Georgia’s Increased Hazelnut Production and Exports Stained by Border Rejections

Hazelnut production for 2021/22 was a record 45,900 mt (in-shell), according to the National Statistics Office of Georgia (Geostat) estimates. The crop recovered over the last two production seasons, after suffering heavy losses due to stinkbugs in preceding years. Subsequently, Georgia’s hazelnut exports also increased, but poor management practices, both pre and post-harvest, led to frequent border rejections.

Border Rejections Overshadow Increased Exports

From August, when the 2021/22 marketing year started, until February, Georgia exported 12,623 mt of shelled hazelnuts. This is still slightly below the 13,058 mt exported over the same period in 2020/21, but well above the 5-year average of 10,427 mt. Germany is the main buyer of Georgia's shelled hazelnuts, from where it is distributed through the rest of Europe,

In-shell exports soared in the first 7 months of the marketing year, and at the end of February were 7,466 mt, more than double the 3,163 mt exported over the same period in the previous marketing year. The 5-year average over the same period is only 1,761 mt. Most of Georgia’s in-shell hazelnuts are destined for Italy, where it is processed further.

While hazelnut exports as a whole increased, it is overshadowed by the very high number of rejections at EU borders. Many rejections occur in Bulgaria, and Poland where these hazelnuts first enter the EU. 26 shipments of Georgian hazelnuts have already been rejected at European borders since the start of the marketing year, most of them due to aflatoxins. This is an indication of improper drying and storage of hazelnuts and will need improvement if Georgia plans to increase exports in line with production.

Deficient Orchard and Post Harvest Management

The Georgian hazelnuts industry still lags most other key players in the market in terms of orchard management and phytosanitary practices. According to the Georgia Hazelnut Growers Association, most producers in Georgia do not carry out correct orchard management yet or at all, drying and storing are done improperly. Due to the improper management, Georgian hazelnuts often do not meet European standards and do not have the trust of international buyers.

According to Tridge data, the domestic wholesale price of shelled hazelnuts decreased to USD 3.99 / kg, a drop of 13% since the start of the year, and 28% YoY. In-shell prices were at USD 1.66 / kg at the end of April, down 7% since the start of the year, and 29% YoY.

Improved Management Could Unlock Huge Potential

Hazelnuts are Georgia’s largest agricultural export, and in 2021 raked in USD 115 million. While this was by far the highest number in the last five years, there is much more room for growth. The 5-year Georgia Hazelnut Improvement Project, funded by the Global Development Alliance (GDA), USAID, Ferrero, and Cultivating New Frontiers in Agriculture (CNFA) will conclude this year, which could mean improved production and quality of Georgian hazelnuts in the near future. The focus of this project has been on orchard management training, and investment in post-harvest infrastructure. Furthermore, the Georgia Hazelnut Growers Association is constructing several drying and storage facilities in the towns of Lanchkhuti, Kvemo Devi, and Chkhorotsku, which could be ready for the next harvest. This could help secure better quality hazelnuts in the coming marketing year.