Ontario’s hazelnut growers want to crack into the Nutella business

By John Michael McGrath - Published on July 30, 2015
Hazelnut trees
A hazelnut orchard at the University of Guelph Simcoe - the trees can take up to a decade to mature

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Nutella isn’t exactly seen as a Canadian-made staple. Aside from the fact that owner Ferrero is an Italian-based multinational, the popular spread is primarily made up of sugar, palm oil, cocoa, and hazelnuts – none of which are produced here.

But farmers in Ontario’s nascent hazelnut business are hoping to change that – at least a little. Farmers like Martin Hodgson have swapped some of their acres devoted to traditional crops for hazelnut trees in the hopes they can feed Ferrero’s plant in Brantford and tap into a hungry global market for the nuts.

But first they have to produce a tree that will stay alive.

“I planted 5,000 seedlings between 1994 and 1997,” says Hodgson, who owns a farm in Courtland. “96 per cent of them were dead by 2003.”

Today Hodgson has 30 acres devoted to trees on his farm, but has yet to make a cent off the hazelnuts. Some make it to market in small quantities as Ontario-grown hazelnuts, but neither his crop nor any in Ontario have reached the volume needed to supply a processor like Ferrero.

Still, Hodgson sees promise in the trees, which can take as long as a decade to become viable producers.

“There’s a lot more money in hazelnuts than in corn and beans,” says Hodgson. In contrast to returns of $100-$200 an acre for commodity grains, Hodgson estimates the returns on hazelnuts can be several thousand dollars an acre. A 2013 Oregon State University study estimated gross income of $2800 an acre in a mature hazelnut orchard.

It’s that extra cash that motivated him to get into hazelnuts in the first place, and why he’s still hoping to add another five acres of hazelnuts to his farm in the near future. For now, some of his trees are helping the University of Guelph’s Simcoe research station breed hardier, blight-resistant varieties of hazelnut that may have commercial promise.

Some species of hazelnut are native to Ontario, but Ferrero relies on imported European hazelnuts for its products. The European hazelnut hasn’t done well in North America in part because of the eastern filbert blight (EFB), a fungus that can devastate farms like Hodgson’s.

By the time it was done with his orchard the survivors were so thinly spread out it wasn’t worth the effort to collect the nuts that were left. The remaining 120 trees had to be uprooted and replanted in a denser block. Hodgson still hasn’t made a cent of profit from his hazelnuts.

The good news is that those survivors have proved resistant to EFB and Ontario’s cold winters. A team from the University of Guelph is looking at whether they can help germinate an Ontario hazelnut industry strong enough to compete with global suppliers.

“I came to Ontario 30 years ago,” says University of Guelph professor Adam Dale. “In all that time I’ve heard about new crops that have gone nowhere. I think there’s one with huge potential, and that’s hazelnuts. We can find the market if we get the trees.”

There’s a combination of factors at work: Turkey is the world’s largest supplier of hazelnuts by far with 70 per cent of the global crop, but production is hampered by small (and inefficient) plots as well as more recent weather-related problems.

“There’s a long-term demand for maybe 20,000 acres of hazelnuts in Ontario. Currently, we’ve got a couple hundred at the most,“ says John Kelly of Ontario Hazelnut Association. By comparison, Ontario has roughly 17,000 acres of vineyards.

“There are other companies that use hazelnuts, and because there’s a global shortage of hazelnuts there’s some export potential,” Kelly says.

Growers hope that the combination of tight supply, thanks to Turkish troubles, and a very large global market will mean there’s plenty of room for them to grow without flooding the market and bringing prices back down again.

It’s not as simple as putting seed in the ground, however. Hazelnut trees take years to mature, and Dale’s work at the University of Guelph is still with varieties that are consistently blight-resistant, winter-hardy, and will work in varying regions of Ontario. On the winter front, there’s been some progress.

“We’ve had trials in the ground since 2008 and we never had any problems until the winter of 2013-14, and we still saw some varieties with 40 per cent of our crop come in,” says Dale. Despite another tough winter in 2014-15, “this year, we’re seeing varieties with 100 per cent of their crop.”

For the investment in time and money to get a productive tree, farmers are hoping for much higher returns than they can expect from more common crops. And, one that will last for decades instead of needing to be replanted every year.

But Hodgson and Dale acknowledge that once they have hardier breeds that work in Ontario’s climate, they’ll still need to tinker with their trees to produce a nut that meets Ferrero’s standards and explore alternative markets for the nuts.

Ferrero is providing enough demand for farmers and scientists to take hazelnuts seriously, but nobody wants to be dependent on a single customer for their product. Tomato farmers around Leamington found that out the hard way in 2013, when Heinz announced the closure of its Leamington plant that was the buyer for dozens of farms in the region. (The plant later reopened under different owners.)

“We know that Ferrero is committed to staying here, but we also acknowledge we don’t want to have a single market,” Kelly says.

In the meantime, hazelnut growers in Ontario will keep trying to grow the markets they have available to them, hoping to get a tree they can plant over a few thousand, then tens of thousands of acres.

“I think it’s doable,” says Dale. “What do we have? We have all the land we could need. We have advanced agriculture; the crop is low-input. We just need the trees in the ground.”

Image credit: University of Guelph Simcoe Research Station, Hazelnut Research

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