Positive Long-Term Outlook for Georgian Hazelnut Production and Quality

Hazelnut Kernel

Raw Hazelnut

Georgia

Market & Price Trends

Published Feb 2, 2023

Georgian hazelnut production has recovered from the large-scale losses caused by stinkbug infestations in previous years and is expected to increase rapidly in the long term as the industry modernizes and digitizes. In recent years, the focus on expanding production, and most importantly, improving the quality of hazelnuts has been renewed. The investment of private and public entities in the industry is starting to bear fruit and the long-term production forecasts are very positive, as high as 100,000 mt in 2025, up from 40,000 mt in 2022.

Georgia’s climate and soils are ideal for growing hazelnuts. Georgian hazelnuts are renowned for their flavor and texture, and it is the country’s second-largest agricultural export. Heavy rains at the end of the 2022 harvest sabotaged a rapid recovery from the harvest losses caused by stinkbugs in preceding years. Production for the 2022/23 season is estimated at 40,000 mt (in-shell) down from the 55,000 mt produced in 2021. However, according to the Georgia Hazelnut Growers Association (GHGA), production could increase rapidly over the medium and long term, to 100,000 mt (in-shell) as early as 2025. Georgia already has a large area of well-established hazelnut trees, estimated at 70,000 ha. Within the country, modern and commercial farms yield as much as 2.5-3mt/ha whereas the country’s national average is close to only 0.5mt/ha. The low yields are mostly due to poor orchard management, but according to Merab Chitanava, chairman of the GHGA, this can be rectified “even within two seasons”.

Source: GeoStat, International Nut and Dried Fruit Council, ITC Trademap

The GHGA, in partnership with government organizations, has launched an extensive digitalization plan for the industry. This will include production information, such as mapping and geolocating orchards, information on the number of orchards, the age of orchards, and the varieties being produced. The country is also creating a digital registry of hazelnut farm ownerships, which will lead to easier access to finance and subsidies, and eventually to better orchard management and higher-quality hazelnuts. The country is further upgrading its drying and processing facilities. According to the GHGA, currently, the country has over 40 processing plants that meet modern standards. The capacity of these plants is more than double the current hazelnut production. Digital warehouse receipts, which track the ownership of hazelnuts stored in warehouses, have also recently been launched.

Unfortunately, Georgian hazelnuts still have to deal with a notoriously bad reputation in terms of quality. In 2021 there were no fewer than 32 border rejections of Georgian hazelnut shipments by the European Commission, most of them due to aflatoxins. However, the steps taken to improve the post-harvest management of nuts seem to be paying off and, in 2022, there were only 8 border rejections by the European Commission. Despite the improvement in quality, Georgian hazelnuts are still mostly offered in Europe at prices below that of other major exporters.

Source: ITC Trade Map, Eurostat

The lower price at which Georgian hazelnuts are offered provides an opportunity for hazelnut buyers if they can source from a reputable hazelnut producer. Several suppliers can already ensure their products meet European phytosanitary standards, as well as that of other destination countries. Hazelnut suppliers that have food standard certification, for example, ISO 22000, and monitor the whole process from production to exports, is a lucrative option for early access into a rapidly expanding market.