GEORGIA HAZELNUTS
ASSESSMENT
FINAL
Tuesday, August 30, 2011
This publication was produced for review by the United States Agency for International
Development. It was prepared by Deloitte Consulting LLP.
GEORGIA HAZELNUTS
ASSESSMENT
FINAL
USAID ECONOMIC PROSPERITY INITIATIVE (EPI)
CONTRACT NUMBER: AID-114-C-10-00004
DELOITTE CONSULTING LLP
USAID/CAUCASUS
TUESDAY, AUGUST 30, 2011
DISCLAIMER:
The author’s views expressed in this publication do not necessarily reflect the views of
the United States Agency for International Development or the United States
Government.
ECONOMIC PROSPERITY INITIATIVE (EPI) i
DATA
Author(s): Thomas J. Payne
Name of Component: Agriculture Sectors
Practice Area: Hazelnuts
Key Words: Georgia, hazelnuts, exports, Farm Service Centers, seedlings, fertilizers,
pesticides, processors, access to capital, access to financing, loans, Microfinance Institution,
commercial banking, capacity building, education and training, associations, government
agency, credit, marketing, exports, standards, pruning, nutrition
Reviewed by:
David Grigolia, EPI Value Chain Manager, Hazelnuts
Dennis Zeedyk, EPI Ag Component Team Leader
ECONOMIC PROSPERITY INITIATIVE (EPI) ii
ABSTRACT
USAID/EPI brought a consultant who is a hazelnut marketing expert to Georgia on a
two-week visit. The consultant’s deliverables were to observe and analyze which if any
improvements needed to be made to the hazelnut value chain. In order to market hazelnuts
to the most profitable markets, and in order to ensure that hazelnuts are of the best quality
that they can be, this Georgian hazelnut assessment was conducted.
Currently, in Georgia, most hazelnut production takes place in small farms and gathering
conditions in two major regions of the country: east and west. The hazelnut key value chain
players were met with and discussions were held. Harvested hazelnuts are handled by
collectors who speculate on the market and deliver product to packers. Packers select
product for two distinctive channels: inshell and shelled hazelnuts and do some further
processing, including roasting, blanching, slicing, dicing and paste production. The value
chain was investigated and improvements to the hazelnut value chain in Georgia were
recommended.
ECONOMIC PROSPERITY INITIATIVE (EPI) iii
CONTENTS
I. EXECUTIVE SUMMARY ........................................................................................ 1
A. FINDINGS & RECOMMENDATIONS......................................................... 5
B. ADDITIONAL INFORMATION .................................................................. 26
GEORGIA HAZELNUTS ASSESSMENT FINAL
ECONOMIC PROSPERITY INITIATIVE (EPI) 1
I. EXECUTIVE SUMMARY
Georgia is a traditional production region for hazelnuts. Currently, most production is in
small farms and gathering conditions in two major regions of the country: east and west.
Harvested hazelnuts are handled by collectors who speculate on the market and deliver
product to packers. Packers select product for two distinctive channels: inshell and shelled
hazelnuts and do some further processing, including roasting, blanching, slicing, dicing and
paste production. Although most Georgian hazelnuts could be considered organic, there is
no certification of organic production in the country. Georgian production is either shipped to
neighboring Turkey which is the dominant world producer of hazelnuts, or to European
customers. Georgian production lacks some of the processing quality and packing that is
required for direct sales to confectionery and food industries. So, intermediate customers or
partners fulfill an important function of getting product to delivery condition, i.e. cleaning,
grading and packaging.
Description and Structure of Markets
The world trade of hazelnuts centers on a very few large trading companies who have long-
established relationships with confectionery companies who use a majority of hazelnut
production. For example, there are 10 more traders in Hamburg and Rotterdam, and they all
have offices in the same neighborhoods near the port. These companies are in very tight
formation with buyers and have decades of business on the books. The new companies that
are listed are on the fringes and are currently already sourcing from secondary sources or
are looking to fill requirements for new customers. The new import companies have direct
linkages with the end users, have technical service capabilities and are in a position to
develop new markets for hazelnuts. Where they lack in huge volumes, they make up in
willingness to work with new suppliers and provide assistance and support. This will be a
recommended channel for Georgian hazelnuts.
Georgian Production Capacity
Georgia is currently a small player in the global hazelnut industry. Being attached to Turkey,
the main player, Georgia fills supply needs in this country and has direct field grade and raw
material and semifinished product shipments to main European markets. In addition, the
production is stable and limited to small farming activities, in which packers are supplied by
farmers through a middleman and direct sales to packers. This situation is seriously limiting
the development of new production. Georgia has substantial amounts of land available for
hazelnut production and some of this is in areas where discontinued tea production as
occurred. Other acres are in the East and in new and nontraditional hazelnut production
areas. The small producer, handler and packer arrangements does not seem to stimulate
new plantings and business because the middle men are regulating supply to keep pricing
up to the packer. Packers are struggling to get supply. The supply pull will not begin until
packers start to source directly from producers. They will initially compete for producers,
and provide incentives like higher prices and some serviced and technical support. In time
relationships will develop and packers will build bases of production which will grow as the
market grows.
Identification of Policy and Regulatory Conditions to Improve Sector
The hazelnut sector is a priority agricultural commodity in Georgia and has received a
substantial amount of attention from the central government. It is also a priority item for
GEORGIA HAZELNUTS ASSESSMENT FINAL
ECONOMIC PROSPERITY INITIATIVE (EPI) 2
assistance from donor nations, and assistance programs. From a policy standpoint, the
formation of a marketing order type of program, which would allow development activities
and controls, which could benefit the entire sector. Modeled after the Oregon Hazelnut
Committee in the USA, the program could address four different areas:
1. Quality. A law would be established to define quality standards for Georgian
hazelnuts. This would include size, color, and other criteria that are important to the
buyers. In short, anyone would be able to grow hazelnuts in Georgia, but only those
which meet the mandated quality criteria could be marketed and exported. The law
would define an inspection mechanism at the packer level, as well as fines and
consequences for violating this aspect of the marketing order.
2. Research. The law would allow for identification and funding of research to serve the
needs of the Georgian hazelnut industry. This would include research and
development of new plant stocks, new products and processes and economic
research.
3. Promotion. The law would allow funding of market development and promotions in
the domestic and world markets, including market research, exhibitions, advertising
and trade missions.
4. Control. A board would have powerful marketing functions to create order in the
marketplace. This includes setting marketable supply, reserve pools, tools for
limiting product on the market, such as green drops (payment for destruction of the
product on the tree) and other mechanics.
The marketing order would be funded by an assessment per metric ton, on product received
by packers. The assessment would be passed along to the end user, and in the case of
Georgia, there is adequate room for price increases. In the USA, assessments for
commodity boards range from one cent per lb for honey to around $12 per ton for
blueberries. Most products, such as almonds and walnuts, are assessed at around $24-36
per ton. This would cover operating expenses of a board office and a collection mechanism.
A board would be formed which would represent the geographic profile of the industry and
would be selected in an election by industry stakeholders. Typically, this would be the
growers, but could also be the packer who in turn represents a producer base.
Constraints:
Some of the main hazelnut industry problems are listed below:
Infrastructure due to the current approach of collecting and sourcing hazelnuts through
collectors, there is no long-term, direct relationship between farmers and processors as
there is a middleman collector in between. Thus, there is no way to directly incentivize
farmers to make changes in production practices or quality.
Product and Market Selection the in-shell market is a lucrative business that requires far
less packer input than the shelled market. Additionally, the packer is selling 100% of the
product and not worrying about hazelnut shell disposal. For the inshell market, the nuts
must be large, round, clean and with no blemishes and there is a small window of sales
opportunity primarily based on the Christmas market in Europe. The shelled market, size of
the nut meet kernel is the primary concern, but there are no real market standards used in
Georgia. Appropriate packing in cardboard boxes with plastic liners not only keeps the
product cleaner and looks more professional, but also allows for cases to be loaded on a
pallet with 1/3 more hazelnuts per container, lowering freight rates on a per unit basis.
GEORGIA HAZELNUTS ASSESSMENT FINAL
ECONOMIC PROSPERITY INITIATIVE (EPI) 3
Certification and Standards currently buyers and sellers informally agree on the
standards of traded hazelnuts. The adoption of USDA hazelnut standards, which is the
basic world standard, will allow buyers, sellers and intermediate traders to speak the same
language in terms of product quality, as well as setting and avoiding disputes.
Business Management The Georgian hazelnut industry needs a quality improvement
guide and framework. A good model is the Dried Fruit and Treenuts Association (DFA) from
the USA, which was established in the US over 100 years ago. There should also be an
improvement in record-keeping, traceability, inspection and implementation of standards.
Linkages and Partnerships The global treenut business is a tight-knit group of packers,
handlers, importers and end-users. There needs to be a significant amount of linking
Georgian companies with real, substantial customers in markets that will not interfere with
their current business relationships. There should be some image development for
Georgian companies and develop a packer list of Georgian hazelnut processors. Some
simple technical assistance on plant improvement will enable them to help in image
improvement.
Conclusions and Recommendations
Recommendations have been made in individual sections. But, overall it is recommended
overall that to help Georgian producers enter the 20
th
century with key trade contacts in
regions of the world. These new buyers will help move hazelnuts to new markets in
significant volumes and will work with Georgian suppliers on ascension to real world
standards and specifications.
Georgian packers must seek direct business relationships with dedicated grower
base in order to influence production improvement and extension activities that will
encourage more production of marketable types of hazelnuts.
Georgian packers must diversify their customer base and work with more than single
customer ―partners‖ who can provide guidance and product improvement in the
marketplace.
Georgia can begin gaining a presence in the treenut world, and seek out new
customers in alternative areas of the world such as Canada, Southeast Asia, Central
and South America, and other areas – where they can market more hazelnuts and
not disturb the important status quo in western Europe.
GEORGIA HAZELNUTS ASSESSMENT FINAL
ECONOMIC PROSPERITY INITIATIVE (EPI) 4
A. FINDINGS & RECOMMENDATIONS
B. ADDITIONAL INFORMATION
GEORGIA HAZELNUTS ASSESSMENT FINAL
ECONOMIC PROSPERITY INITIATIVE (EPI) 5
A. FINDINGS &
RECOMMENDATIONS
MARKET ACCESS
Georgia is a small player in the world hazelnut production with less than 2% of total
production. Turkey and the Black Sea regions next door are the major producers of
hazelnuts, producing more than 570,000 metric tons and 80% of the total world supply.
Hazelnuts are produced in two distinctive regions of Georgia, the East and West. The west
appears to be the more traditional area for production and an extension of the Turkish Black
Sea hazelnut belt.
PARTNERS
At face value, the industry is doing just fine. Each of the 15 processors, which were visited,
initially says they are doing good business, with a partner in Western Europe.‖ At second
swipe, it was learned these partners are actually solo customers who come into the market
once a year to buy their requirements. They purchase the product as is‖ and dictate prices.
These partners‖ are extremely important, as some may actually be investors. However, at
the same time, they have kept the packers in suspended animation. They need to do little to
improve product to world standards, and all recognize that they are receiving purchase
prices well below the world trading ceiling for hazelnuts. On second and third meeting,
packers would disclose their need for diversified market. They are concerned that they not
rock the boat with their current customer. But, they also show a high degree of interest to
initiate new market initiatives.
0
100000
200000
300000
400000
500000
600000
700000
800000
Turkey
USA
Azerbajian
EU-27
World Hazelnut production
(metric tons)
GEORGIA HAZELNUTS ASSESSMENT FINAL
ECONOMIC PROSPERITY INITIATIVE (EPI) 6
MARKETING
None of the packers has many of the fundamentals for sales in the real marketplace. It is
extremely difficult to discuss product offerings of individual packers, who have very vague
terminologies, no standardized specifications or marketing information. They have the
calibration and sizing down pat, but besides this, they have ambiguous descriptors of further
processed products, unclear terminologies.
PRODUCT AND SERVICE ENHANCEMENT
PRODUCT DEVELOPMENT AND OFFERINGS
Typically, nut producers experience company expansion from inshell producers, to shellers,
to specified items and specialty products. In Georgia, this is a mixed bag of product
offerings based of course on the demands of their European customer, which is always
almost a primary nut product. They are struggling with new product items that they know are
traded on the world market, especially in the confectionery area. This includes simple
product adaptations such as sizing and shape selection to categories that require extensive
capital expenditures such as roasting, blanching, slicing, dicing and production of paste. It is
recommended that most of these producers concentrate on their mainstay product, the
natural whole hazelnut and work on getting their production and processing optimized,
before they start new lines.
The current European customers are sourcing the bargain nuts from Georgia because of
deficiencies in the process that is not up to European or American nut processing standards
which customers want to see. It is important to ask what would the buyer from Nestle
think if he was in this plant? The reality is that most Georgian processors will ship raw
0
50000
100000
150000
200000
250000
EU-27
Switz
Russia
USA
HK
Canada
Ukraine
Turkey
Serbia
2008
2009
2010
World Hazelnut Imports/MT
Activity:
INC Meeting. Georgian delegation attends the International Nut
Congress (INC) in 2012. This will be a ―coming out party for the
group and attendees will see the real world of buyers and sellers, and
will also make key contacts with new customers and channel partners.
GEORGIA HAZELNUTS ASSESSMENT FINAL
ECONOMIC PROSPERITY INITIATIVE (EPI) 7
materials in jute bags, and they are reprocessed in Europe to meet end user specs. Most
probably, many companies are moving into the value-added products area based on instinct
and have no market demand at the end of the investment. It was clear that several
companies with large unused roasters and other owners spoke with stars in their eyes about
the need top of the line laser sorters, blanchers and paste operations.
SERVICE ENHANCEMENT
The Georgian producers have been buffered from the real world of marketing and new
market activity. For the most part, they are terrified about the prospect of dealing with new
customers in strange lands. They are lacking some very basic fundamentals that are
necessary for going from total stranger to customer. Unfortunately, many are looking to the
Internet and sales portals as the answer, which is indeed an extremely dangerous
proposition. Even describing very basic fundamentals of sales prospecting takes a long
time. This included:
Prequalification of companies – what to look for as a danger signal of a waste of
time. Product description methods using digital photos, measurement and
terminologies.
Sampling to legitimate companies and how to ship, and keep cost down and gain
commitment from potential customers with partial payment.
Test samples (dispute prevention).
Simple laboratory analysis. Just a few basic analysis are required.
Pricing.
Export packing.
Money collection. Many companies are ready to ship without payment just because
the customer is from a developed country.
INFRASTRUCTURE IMPROVEMENT
The Georgian hazelnut industry is structured differently from other treenut industries and
some of the differences are responsible for typecasting as a raw material supplier rather
than an ingredient supplier to the food industry.
STRUCTURE
The Following two charts show the differences between Georgia and Oregon in the USA.
Activities:
Marketing plan. Development of a comprehensive industry marketing
plan to document situation, competitive analysis, market situations,
constraints/opportunities, strategies, tactics and evaluation methods
for new market activity.
Individual consultations. One-on-one meetings and consultations as
well as follow-up on sales and marketing issues will be provided. This
will help guide Georgian producers on sales prospecting, market
development and transaction fundamentals.
GEORGIA HAZELNUTS ASSESSMENT FINAL
ECONOMIC PROSPERITY INITIATIVE (EPI) 8
Georgia:
Oregon/USA (Exhibit X)
PRODUCTION TO PACKER COMPONENTS
Production: Georgia is a country of thousands of small producers scattered around
the two main growing regions. Growers produce the nuts in small plots or on their
own lands and knock the trees to produce field-grade hazelnuts. The hazelnuts are
air dried on the ground down to a point of equilibrium where there will be no mold or
spoilage. Note: this gives the producers in the eastern regions an advantage in that
due to their dry climate, this gives them the opportunity to sell directly and quickly
with less or no additional dehydration.
Field Transportation. There is very little organization among producers, and all are
freelancers. Producers place field grade hazelnuts into used plastic mesh bags and
transport to local towns or cities where they deliver bags of nuts to collectors.
Typically, transportation is done in the back of small trucks and cars and the average
delivery is six bags of 50 lbs.
Collectors. Dozens of collectors operate in each region. They operate out of small
storefronts with some warehouse space. Some are attached to stores or money
exchange operations. Typically, they will have a storage area with a scale and
enough space to store around one truckload (16 MT) of field-grade hazelnuts. The
collector will inspect the bags of nuts and probe the interior for rocks or foreign
materials. Collectors will test a random sample of each bag to look at the percentage
of empty shells. This is a huge problem in the Georgian hazelnut business. Inshell
Large
producers
Field agents
Packers
Retail
Broker
Secondary
Processors
End
user
Inshell
buyer
(China
/W.
Europ
e)
Small
producers
Cooperative
Medium/Larg
e Packers
Coop
Med/.Large
packers
Small
Packers
Industrial
Broker
Exporter
Small
producers
Collectors
Packers
Importer
Secondary
processor
End user
Inshell
buyer
(China
/W.
Europ
e)
GEORGIA HAZELNUTS ASSESSMENT FINAL
ECONOMIC PROSPERITY INITIATIVE (EPI) 9
buyers abroad complain about the Georgian origin because of a high percentage of
empty shells. The collector will pay the grower with cash, and reportedly pay a
premium of up to 5 % for quality (large size). There are no real specifications that
they look for, rather the quality appreciated by their packer customer. Hazelnuts are
shipped by car of small truck to local packers. There is no real pattern of which
packer they serve or how they choose a packer. It might be that they talk via cell
phone with packers and play the field to know who needs what where. It was
discussed that some collectors are actually speculators. They buy cheap and hold
product and store until there is a desirable time to sell.
INFRASTRUCTURE PROBLEM
Perhaps the current shotgun approach to collecting and sourcing is the root cause of many
problems facing the Georgian hazelnut industry. If you look at the Oregon structure (Exhibit
X) note that there is a long-term direct relationship between the packer and the producer. In
Georgia, there is a middleman collector, who plays the field and keeps the producers one
step removed from the packer. In Oregon, and other nut industries, such as the California
walnut and almond industries, there is a well-established and formal and informal linkage
between producer and packer.
In Oregon, growers work with the packer on the necessary quality and product, and
receive immediate feedback and rewards for good products (size, moisture etc.). In
Georgia, the intermediary takes any and all products and is the judge and jury on
payment.
Oregon packers give growers a monetary incentive for meeting and exceeding
specific quality specifications.
Oregon packers have specific year-to-year requirements and can work with a
producer base on raising production to meet goals.
Oregon packers serve as an extension outlet for new technology, production
practices, fertilization and other improvements.
This will be a very difficult adjustment to implement, and would involve pinching out
intermediaries from the nut business. Perhaps, these middlemen could be converted to
become more or less buying agents for individual packers. Without a producer-packer
relationship, it will be quite difficult to implement change in the hazelnut business in Georgia.
With a structure in place, changes could occur which would result in raised quality, and more
importantly, increased production of hazelnuts in an orderly manner.
PRODUCT AND MARKET SELECTION
The hazelnut can go to one of two different market paths: inshell and shelled. It is
interesting to note that the processes used throughout Georgia are almost identical to that in
all other areas of the hazelnut-producing world.
GEORGIA HAZELNUTS ASSESSMENT FINAL
ECONOMIC PROSPERITY INITIATIVE (EPI) 10
In this section, the process was reviewed, and some differences and areas of structural
adjustment that could be implemented were identified.
INSHELL
The inshell market is a lucrative business that requires far less packer input than the shelled
area. In addition, the packer is selling 100 percent of product and not relegating shell to
cogeneration use. Product for the inshell market is normally different than that of the shelled
in that the market looks for big round nuts, clean surface and zero blemishes. For shelled
product, size of the nut meat kernel is the main concern. The inshell market is a tricky
business with small windows of opportunity, a few trading entities and a lot of chance for
making or losing big money. The Georgian packers are getting closer to the inshell market,
and will need to learn the nuances of the business in order to play the game.
The hazelnut season has peaks and valleys in production and pricing. This is based on a
number of factors:
West European Inshell Market. Besides the Chinese trade of jumbo inshell nuts
and Balkan Ramadan season (Bosnia, Kosovo, Albania, Turkey, etc.) – the only real
market for this product is the Christmas market in West Europe. Countries such as
Germany, Holland, Belgium, Switzerland and Austria, all have long-standing inshell
nut traditions associated with Christmas time. This is not a hazelnut-only tradition
and it includes walnuts and other inshell nuts. A whole culture has developed around
this tradition, including nutcrackers, nonfood decorative use and cracking rituals.
Because of the importance of the inshell trade, most nut traders in Rotterdam and
Hamburg all have very rigid buying criteria that must be followed. Perfectly dried
Inshell nuts must be landed in the key markets in early October which creates rush to
match the demand. For this purpose, specific markets and cultivars of hazelnuts are
selected and propagated to provide for an early harvest, lower moisture weight at
harvest, which will accelerate the amount of time a hazelnut will take from harvest to
market.
Moisture content of incoming nuts. It is widely known that eastern Georgian
hazelnuts are harvested with lower moisture content. Although the percentages may
seem minute, they are actually quite significant; in that a packer can more rapidly dry
an inshell nut for market. This takes less energy time and input and a packer can
gain more than 10-20 % premium by hitting the inshell market just right.
Incoming nuts
Shelled
Field drying
Air drying
Calibration
Cleaning
Field
sorting
Calibration
Visual
sorting
Visual
sorting
Sacked
Packed
GEORGIA HAZELNUTS ASSESSMENT FINAL
ECONOMIC PROSPERITY INITIATIVE (EPI) 11
Chinese Buying Patterns. Each year, traders from the People’s Republic of China,
source the entire world supply of large sized inshell hazelnuts. Oregon in the USA is
the main producer of this product. However, the Chinese are always on the lookout
for alternative suppliers to supplement the Oregon production. The Chinese trade is
actually Hong Kong and South China based, yet the usage market is North China.
Hong Kong ―sister companies conduct the actual transaction and land the inshell
nuts at the port of Hong Kong. The nut are transshipped to Chinese sister companies
who warehouse nuts in Guangdong province, mainly in the Zhuhai area. The main
users are the nut roaster trade. These are a group of 10 or so companies who roast
inshell nuts and bag for the north Chinese markets mainly in Beijing, Dalian, and
Tianjin cities. The product is roasted and the shells crack allowing infusion of flavors,
such as salt, li hing powder (salty plum) and others into the interior nut. The product
is sold in foil pouches, as well as bulk in wet markets. Typically, all inshell nuts,
including almonds, hazelnuts and even cashews are identified as USA or California
origin. This is despite the fact that cashews are not even produced in the USA. In
the past, the Chinese buyers have visited Georgia, and according to most packers,
they had very poor results. The Chinese made great demands, on quality, credit on
goods, and just bad and rude behavior in general. It is interesting to note that when
queried the Chinese concerning Georgia, each buyer has a similar impression of
Georgia which should be taken into consideration: They believe that the Georgian
product may be cheap, but not a good value because there is too high a percentage
of empty shells in each order.
Location of plants. As a remnant of the old system, some plants are in areas far
from hazelnut production. Some smart companies are building plants in the areas.
Unique varieties. Several packers mentioned that there were specific regional
differences and some exquisite types of hazelnuts produced in the East of Georgia.
This would give Georgia some interesting potential for developing appellations and
specific branded products, such as the way that the Iranians have done with their
almond crop. Some varieties are valued at more than 80 percent above conventional
nuts.
SHELLED HAZELNUTS
Georgia produces a world-class shelled hazelnut. The shape, soundness of the kernel,
adhesion of the skin and other attributes make it a most desirable product. All Georgian
producers who were visited, utilized similar or same flow process, which included drying,
cracking, calibrating and packing. They also segment out co-products, such as hazelnut
meal and have developed the basics of further processed items, such as roasted, blanched,
sliced, diced and meal.
Sizes and classifications. Georgian producers have the size and calibration
system down pat. This is the main descriptor for buyers, concerning the screen sizes
that a product will not fall through. This terminology is very adequate, yet there are
some concerning about the shape of some Georgian hazelnuts, which are an oblong
shape due to nature. This would distort the screen size. We should consider
alternative size grades, such as pieces per kg, which are used in the confectionery
industry as well.
Packing. The standards packing methodology for hazelnuts for the food industry is
the cardboard box with a blue plastic poly liner. Typically, the size will be 13.5 kg.
This depends on the size of the kernels. Almost all production Georgia leaves the
country in clean jute bags. This is a wonderful throwback to the old days, but for
GEORGIA HAZELNUTS ASSESSMENT FINAL
ECONOMIC PROSPERITY INITIATIVE (EPI) 12
Activity:
Development of technical specifications for Georgian
hazelnut offerings with terminologies, size, shape, color
and other specifications.
Provide a market analysis of potential sales in various
categories, including requirements, formats, packing and
potential volumes required. This will give the Georgian
producers an idea of target markets and goals for market
development.
sanitary reasons, we must advance to food grade containers. In fact, there are many
advantages to the corrugated box.
Due to the cube dimensions, a packer can pack up to 1/3 more hazelnuts in
an ocean container or truck trailer. They can be stacked higher have sheer
strength.
Cases load easier on a pallet.
Hazelnuts will not absorb jute particles and the plastic case liner is sanitary
and of food grade.
Cardboard cases cost about the same or less than clean jute bags.
Emphasis on further processing. Several Georgian factories have new roasting
and other equipment and a few are producing new items. This is a wonderful
advancement, but at the same time, it is clear that the most useful place for
hazelnuts will be in the whole kernel market and this is what the Georgians do quite
well. The hazelnut has a perfect antioxidant barrier in the adhering skin and this
keeps the product fresh for long periods of time. To roast, blanch, and grind will
immediately accelerate oxidative rancidity, which is the enemy of all nut producers
and buyers. It is best to keep the whole nuts in skin as long as possible and make
product to specs for customers. In short, it is a good strategy to focus on what is
best and not get carried away with the co- and by-products.
Terminologies for value-added products. Georgia needs to establish standard
terminologies for further processed items to ensure buyer understanding. This
includes sliced items, ground, blanched, etc. The recommendation and development
of a technical brochure that shows the standard offerings across the board would be
beneficial. This would include photographs, size descriptions and shapes.
WORKFORCE ENHANCEMENT
OREGON GRADE STANDARDS
FILBERTS (HAZELNUTS) IN SHELL
(effective August 25, 1975)
GEORGIA HAZELNUTS ASSESSMENT FINAL
ECONOMIC PROSPERITY INITIATIVE (EPI) 13
OREGON NO. 1 GRADE. Oregon No. 1‖ consists of filberts in the shell, which meet the
following requirements:
1) Similar type; and,
2) Dry
3) Shells:
a. Well formed; and,
b. Clean and bright
c. Free from:
i. Blanks; and,
ii. Broken or split shells.
d. Free from damage caused by:
i. Stains; and,
ii. Adhering husk; or,
iii. Other means.
4) Kernels:
a. Reasonably well developed; and,
b. Not badly misshapen.
c. Free from:
i. Rancidity;
ii. Decay;
iii. Mold; and,
iv. Insect injury.
d. Free from damage caused by;
i. Shriveling; and,
ii. Discoloration; or,
iii. Other means.
5) Size: The size shall be specified in connection with the grade in accordance with one
of the size classifications in Table 1.
6) Tolerances: In order to allow for variations incident to proper grading and handling,
the following tolerances, by count, are permitted as specified:
a. For mixed types: 20 percent for filberts which are of a different type.
b. For defects: 10 percent for filberts which are below the requirements of his
grade: Provided that not more than one-half of this amount or 5 percent shall
consist of blanks, and not more than 5 percent shall consist of filberts with
rancid, decayed, moldy or insect injured kernels, including not more than 2
percent for insect injury.
c. For off-size: 15 percent for filberts which fail to meet the requirements for the
size specified, but not more than two-thirds of this amount, or 10 percent shall
consist of undersize filberts.
CERTIFICATION AND STANDARDS ATTAINMENT
Because most Georgian producers are a step removed from end users, such as major candy
companies, the product offerings are only measured by informal criteria agreed between the
European partner and Georgia packer. In other producing regions of the worked, industry-
GEORGIA HAZELNUTS ASSESSMENT FINAL
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wide quality and grading standards have been implemented which raise the product quality
to world standards and give end users confidence in purchase.
QUALITY STANDARDS
In Oregon, anyone can produce hazelnuts. However, in order for hazelnuts to be marketed,
they must meet USA federal government (USDA) standards. These standards were
implemented decades ago at the insistence of growers, packers and end users as a way to
bring order to the marketplace. USDA standards are the basic standard and all products
must exceed. The standards are part of public law and cover, size, defects, color and many
of the concerns of the shelled and inshell buyer (attachment Oregon Standards).
INSPECTION AND IMPLEMENTATION OF STANDARDS
The nut industry has an inspection mechanism in place to implement quality standards. In
the walnut industry, this is the Dried Fruit and Treenuts Association (DFA), but other
inspection services can also be used, such as the Society General Service or others.
Packers pay a per ton inspection fee and a DFA or USDA inspector is present at all packing
facilities. A random sample of incoming nuts is taken and product is graded or failed for
human consumption. Packers use this incoming inspection as the basis for payment to
growers. Outgoing inspections designate the nut by grade and are the basis for market
pricing by buyer and seller. A tag or sticker is placed on all outgoing cases of shelled nuts
and sacks of inshell nuts. This tag is sought after by buyers around the world as an
assurance of quality.
RECORDKEEPING
As part of the incoming inspection, records are kept by the packer on intake nuts. Test
samples are kept and this ability to trace the nut to a grower intake lot becomes a very
important factor in satisfying end user requirements for after reception traceability. Packers
can monitor grower quality and pay the appropriate premiums. Most importantly, they can
rapidly trace lots to the grower when there is a quality dispute or recall.
DISPUTE RESOLUTION
The quality inspection becomes a business tool for the packer and a means of setting and
avoiding disputes. In talking with Georgian packers, they are always in trouble when
shipping to new markets, such as the Gulf, India and China. The product grade and
inspection certificate, as well as test samples become an important tool for avoiding frivolous
quality claims and for setting legitimate disputes.
ORGANIC CERTIFICATION
The value of organic certification has been debated by buyers for years. What is certain is
that a number of the new buyers, in places like Asia, Canada, South America and Australia
are all asking for organic. Georgia, of course is an organic island, and growers do not
utilize pesticides and herbicides in hazelnut production. The question is posed, should we
capitalize on the organic nature of Georgian hazelnuts.
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Advantage: Georgian hazelnuts are definitely organic.
Disadvantage: Because of the small and disorganized structure of the grower base, it would
be quite difficult and expensive to certify large combined lots of hazelnuts destined for a
packer under the current system. If packers did deal direct with producers, this would be
much easier to implement. But currently, the collector system does not work for inputs back
down the value chain.
In talking with buyers, they do ask for organic as a wish, but would also be quite satisfied
with products which –although not technically certified by a certification body are logically
organic, natural. It is recommended that there is investigation held for the use of terminology
that describes the organic yet not certified nature of Georgian hazelnuts. Georgian
Natural.Georgian Supra.‖
BUSINESS MANAGEMENT IMPROVEMENT
While visiting numerous plants in Georgia, it was noted that they are producing a fine
product under very difficult conditions and little guidance. (It is the notion that the companies
are currently adequate to their partners‖ as suppliers of raw materials that must be
reprocessed in Western Europe. The Georgian hazelnut industry needs a quality
improvement guide and framework. Perhaps a best practices model from the DFA of
California, which is the premiere food quality and plant inspection service worldwide, can be
Activities/Recommendations:
Development of a DFA like organization in Georgia, utilizing the expertise
of a visiting expert from the USA to help establish. This would include
development of plant inspection guidelines, product specification and
inspection system and certification.
Consultations with individual plants with nut production expert to show
how to improve quality from within, raising the standards of cleanliness
and production efficiencies to higher levels.
Certification on inshell California walnuts
shipped to Georgia for reprocessing
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used. In the 1880s, California’s dried fruit packers founded the DFA as a means of
preventing disputes with overseas buyers. The DFA concept developed a 2000-point
system for plant cleanliness and operations, which covers all aspects of the dried fruit and
nut business. The organization inspects most of the fruit and nut companies on the West
Coast of the USA, and packers fiercely compete to get the 1800 Club certification, which is
recognized by confectionery and food industry buyers around the world. Perhaps the DFA
could consult with the Georgian hazelnut industry to establish a similar organization, which
could provide the framework for raising quality plant operations worldwide. The organization
could also become a contracted inspection service as it is in the USA. If run properly, this
organization should become an independent and self-sustaining entity with a board of
directors.
2010 Exports
LINKAGES & PARTNERSHIP
The treenut business in the world is a tight knit group of packers, handlers, importers and
end users. When looking at the cohesiveness of the group – for example, under the
umbrella of the International Nut Congress, it is easy to say that: anyone who needs to buy
hazelnuts knows where to get them. The world nut handlers, such as the Pont Brothers
Turkey
Azerbajian
EU-27
HK
USA
Activities/Recommendations:
Development of a DFA like organization in Georgia, utilizing the
expertise of a visiting expert from the USA to help establish. This
would include development of plant inspection guidelines, product
specification and inspection system and certification. Note that the
organization has a new name, American Council for Food Safety,
which shows the initiative to become more than a California Nut
organization. The former director, Rich Novy is now an independent
consultant available for consultations as well.
o http://agfoodsafety.org/
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(Borges) in Spain, Bessana Nut (Italy), George Goeck (Germany) and other such companies
do a tremendous job of handling a huge quantity of nuts and hazelnuts in particular. But,
the world market is also much larger and a whole end user base abroad is un-serviced and
willing to try new sources such as Georgia.
LINKAGES
We will go beyond the European market and match Georgian hazelnut packers with real
substantial customers in markets that will not interfere with their current business
relationships. This will include companies in Canada, USA, China (shelled), Central
America, Brazil, Mexico, Southeast Asia and other markets. The companies suggest that
they are eager to find new direct sources, and are willing to come to Georgia, work with the
packers on quality improvement and marketing strategies.
IMAGE DEVELOPMENT
We will place Georgia on the world tree nut map, and publish an article with photos in the
Germany food technology publication Food Marketing and Technology. This will be read by
major end users and buyers.
ONLINE PACKER LIST
Establish a packer list as a means for reaching packers and individual products. The world
candy customers are bigger than any individual packer in Georgia. We need to establish a
packer list online that includes product offerings and e-mails for contact.
TECHNICAL ASSISTANCE TO PACKERS
We will assist the packers in the field to help them find new customers and execute
transactions. This will include individual consultations, ongoing assistance and advice on
sampling, pricing, collections and sales.
TECHNICAL BROCHURE
The Georgian hazelnut industry needs a flagship document that has Georgian specific
technical information, including the production region, products offered, photos,
specifications and contact information.
Size and color chart.
Product specifics and Georgian terminologies: natural, blanched, roasted, etc.
Background on the industry: not technical but very important for understanding.
Information on Georgian hazelnuts: natural, no pesticide use and term for ―uncertified
organic.
Packing sizes available: very important information for buyers.
Georgian Commitment to quality: information on quality improvement programs listed
in another section of this document.
Would suggest making two technical specification documents: inshell and shelled
(kernels). The inshell market is quite simple in requirements.
o Georgian size and shapes
o Processing, drying and cleaning
o Moisture content
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Activities/Recommendations:
Bring qualified buyers with a long-term interest in working with the
Georgian producers, into the country in a harvest-time visit . This will
result in immediate sales, and long- term communications and real
partnerships for future growth. Specific activities are listed above in
sections 7.1 to 7.4. With these linkages will come valuable technical
assistance.
o Georgian quality commitment. (Hit the hollow nut problem right on the head
and list initiatives in place to ensure valued product).
Shelled Hazelnut Imports. EU is dominant importer.
CONCLUSIONS/RECOMMENDATIONS
Recommendations have been made in individual sections. But, overall it is recommended
overall that to help Georgian producers enter the 20
th
century with key trade contacts in
regions of the world. These new buyers will help move hazelnuts to new markets in
significant volumes and will work with Georgian suppliers on ascension to real world
standards and specifications.
VALUE-ADDED TASKS
Market analysis The world hazelnut market, like other treenuts, such as almonds, walnuts
and pecans, is a demand-driven specialty commodity. There are two major segments of the
industry: inshell and shelled. Although many channel partners or intermediaries are active in
the trade of both, the end users are totally separate.
Australia
Brazil
Croatia
EU-27
HK
Japan
S.Korea
Norway
Russia
Serbia
S.Africa
Switz.
Turkey
Ukraine
USA
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ANALYSIS OF CURRENT AND PROSPECTIVE MARKETS OF OPPORTUNITY
Most inshell hazelnuts are either shipped to Europe for Christmas time or to China for
roasting. On the shelled side, although there are a number of different supplier nations and
regions, Turkey is the main entity and focus of buyers. The customer base is quite small
and most products go to the confectionery industry for a number of long established candy
products that require hazelnuts, hazelnut paste and kernels. Consumer packs of hazelnuts,
foodservice, dairy use and other applications are smaller, yet are quite interesting for market
development and are a focus of hazelnut producers in Turkey and elsewhere. Currently,
almost all trade of hazelnuts is locked up by a small number of suppliers and intermediaries
(mainly in Hamburg, Rotterdam) who have long established relations with the major world
confectionery companies, such as Ferrero, Mars, Nestle and Nutella.
LIST OF POTENTIAL BUYERS
The current universe of hazelnut intermediaries and buyers is quite small. Here are a few
leaders.
Country
Contact
United
Kingdom
CG Hacking Co.
Mr. Christopher Hacking, Chariman
Calverts Buildings, 50 Borough High Street, London, SE1 1XW, United Kingdom
Tel: + 44 (0) 207 407 6451
Fax.: +44 (0) 207 407 300
Email: ghacking@cghacking.com
Web site: http://www.cghacking.com
Spain
BORGES, S.A
Marti Jordi
C/. Flix 29, 43205 Reus, Spain
Tel: +34 (977) 30 90 00
Fax: +34 (977) 77 20 52
Email: info@borges.es
Web site: http://frutossecos.borges.es
Italy
Besana Nut
Pino Calcagni
V. Besana S.p.A. - Via Ferrovia, 210 - 80040 - San Gennaro Vesuviano (NA)
Italia
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Country
Contact
Tel: +39 081 8659111
Fax: +39 081 8657651
E-mail: info@besanaworld.com
Germany
Max Kiene GmbH
Oberhafenstraße 1
20097 Hamburg, Germany
Tel: 040 309655-0
Belgium
Q.M. BVBA
Mr. Frank Vaerewijck, Director
Scousele 30. B-9140 Steendorp. Belgium.
Tel: 32 (2) 711 0895
Fax: 32 (2) 711 0879
E-mail: q.m[email protected]
Netherlands
van de Sandt B.V.
Kleiweg 307. 3051 XR Rotterdam, The Netherlands.
Tel: +31(0)10 418 2060. +31(0)10 422 1177
E-mail: info@cvandesandt.com.
Web site: www.cvandesandt.com
Australia
MWT Foods
Pelaco Building
Ground Floor, building 2, 21-31 Goodwood Street, Richmond, Victoria Australia
Tel: +61-3-9420-2900
Fax: +61-9421-0507
Email: info@mwtfoods.com
Web site: http://www.mwtfoods.com
Germany
Bösch Boden Spies
GEORGIA HAZELNUTS ASSESSMENT FINAL
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Country
Contact
Lippeltstr. 1, Hamburg, Germany
Tel: +49-40 333016-66
Email: info@boesch-boden-spies.com
Web site: www.boesch-boden-spies.com
Canada
Balcorp Limited
4103, Sherbrooke Ouest Montréal, (Québec), Canada H3Z 1A7
Tel: (514) 939-0909.
Fax : (514) 939-0777
France
Raul Gamon
Somervom SRL, 12 Rue Marbeuf, 75008 Paris
Tel: 01 40 70 94 50
Fax: 01 40 70 94 80
INTERVIEWS WITH BUYERS (COMPLETED)
A number of buyers of Hazelnuts were interviewed. In doing so, it validated the fact that the
large entities are already well tied in with other Turkish other suppliers. For this purpose, it is
important to operate outside of the current structure and work on new markets.
Singapore: Ken Davis, Spectrum In gradients
Japan. Toyo Nuts, Kobe
Canada, All Gold, Toronto
Germany, DIA, Cologne
Costa Rica, Resosco, San Jose
Others
DESCRIPTION AND STRUCTURE OF MARKETS
The world trade of hazelnuts centers on a very few large trading companies who have long-
established relationships with confectionery companies who use a majority of hazelnut
production. For example, there are 10 more traders in Hamburg and Rotterdam, and they all
have offices in the same neighborhoods near the port – sometimes even in the same
building. These companies are in very tight formation with buyers and have decades of
business on the books. The new companies that are listed are on the fringes and are
currently already sourcing from secondary sources or are looking to fill requirements for new
customers. The new import companies have direct linkages with the end users, have
technical service capabilities and are in a position to develop new markets for hazelnuts.
GEORGIA HAZELNUTS ASSESSMENT FINAL
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Where they lack in huge volumes, they make up in willingness to work with new suppliers
and provide assistance and support. This will be a recommended channel for Georgian
hazelnuts.
GEORGIAN PRODUCTION CAPACITY
Georgia is currently a small player in the global hazelnut industry. Being attached to Turkey,
the main player, Georgia fills supply needs in this country and has direct field grade and raw
material and semifinished product shipments to main European markets. In addition, the
production is stable and limited to small farming activities, in which packers are supplied by
farmers through a middleman and direct sales to packers. This situation is seriously limiting
the development of new production. Georgia has substantial amounts of land available for
hazelnut production and some of this is in areas where discontinued tea production as
occurred. Other acres are in the East and in new and nontraditional hazelnut production
areas. The small producer, handler and packer arrangements does not seem to stimulate
new plantings and business. My guess is that this is because the middle men are regulating
supply to keep pricing up to the packer. Packers are struggling to get supply. The supply
pull will not begin until packers start to source directly from producers. They will initially
compete for producers, and provide incentives like higher prices and some serviced and
technical support. In time relationships will develop and packers will build bases of
production which will grow as the market grows.
The exception to the above described situation is the big farming activity from investors and
Fererro. The large confectionery company has jumped into the Georgian market seeing the
available land and potential and is producing on its own with substantial plantings in the
ground. Other private investors have developed hazelnut plantations in the East, and
unfortunately they do not seem to be experts in nut production and there is not much
progress or prospect for success in the future.
Nut Aggregators & Processors
Company Name
Contact person
Phone No
1
Nut producing and processing company
Besik Akhaladze
899170698
2
Kartu Group HCP
Irakli Amanatashvili
895222216
3
LLC Keskia
Fridon Kodua
899515194
4
LLC Tskaros Tavi
Koba Gvazava
877431517
5
LLC Didinedzis meurneoba
Goneli Kukava
899584234
6
LLC Kristali
Dato Lashqarava
877419587
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7
LLC Kartuli Sio 2000
Begi Sioridze
899989090
8
LLC GN Company
Mokho Khomeriki
899115370
9
LLC Argo Natia
Mamuka Todua
10
LLC Dioskuria
Ronaldi shelia
899299845
11
LLC Impex
Levan Jorjikia
877544445
12
LLC G-Nut
Shota Bukhaidze
877777374
13
LLC Georgian Nuts
Kakha Bochorishvili
877797574
14
LLC Fima Georgia
Aleko Motserelia
899953737
15
LLC Megobrebi da Kompania
Paata Erqvanidze
899180803
16
LLC Kardiko
Tengo Arqania
899519214
17
Ferero International
Merab Murgulia
899583658
18
I/E Badri Lorchoshvili
Badri lorchoshvili
899507823
19
LLC Agro+
David Quhilava
20
LLC Verdzi
Gela dzidzava
895343358
21
I/E Tskvitava Paata
Badri Lorzoshvili
899508852
IDENTIFICATION OF POLICY AND REGULATORY CONDITIONS TO IMPROVE
SECTOR
The hazelnut sector is a priority agricultural commodity in Georgia and has received a
substantial amount of attention from the central government. It is also a priority item for
assistance from donor nations, and assistance programs. From a policy standpoint, I would
recommend development and formation of a ―marketing order type of program, which would
allow development activities and controls, which could benefit the entire sector. Modeled
after the Oregon Hazelnut Committee in the USA, the program could address three different
areas:
5. Quality. A law would be established to define quality standards for Georgian
hazelnuts. This would include size, color, and other criteria that are important to the
GEORGIA HAZELNUTS ASSESSMENT FINAL
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buyers. In short, anyone would be able to grow hazelnuts in Georgia, but only those
which meet the mandated quality criteria could be marketed and exported. The law
would define an inspection mechanism at the packer level, as well as fines and
consequences for violating this aspect of the marketing order.
6. Research. The law would allow for identification and funding of research to serve the
needs of the Georgian hazelnut industry. This would include research and
development of new plant stocks, new products and processes and economic
research.
7. Promotion. The law would allow funding of market development and promotions in
the domestic and world markets, including market research, exhibitions, advertising
and trade missions.
8. Control. A board would have powerful marketing functions to create order in the
marketplace. This includes setting marketable supply, reserve pools, tools for
limiting product on the market, such as green drops (payment for destruction of the
product on the tree) and other mechanics.
The marketing order would be funded by an assessment per metric ton, on product received
by packers. The assessment would be passed along to the end user, and in the case of
Georgia, there is adequate room for price increases. In the USA, assessments for
commodity boards range from one cent per lb for honey to around $12 per ton for
blueberries. Most products, such as almonds and walnuts, are assessed at around $24-36
per ton. This would cover operating expenses of a board office and a collection mechanism.
A board would be formed which would represent the geographic profile of the industry and
would be selected in an election by industry stakeholders. Typically, this would be the
growers, but could also be the packer who in turn represents a producer base.
GAP ANALYSIS
Where we are
Where we want to be
What is stopping us
from getting there
What we can do to get
there
Production: small stable
production, little growth.
Want to achieve at least 3-
5% increases in production.
No ability for packers to
stimulate production due to
middle men (collectors)
keeping the producers
hungry.
Encourage direct relationship
between packers and longer
term and steady supply
relationships that can be built
and developed.
Most products are sold ―as
is to intermediary
customers who do
reprocessing.
Want to achieve market
price sales of hazelnut
products to real customers
based on quality and
appropriateness for the end
user.
Georgian plants are
deficient in many quality
control attributes and
practices due to lack of
knowledge of end user
standards.
>Engage Georgian producers
with real customers who can
help advise on quality steps.
>Utilize food safety and
processing experts in market
to work with companies to fix
gaps.
>Implement ongoing quality
and processing standards
certification program.
Few packers offer product
in a form and condition for
the end market.
Georgia should have a wide
range of offerings in proper
world packing materials.
Current solo customers are
content to get cheap prices
and do not push for world
class packaging and
products.
Provide consul to industry on
market requirements,
demands and product forms
that are needed in the
marketplace and show how to
GEORGIA HAZELNUTS ASSESSMENT FINAL
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get there.
Although most product is
produced without
pesticides, there is no
organic certification in
Georgia.
Georgia should have a
small yet significant organic
hazelnut category and thus
could well differentiate this
origin in new markets for
higher prices and growth
outside of the commodity
business.
Because of the current
structure where packers are
removed from growers by
collectors, there is a
difficulty to get organic
certification for such a large
grower base.
We should work with a few
larger packers with a large
direct grower base to begin
certification process to obtain
new organic production for the
marketplaces. At the same
time, we should develop a
terminology for Georgian
product that is certainly
organic yet not certified. This
would be immediately
accepted in some markets and
would add value.
Georgian product has little
or no image and awareness
in the world tree nut
community.
Georgia should obtain a
unique and positive identity
for hazelnuts – as an
original home of hazelnuts,
a provider of unique
cultivars and products.
Georgia is close to Turkey,
which is the leading
producer in the world, and
current customers come to
Georgia.
Georgia should gain a
presence in the International
Nut Congress, as well as gain
awareness through
participation in international
food exhibitions, such as
International Sourcing &
Marketing (confectionary)
FOODEX, Japan, Food and
Hotel Korea trade articles in
European, American and
Asian trade magazines and
online information portals.
Georgian packers lack the
fundamental knowledge for
succeed in new export
market transactions.
Current single customer
partner system has not
required packers to learn
and implement a lot of the
basic practices and
fundamentals of import
export business.
Georgian producers need
basic skills in sales
prospecting, sampling,
pricing, dispute resolution
and other skills to work in
new markets.
We should implement
seminars and consultations
with individual packers on
export transactions, sampling,
prospecting, pricing, dispute
resolution and collection.
Recommendations (Completed) followed outline of project tasks as provided to ensure that
the recommendations fit into the project structure.
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B. ADDITIONAL INFORMATION
DEFINITION OF TERMS
Collector A person or company which is not a producer of packer, which is located in a
stationary location, normally a town near hazelnut production, which receives and buys
incoming deliveries of hazelnuts from producers.
Handler – Typically is the first company who handles raw material from field. In Georgia, this
is also called a collector.
Packers – a company or individual who receives raw material and transforms product
through cleaning, processing for shipping to customers.
Exporter or street broker A person or company who works with a packer independently as
an export seller of hazelnuts. Normally is allied with one or two packers.
EXHIBITS/PHOTOS
New drying chamber
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Hazelnut nursery, East Georgia
New three-year old plantings in East Georgia
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New plantations in East Georgia
New generation of hazelnut processors in Georgia. Tom Payne on Right.
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Hand cracking of California Walnuts in plant in Zigdidi, West Georgia. Inshell walnuts are
shipped in sacks to Georgia for hand cracking for the French market. This is done alongside
conventional hazelnut processing
Perfect hand cracked California walnuts
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Hand cracking of California walnuts in Zigdidi, West Georgia
Sorting of hazelnut kernels after cracking
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Collector checks probe of inshell hazelnuts for hollow nuts as well as foreign object
Boss collector inspects inshell nuts
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Entrepreneurs with new roasting equipment
Drying tower
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New drying tower
Cracking machinery
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Inshell walnuts ready to ship. Note, stacked directly on floor!!!
Large inshell walnuts ready to ship to China.
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“Big Boss” at his new factory in Zigdidi.
Shelled hazelnuts
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Processed shelled hazelnuts ready to ship on pallets.
Blanched hazelnuts in vacuum pack
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Hazelnut meal in vacuum pack
Shelled product for Middle East customer with Halal certification
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Variety of product offerings in vacuum pack for samples and evaluation
Loading of truck in Zigdidi
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Incoming hazelnuts loaded into dryer
Sorting of shelled hazelnuts. Note hairnets.
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Properly packed product ready to ship on pallets
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Blanched hazelnuts in vacuum pack blocks.
Posters on proper propagation of hazelnuts.
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Sorting table, note unprotected fluorescent tubes!
New cracking machinery
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New inshell dryers
Incoming inshell hazelnuts
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Inshell probe. Note, notations of grower on sack.
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Packer inspects incoming field-grade product.
Scale at raw material reception area at packer.
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Hazelnut cracker
Outside of plant, note rodent control measures and barriers on peripheral of plant.
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OREGON STANDARDS FOR HAZELNUTS
OREGON GRADE STANDARDS
FILBERTS (HAZELNUTS) IN SHELL (Effective August 25, 1975)
OREGON NO. 1 GRADE. ―Oregon No. 1 consists of filberts in the shell which meet the
following requirements:
(1) Similar type; and,
(2) Dry.
(3) Shells:
(a) Well formed; and,
(b) Clean and bright.
(c) Free from:
(i) Blanks; and,
(ii) Broken or split shells.
(d) Free from damage caused by:
(i) Stains; and,
(ii) Adhering husk; or,
(iii) Other means.
(4) Kernels:
(a) Reasonably well developed; and,
(b) Not badly misshapen.
(c) Free from:
(i) Rancidity;
(ii) Decay;
(iii) Mold; and,
(iv) Insect injury.
(d) Free from damage caused by:
(i) Shriveling; and,
(ii) Discoloration; or,
(iii) Other means
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(5) Size: The size shall be specified in connection with the grade in accordance with one of
the size classifications in Table 1.
(6) Tolerances: In order to allow for variations incident to proper grading and
handling, the following tolerances, by count, are permitted as specified:
(a) For mixed types, 20% for filberts, which are of a different type.
(b) For defects, 10% for filberts which are below the requirements of this
grade: Provided, that not more than one-half of this amount or 5% shall
consist of blanks, and not more than 5 percent shall consist of filberts with
rancid, decayed, moldy or insect injured kernels, including not more than 2%
for insect injury.
(c) For off-size, 15% for filberts which fail to meet the requirements for
the size specified, but not more than two-thirds of this amount, or 10%
shall consist of undersize filberts.
Table 1
Round type varieties:
Size classifications for kernerls
packed in containers holding
more than 1 kilogram
Maximum Size
Will pass through a round
opening of the following size
Minimum Size
Will not pass through a round
opening of the following size
Giant
No Maximum
23 m.m.
Jumbo/Giant (at least 25% giant
size and balance jumbo size)
No Maximum
22.2 m.m.
Jumbo
No Maximum
22.2 m.m.
Large
22.2 m.m.
19.4 m.m.
Medium
19.4 m.m.
17.9 m.m.
Small
17.9 m.m.
No Minimum
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Table 2
Long type varieties:
Size classifications for kernerls
packed in containers holding
more than 1 kilogram
Maximum Size
Will pass through a round
opening of the following size
Minimum Size
Will not pass through a round
opening of the following size
Giant
No Maximum
22.2 m.m.
Jumbo/Giant (at least 25% giant
size and balance jumbo size)
No Maximum
18.6 m.m.
Jumbo
No Maximum
18.6 m.m.
Large
19.0 m.m.
17.5 m.m.
Medium
17.9 m.m.
13.5 m.m.
Small
13.9 m.m.
No Minimum
Application of standards
(1) The grade of a lot of filberts shall be determined on the basis of a composite
sample drawn from containers in various locations in the lot. However, any
container or group of containers in which the filberts are obviously of a quality,
type or size materially different from that in the majority of containers shall be
considered a separate lot, and shall be sampled separately.
(2) In grading the sample, each filbert shall be examined for defects of the shell before
being cracked for kernel examination. A filbert shall be classed as only one
defective nut even though it may be defective externally and internally.
Definitions
(1) ―Similar type means that the filberts in each container are of the same general type
and appearance. For example, nuts of the round type shall not be mixed with those
of the long type in the same container.
(2) ―Dry means that the shell is free from surface moisture, and that the shells and
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kernels combined do not contain more than 10 percent moisture.
(3) ―Well formed means that the filbert shell is not materially misshapen.
(4) Clean and bright means that the individual filbert and the lot as a whole are practically
free
from adhering dirt and other foreign material, and that the shells have characteristic color.
(5) ―Blank means a filbert containing no kernel or a kernel filling less than one-fourth
the capacity of the shell.
(6) ―Split shell means a shell having any crack which is open and conspicuous for a
distance of
more than one-fourth the circumference of the shell, measured in the direction of the crack.
(7) Damage‖ means any specific defect described in this section; or an equally
objectionable
variation of any one of these defects, and other defect, or any combination of defects which
materially detracts from the appearance, or the edible or marketing quality of the filberts.
The following specific defects shall be considered as damage:
(a) Stains which are dark and materially affect the appearance of the individual shell.
(b) Adhering husk when covering more than 5 percent of the surface of the shell in the
aggregate.
(c) Shriveling when the kernel is materially shrunken, wrinkled, leathery or tough.
(d) Discoloration when the appearance of the kernel is materially affected by black color.
(8) Reasonably well developed means that the kernel fills one-half or more of the capacity
of the shell.
(9) ―Badly misshapen‖ means that the kernel is so malformed that the appearance is
materially affected.
(10) ―Rancidity means that the kernel is noticeably rancid to the taste. An oily appearance of
the flesh does not necessarily indicate a rancid condition.
(11) Moldy means that there is a visible growth of mold either on the outside or the inside
of the kernel.
(12) Insect injury means that the insect frass or web if present inside the nut or kernel
shows definite evidence of insect feeding.
Metric Conversion Table
Millimeters (m.m.) Inches: Millimeters (m.m.) Inches:
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24.6…………………………..... 62/64 18.6……………………………..47/64
23.4…………………………….59/64 17.9……………………………..45/64
23.0…………………………….58/64 17.5……………………………..44/64
22.2…………………………….56/64 16.7……………………………..42/64
19.4…………………………….49/64 13.9……………………………..35/64
19.0…………………………….48/64 13.5……………………………..34/64
OREGON STANDARDS FOR SHELLED HAZELNUTS
OREGON GRADE STANDARDS
HAZELNUT (FILBERT) KERNELS (Effective August 1, 1980)
603-51-305 APPLICATION OF STANDARDS. The grade of a lot of hazelnut kernels
shall be determined on the basis of a composite sample drawn from containers in
various locations in the lot. However, any container or group of containers in which the
hazelnuts are obviously of a quality, type, or size materially different from that in the
majority of containers shall be considered a separate lot, and shall be sampled
separately.
51-310 OFFICIAL GRADES.
(1) OREGON FANCY, which consists of whole hazelnut kernels meeting the following
requirements:
(a) Similar type, well dried and clean;
(b) Free from foreign material, mold, rancidity, decay and insect injury;
(c) Free from damage caused by chafing or scraping, shriveling, deformity,
internal flesh discoloration or other means;
(d) Free from serious damage caused by serious shriveling, broken kernels or
other means; and
(e) The size meets, and is declared as, those specified in connection with the
grade, in accordance with one of the size classifications in Table I or Table II
of OAR 603-51-311.
(2) OREGON NO. 1, which consists of whole hazelnut kernels meeting the following
requirements:
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(a) Well dried and clean;
(b) Free from foreign material, mold, rancidity, decay and insect injury;
(c) Free from damage caused by chafing or scraping, shriveling, internal flesh
discoloration or other means;
(d) Free from serious damage caused by serious shriveling, broken kernels or
other means; and
(e) The size meets, and is declared as, those specified in connection with the
grade, in accordance with one of the size classifications in Table I or Table II
of OAR 603-51-311, or is declared in terms of minimum diameter or minimum
and maximum diameters.
(3) OREGON NO. 1 WHOLE AND BROKEN, which consists of whole hazelnut kernels
or portions of hazelnut kernel meeting the following requirements:
(a) Well dried and clean;
(b) Free from foreign material, mold, rancidity, decay or insect injury;
(c) Free from serious damage caused by serious shriveling, or other means; and
(d) Does not have to meet any size requirement.
51-311 SIZE CLASSIFICATIONS. The following size classifications are
established for hazelnuts in Oregon:
TABLE I
Size classifications for kernerls
packed in containers holding
more than 1 kilogram
Maximum Size
Will pass through a round
opening of the following size
Minimum Size
Will not pass through a round
opening of the following size
Giant
No Maximum
16 m.m.
Jumbo
17 m.m.
15 m.m.
Extra Large
16 m.m.
14 m.m.
Large
15 m.m.
13 m.m.
Medium
14 m.m.
12 m.m.
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Small
13 m.m.
11 m.m.
Whole & Broken
No Maximum
No Minimum
TABLE II
Size classifications for kernerls
packed in containers holding 1
kilogram or less
Maximum Size
Will pass through a round
opening of the following size
Minimum Size
Will not pass through a round
opening of the following size
Extra Large
No Maximum
14 m.m.
Large
15 m.m.
13 m.m.
Medium
14 m.m.
12 m.m.
Small
13 m.m.
11 m.m.
Whole & Broken
No Maximum
No Minimum
51-315 TOLERANCES. In order to allow for variations incident to proper grading
and handling in each of the foregoing grades, the following tolerances, by weight,
are permitted as specified:
(1) For Foreign Material: 0.02 of 1%, for foreign material.
(2) For Mixed Types: In the Oregon Fancy grade, 10 percent for kernels which
are of a different type.
(3) For Defects: In the Oregon Fancy and Oregon No. 1 grades, 10 percent for
kernels which are below the requirements of these grades, provided that not
more than one-half of this amount or 5 percent shall be allowed for serious
damage caused by serious shriveling and broken kernels, including not more
than one percent for moldy, rancidity, decay or insect injury.
(4) For Defects: In Oregon No. 1 Whole and Broken grade, 5 percent for kernels
or portions of kernels which are below the requirements of this grade,
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including not more than 1% for moldy, rancidity, decay or insect
injury.
(5) For off size: 15% for kernels which fail to meet the requirements for the
size classifications specified, but not more than two-thirds of this amount or
10% shall consist of undersize kernels.
51-320 DEFINITIONS. As used in OAR 603-51-305 to 603-51-325:
(1) “Similar type” means that the kernels are of the same general type and
appearance (i.e., kernels of the round type shall not be mixed with those of
the long type). Color of the kernels shall not be considered since there is
often a marked difference in skin color of kernels of similar type.
(2) “Well dried” means that the kernels are firm and crisp, not containing more
than 6% moisture.
(3) “Clean” means practically free from plainly visible adhering dirt or other
foreign material.
(4) “Foreign material” means any substance other than the filbert kernel, or
portions of kernels. Loose skins, pellicles, or corky tissue which have
become separated from the kernel shall not be considered as foreign
material, provided that this material does not exceed 0.02 of 1% by
weight.
(5) “Damage” means any specific defect described in this section, or an equally
objectionable variation of any one of these defects, or any other defect or any
combination of defects, which materially detracts from the appearance of the
edible or marketing quality of the individual portion of the kernel or of the lot
as a whole. The following defects shall be considered as damage:
(a) “Chafing or scraping” means that more than one-eighth of the surface
is affected.
(b) “Shriveling” means the kernel is materially shrunken, wrinkled, and
tough.
(c) “Deformity” means that the kernel is deformed to the extent that the
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appearance is materially affected.
(d) “Internal flesh discoloration” means any black discoloration within the
kernel. The natural brown stain which occurs within the internal cavity
of some types of kernels shall not be considered damage.
(6) “Serious damage” means any specific defects described in this section or an
equally objectionable variation of any of these defects, or any other defect, or
any combination of defects, which seriously detracts from the appearance or
the edible marketing quality of the individual portion of kernel or of the lot as a
whole. The following defects shall be considered as serious damage:
(a) “Serious shriveling” means that the kernel is seriously shrunken,
wrinkled, and tough.
(b) “Broken kernels” means portions of kernels of which an estimated
one-quarter or more of the original entire kernel has been broken off.
(c) “Moldy” means that there is a visible growth of mold either on the
outside or inside of the kernel.
(d) “Rancidity” means that the kernel is noticeable rancid to the taste. An
oily appearance of the flesh does not necessarily indicate a rancid
condition.
(e) “Decay” means that any portion of the kernel is decomposed.
(f) “Insect injury” means that the insect, frass, or web is present, or the
kernel of portion of kernel shows definite evidence of insect feeding.
51-325 LABELING REQUIREMENTS. (1) The principal display panel of each
hazelnut (filbert) container shall state:
(a) the name of the commodity, unless it can be easily identified through
the wrapper or package;
(b) the name and business address of the grower, packer, shipper,
distributor, or dealer, including the zip code;
(c) the grade and size of nuts in accordance with the standards set forth in
OAR 603-51-305 to 603-51-320;
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(d) the net weight; and
(e) the country of origin.
TURKISH STANDARDS/EXPORTS
Turkey Growing Regions
Turkish hazelnut are
produced in two qualities:
Giresun: grown in Giresun
and neighboring Trabsun
(highest quality).
Levant: grown in other
areas (lesser quality and
lower price)
Region 1
Region 2
Ordu, Giresun, Trabzon, Rize, Artvin
Samsun, Sinup, Kastamonu, Bolu, Duzce,
Sakaraya, Zonguldak, Kocaelli
Forms of Turkish Hazelnuts Exported
Turkish Hazelnut Exports
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Product Offerings
1
Product
End user
Comment
Inshell hazelnuts
Snack for end user
Natural hazelnuts
Raw material for processed
and fully processed
Blanched hazelnuts
Chocolate, snacks, salting
Roasted hazelnuts
Chocolate, snacks, salting
Chopped hazelnuts
Ice cream, biscuit, chocolate,
bakery
Sliced hazelnuts
Bakery
Hazelnut flour
Bakery, biscuit, ice cream
industry
Hazelnut paste
Ice cream, chocolate industry
Turkish Standards for kernel sizes (Turkish Exporters Union)
Size measured by round hole screen size
Turkish Terminology
1
Hazelnut Promotion Group, Turkey.
Shelled
Roasted/Blanched
Further
Processed
EU
Other Europe
Overseas
Others
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9-15 mm
Regular
9-11 mm
Standard III
11-13 mm
Standard II
13-15 mm
Standard I
Over 15 mm
Standard Extra
Turkish Product Descriptions
Round
Pointed
Hazelnuts with spherical shapes which are
almost same in length, width and thickness.
This is the nut normally used in blanching.
Longer hazelnuts which are marketed as
inshell.
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BUSINESS CARDS
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GEORGIA HAZELNUTS ASSESSMENT FINAL
USAID Economic Prosperity Initiative (EPI)
6 Samgebro St.
Tbilisi, Georgia
Phone: +995 32 43 89 24/25/26
Fax: +995 32 43 89 27