Original post in Capital Press
Oregon’s hazelnut industry is looking to expand beyond its traditional export market in Northeast China and gain a better foothold in other Asian countries as well.
A new research export initiative overseen by the Oregon Hazelnut Marketing Board will examine improving the crop’s reach into China while better penetrating markets in Japan, South Korea and India.
The study will also analyze ramping up exports into Canada, which is already the second-largest destination for Oregon hazelnuts behind China.
“The potential is quite remarkable to access consumers around the world. It’s going to yield long-term benefits for all the growers and packers in the region,” said Jeff Nawn, whose North Hill Group consulting firm will conduct the analysis. “For the industry, it’s the right time to do this type of work.”
Of the 18,000 metric tons of Oregon hazelnuts exported last year, nearly 80% were shipped to China and most of the rest to Canada, with nominal amounts destined for other countries. Oregon’s total annual production has averaged more than 37,000 metric tons in recent years.
Japan and South Korea are attractive potential markets because they’re wealthy countries that already consume hazelnuts incorporated into high-end chocolates, and Oregon has strong “brand equity” in both nations, Nawn said.
“Oregon has the image of being very clean, natural, wholesome,” he said.
India, meanwhile, has the “largest collection of vegetarians in the world” whose wages are rising and who are looking for new sources of protein, he said.
Canada is a close neighbor that offers an opportunity to maximize “bang for the buck” in terms of marketing, but current exports are dominated by one confectionary company, Nawn said.
While China is already an important market for Oregon hazelnuts, most shipments end up in Beijing and surrounding areas, he said.
It may be possible to enlarge the Oregon industry’s footprint to include other major metropolitan areas in China, where in-shell hazelnuts could similarly be eaten as a snack food, he said.
“Even though it’s a nice market for hazelnuts, it could be better with some strategic marketing work,” Nawn said.
Last year, Chinese tariffs on Oregon in-shell hazelnuts — the most popular type consumed there — jumped from 25% to 65% due to the ongoing trade dispute with the U.S.
The tariff hike convinced Oregon’s industry to look for ways to increase sales despite the higher barrier while also diversifying beyond the Chinese export market, said Meredith Nagely, manager of the Oregon Hazelnut Marketing Board.
“Tariff mitigation was the impetus for it,” she said.
The trade turbulence comes at a time of looming growth in Oregon’s hazelnut production, as acreage has grown from fewer than 30,000 acres to roughly 85,000 in the past decade.
Between 2007 and 2015, growers focused on planting varieties meant for producing the in-shell hazelnuts that are popular in China, said Larry George, president of the George Packing Co.
More recently, packers have been urging growers to plant more cultivars meant for the production of kernels that can be used by domestic food manufacturers, George said.
However, the industry is “just barely starting to see production increase now” of the kernel varieties, so it needs to focus on widening sales channels for the in-shell nuts that represent the bulk of new production, he said.
“We’re trying to develop those markets first,” George said. “It takes years to develop markets.”
The Oregon Hazelnut Marketing Board is paying for the export research initiative with about half of the $385,000 it recently received in grant funding from USDA’s Agricultural Trade Promotion Program.
The study is intended to pave the way for the Oregon Hazelnut Marketing Board to receive export-oriented funding more regularly through the USDA’s Market Access Program, Nagely said.
“For us, we hope it will help our industry build sales,” she said. “We want to improve our presence and know where our processors should be moving into new markets.”