MCMINNVILLE, Ore. — Green lawns and swimming pools aren’t the only things taking a beating in California’s record-busting drought, now in its fourth year. The state’s nut crop is feeling the effects as well.
In the long run, that may boost the fortunes of Oregon’s famed hazelnut, which represented a $54 million industry in Yamhill County in the 2013 agricultural census.
For a variety of reasons, experts believed it is a crop poised for growth. And the latest is water, which is used heavily in agriculture, and is in better supply in Oregon than California.
It reportedly takes a gallon of water to grow an almond and five gallons to grow a walnut.
Mike Klein, of the industry-backed Oregon Hazelnut Commission, cautions that numbers like that should be taken with a grain of salt. Still, it highlights a basic truth:
California’s most popular nuts — pistachios and almonds — have to be heavily irrigated. But hazelnuts — the key ingredient in Nutella, a popular chocolate nut spread — typically don’t.
Oregon takes a back seat to Turkey on the international stage, but accounts for 99 percent of domestic production. So you can see why Oregon hazelnut farmers are smiling these days.
“We usually get enough rainfall here, and have even this year, for the trees to do well,” Klein said. “We’re just in one of those locations where both the soil and climate are absolutely ideal for growing high-quality hazelnuts. The whole Willmaette Valley, you can put a fence post in the ground and it’ll turn into a tree, it’s so good.”
A couple of decades ago, a deadly fungus threatened to wipe out an industry currently generating about $100 million a year in revenue. But scientists at Oregon State University swung into action, ultimately producing more than a dozen varieties that are resistant, though not entirely immune, to eastern filbert blight.
Last year, they developed yet another. Called the McDonald, it produces a tree with a high yield, strong blight resistance and nuts ideal for snack products like Nutella.
Meanwhile, the world’s biggest producer, Turkey, was hit by a freak deep freeze.
In an average year, Turkey supplies about 70 percent of the world’s hazelnuts. So the Turkish frost had barely melted when the price of Oregon’s hazelnuts started to climb.
Interestingly, Turkey ended up logging a record harvest last year, despite the March freeze. It was valued at $2.3 billion, up from $1.7 billion in 2013.
But that hasn’t put the brakes on Oregon’s hazelnut industry.
Klein said California growers are being joined by growers from other states in buying Oregon farmland of late. And the state’s hazelnut potential is one of the key reasons.
Terry Silbernagel owns Salem-based Agri-Business Real Estate Services. Raised on a farm in Linn County, he’s worked in agricultural real estate for three decades.
In the last four or five years, he says, a trend has become clear: Farmers are coming to Oregon.
“We’ve been dealing with some folks that are in the nut business in California, that are in the second or third generation in the business, and are looking at diversification into hazelnuts,” Silbernagel said. He thinks the drought is probably driving that, but said Californians aren’t alone in coming calling.
“There’s a lot of money out there looking for a home,” he said. “I’ve seen buyers from Mississippi, North and South Carolina, North and South Dakota, Canada, China, and Scotland.”
Carissa Sauer, who left Dairy Farmers of Oregon to join the Almond Board of California, said California almond growers are striving mightily to cut their water use. And she said one element is diversifying into hazelnuts.
Leading the way locally is Munger Farms, based about 95 miles north of Los Angeles in Delano.
In November 2013, the nut-growing company paid Evergreen Agricultural Enterprises nearly $13 million for about 3,000 acres southeast of McMinnville.
Industry observers said at least some of that Evergreen acreage is already planted in hazelnuts. And they said that makes it a good business move.
In fact, the push for more hazelnut acreage has given rise to operators who specialize in the conversion process, like longtime Newberg hazelnut grower Michael Severeid.
“It doesn’t pencil out very well to buy bare ground and plant an orchard, if you can even find bare ground,” he said. “Some people are able to. But in our area, there isn’t much available.”
So Severeid contracts out his services in performing that function for investors interested in gaining a foothold in the hazelnut business. He hasn’t had any California customers yet, but it may be a matter of time.
“We establish the orchard on their property,” he said. “We raise the trees, and we cover all the costs for that for 15 years.
“We pay them a rent that’s at or above what they could get from another crop. At the end of the 15-year term, they get an orchard on their land.”
By then, he said, “We’ve gotten our investment back.”
An increasing awareness of the nutritional value of nuts is also helping fuel Oregon’s hazelnut surge.
The largest consumer of hazelnuts is Ferraro, which ranks as the fourth-largest confectioner in the world. Its product line includes Nutella, and its sales are growing both domestically and internationally.
“What we’re seeing here is to some degree an effect of the drought in California and experienced tree nut growers and processors looking to expand their operations, Klein said. “But to a bigger degree, the increase in planting hazelnuts, especially here in the Willamette Valley, is because of soaring demand.”
