’s price slump.

There’s still a “bright future” for hazelnuts over the coming decades, so the short-term problems in China and Turkey aren’t going to affect long-term planting decisions, he said.

“You’re looking out farther in advance than that,” Rodakowski said. “That can be cleared up within a year.”