OLMIS

by Pat O'Connor
Published Sep-22-2006

Introduction A Sacred Nourishment Blight Stalls Production Economic Impact From Tree to Market World Hazelnut Supply Fall Employment Peaks Opportunities and Challenges

Orchards are not very difficult to find in Oregon. In the Columbia Gorge, one can hardly miss the cherry, pear and apple orchards. In southern Oregon, pear orchards fill Jackson County's countryside. The Willamette Valley has a variety of fruit and nut orchards, but more acres in the valley are planted in hazelnuts than any other fruit or nut tree. In fact, the Willamette Valley produces approximately 99 percent of the hazelnuts grown in the United States.

The first cultured hazelnut tree was planted in Oregon in 1858; retired Hudson's Bay Company employee Sam Strictland planted it in Scottsburg. The first significant planting occurred several years later in 1876, when David Gernott planted a fencerow of 50 hazelnut trees. And it has been just over a century since George Dorris planted the first commercial hazelnut orchard in the Pacific Northwest in the Springfield area in 1905. In 1989 the hazelnut became Oregon's official State Nut.

The history of the hazelnut goes back quite a bit further than Oregon's hazelnut history. Hazelnuts grow in many parts of Europe and Asia and have been a food source for humans since prehistoric times. Hazelnuts have been cultivated for more than 4,500 years. A manuscript found in China from the year 2838 B.C. states that the hazelnut took its place among the "five sacred nourishments" God bestowed to human beings.

Hazelnuts have been known by a variety of names. It has been called the Cobb nut, the Pontiac nut, the Spanish nut and the Lombard. Many people also call them filberts. However, there is some debate about where the name "filbert" came from. Some speculate that the name filbert originated from the Old English term for "full beard," in reference to the nut's outer husk. Others believe the name was derived from St. Philibert, because August 22 – a date that corresponds in England to the ripening of the earliest filbert – is dedicated to him.

Whether they are called hazelnuts or filberts, one thing is certain, the hazelnut industry plays an important role in Oregon's agricultural sector.

Even though commercial hazelnut orchards have only been in Oregon for the past 100 years, they have managed to grow quickly enough that we have almost as many hazelnut trees in the state as Oregon has residents. As of 2004, Oregon had 3,464,000 hazelnut trees. That compares with Oregon's population of 3,631,440 in 2005.

However, Oregon's hazelnut orchards are not spread evenly around the state. Nearly all are located in the Willamette Valley. In fact, in Yamhill County there are more than eight hazelnut trees for every county resident. Clackamas, Lane, Linn, Marion, Polk, and Washington counties are the other six counties that have the vast majority of Oregon's hazelnut orchards. These seven counties account for 97.5 percent of the commercial hazelnut trees growing in Oregon.

Graph 1 shows the number of hazelnut acres in Oregon from 1980 through 2005. Acreage planted in hazelnut orchards grew rapidly during the 1980s, expanding 41 percent from 1980 to 1990. Following the expansion of the 1980s, the number of acres of hazelnuts has been quite stagnant. From 1990 to 2005 acreage in hazelnut production has only expanded 1 percent.

The reason for the recent slow growth in hazelnut acreage has largely been due to Eastern Filbert Blight (EFB), a disease with the potential to decimate the industry. When we consider the number of trees lost to EFB over the past 15 years, the industry has actually done quite well to maintain and not lose hazelnut acreage over that period of time. Evidence of the effect EFB has had on the industry can be seen in the varieties of trees growers have planted in recent years. Growers have planted far fewer EFB susceptible varieties and have planted more EFB resistant varieties.

Oregon State University and the hazelnut industry are working together to tackle the EFB problem. Oregon State has introduced new EFB resistant varieties to the industry over the past decade, and has recently released EFB immune varieties. The new EFB immune varieties are in great demand from growers. Oregon State continues to work on developing better EFB immune hazelnut cultivars that produce high quality nuts.

Oregon's hazelnut marketing board estimates that the hazelnut harvest over the past five years has averaged $30 million per year. That total only represents the income growers received for their crops. Of course the economic impact of the industry goes beyond $30 million when considering the multiplier effect the industry has on the state's economy. The hazelnut marketing board estimates that the hazelnut industry has a total annual economic impact of $75 million on Oregon's economy.

Many of Oregon's hazelnuts travel far beyond the state border; over half of Oregon's production is exported outside the United States. Two of the largest export markets are China and Germany.

The process that Oregon's hazelnut producers use to sell their crop is a bit different than your typical agricultural commodity. The hazelnut industry has established the Hazelnut Marketing Board (HMB), which working through the United States Department of Agriculture (USDA), administers a hazelnut marketing order (HMO). The HMO is a federal law that growers in the industry have requested. The HMB, which comprises both growers and handlers in the industry, meet to determine if they want to have volume regulations for hazelnut sales each year. If the board decides to proceed, a "marketing program" is established which complies with the provisions of the hazelnut marketing order. The Hazelnut Marketing Board has established a "marketing program" each year since 1949.

The HMO can establish various quality regulations, but it also establishes controls over the forms in which hazelnuts are sold. The industry believes that in most years the highest priced market for Oregon hazelnuts is the "domestic inshell" market. But there is not enough domestic inshell demand to consume all of the U.S. hazelnuts produced. If handlers were able to sell their entire crop in the domestic inshell market, the price received for domestic inshell hazelnuts would drop significantly. Clearly, one very important goal of the HMO is to protect the domestic inshell market.

When the Hazelnut Marketing Board meets to work on the HMO, they decide whether to put the "volume control" provision in the HMO into effect. In essence, the volume control divides the domestic inshell market evenly between all handlers, based on percentages of the overall industry product each handler controls.

As an example, if in a given year the HMB decided that 20 percent of the annual crop can be absorbed by the domestic inshell market, then each handler can sell 20 percent of their product in the domestic inshell market. In the industry this 20 percent is referred to as "free" product. The other 80 percent is referred to as "restricted" product. The restricted product must be sold in the shelled or export markets.

Oregon may dominate U.S. hazelnut production, but the U.S. is a relatively small player in the world hazelnut market. One feature that all hazelnut producing regions of the world have in common is that they are all close to large bodies of water, which help create a moderate climate. Turkey is by far the largest producer of hazelnuts, producing nearly 75 percent of the total world production (Table 1). The U.S. produces 4.4 percent of the total world production. Italy and Spain are the two other countries with significant hazelnut production, producing 14.9 and 3.3 percent, respectively.

The manner in which hazelnuts are grown in other parts of the world is quite different than the way they are grown in Oregon. The hazelnut is grown naturally as a bush or multi-stemmed tree. They have been grown in southern Europe and Turkey in this manner for centuries. This contrasts significantly with the tall single-trunk trees we see grown in Oregon's hazelnut orchards.

According to the most recent hazelnut tree survey done by the Oregon Agricultural Statistics Service, there are 648 commercial hazelnut tree operations in Oregon. Oregon Employment Department (OED) records counted 19 firms in 2005 categorized in the "tree nut farming" industry. These 19 firms that report their employment to the OED are covered under the unemployment insurance (UI) program, and the discrepancy is mostly due to the large number of farms that are not covered by unemployment insurance. Many smaller farms that don't exceed certain payroll thresholds, primarily use farm labor contractors, or almost exclusively employ family members are examples of farms that are not covered.

Polly Owen, manager of the Hazelnut Marketing Board, says that, "many of Oregon's hazelnut growers are small family-run farms with few employees." Most of the work is done by the farmer and other family members. One thing that has helped the industry keep down its need for labor is that harvesting the crop is largely mechanized, keeping labor costs down. In Turkey hazelnuts are still harvested by hand.

Graph 2 shows tree nut farming employment in Oregon from 2001 through 2005. Although the employment may be significantly undercounted, due to the lack of employment coverage, the graph gives a good indication of the seasonal employment pattern that occurs in the industry. Employment is relatively steady throughout most of the year, except in October. October's employment level increases like clockwork every year as the annual hazelnut crop is harvested.

The Hazelnut Marketing Board is currently participating in a joint marketing venture with the world's largest hazelnut producing country, Turkey. The goal is to encourage food producers to use more hazelnuts in value-added food products such as confectionary and baked goods. The last couple of years have produced fairly small worldwide hazelnut harvests, causing high hazelnut prices which have caused some food companies to hold off on including hazelnuts in their food products. However, the forecast for this year's worldwide hazelnut crop is that it will be a very large harvest. A large harvest will cause hazelnut prices to be lower and help to encourage food producers to use more hazelnuts in their products.

Polly Owen of the Hazelnut Marketing Board says that the industry is looking for additional growing markets where hazelnuts can be sold. Although the inshell market may bring the highest price, it is a market that is very unlikely to show significant future growth. Finding additional markets to sell hazelnuts will allow the industry to continue even if the inshell market has slow growth or declines.

One of the biggest challenges facing the industry is Eastern Filbert Blight. This disease has presented a tough challenge to growers in the valley, in particular the northern Willamette Valley. Efforts from the hazelnut industry and from Oregon State University are helping growers better manage the disease. Hopefully this disease will become less of a threat as OSU continues to develop varieties that are immune to Eastern Filbert Blight. However, due to the nature of growing hazelnuts, the problem can't be fixed overnight. It takes time for an orchard to become established and productive, so planting all new hazelnut trees is not a practical option. It will happen over time as growers replace older, less productive, or badly diseased parts of their orchard with new Eastern Filbert Blight immune varieties.

We can only wonder if George Dorris realized what he was starting when he planted the state's first commercial hazelnut orchard a century ago. It is estimated that over half of the hazelnut trees growing in Oregon came from Dorris nursery stock. The industry has grown from that lone 5-acre orchard to now encompass over 28,000 acres and close to 3.5 million trees.

As for the long term future of the hazelnut industry, we will just have to sit back, snack on some chocolate-covered Oregon hazelnuts, and see what the next century has in store for this unique Oregon industry.

For information on Oregon's hazelnut industry, visit  http://oregonhazelnuts.org.