September 13, 2023

Dear HGBA Member,

The Hazelnut Growers Bargaining Association has arrived at the Guaranteed Minimum Price for the 2023 crop. This price reflects the minimum price a grower can receive from a signatory packer of the HGBA. The signatory packers include Firestone Processing Company, George Packing, NW Hazelnut and Willamette Hazelnut. Non-signatory packers have established other minimums and terms that do not abide by the contract set forth by the HGBA. If you are an HGBA member and deliver to one of these non-signatory packers the HGBA minimums, terms and potential future bonuses do not apply.

The current market for hazelnuts has been a bit of an emotional roller coaster. As for the kernel markets around the world, the significant news has been that there is a surprising reduction of crop size and quality out of the Black Sea region. Turkey especially has down graded their crop by at least 110,000 metric tons in the past two weeks. Other players in the region are hinting at the same predominant issue of the Brown Marmorated Stink Bug. If the damage is truly as bad as it appears, then the total world supply of hazelnuts will become more aligned, resulting in a manageable amount of carryover going into 2024 crop. This is great news for Oregon hazelnut growers in order to stop the expansion of the carryover that has been suppressing prices.

Due to the timely news of this likely supply correction, the kernel markets have seen a nice bounce in interest and firming of prices. This is very encouraging and the HGBA board has informed its packers that we also expect significant bonuses as they build these markets. The Oregon carryover that persisted last year is affectively gone. There is no reason our members should not expect double-digit bonuses for their kernel varieties! Therefore, the HGBA Guaranteed Minimum Price for McDonald, Sacajawea and Casina will be $0.55. Wepster, Clark, Polly O, Yamhill, Willamette, Lewis, Dorris and Santiam will be a $0.50 Guaranteed Minimum Price.

Regarding the in-shell market in China we anticipated a strengthening position but, unfortunately the Chinese buyers became aware of a $0.30 minimum published by a non-signatory packer. Thus, the firming of this market quickly eroded to last year’s ending price for delivered hazelnuts. Though much of the industry’s momentum was extinguished, the HGBA believes a much higher minimum than this was necessary to get things headed back in the right direction. Therefore, the HGBA has set the in-shell varieties minimum at a level 50% higher than the non-signatory packer’s minimum and 12.5% higher than last year’s Guaranteed Minimum Price. The HGBA minimum for Barcelona, Jefferson, and Ennis have been set at $0.45. We expect the HGBA minimum to bring the needed stability this portion of our industry needs. Our expectation is that growers will receive healthy bonuses for their in-shell varieties later in the season. The HGBA board is expecting double-digit bonuses for in-shell varieties as well!

With better minimums for the 2023 crop and the commitment of our Packers to push for the double-digit bonuses the HGBA board expects growers are likely to get back to profitability this season. Every day the Oregon crop estimate seems to get a bit bigger and our competitors a bit smaller. It is nice to see Oregon hazelnut farmers with the wind at their backs and 2022 in the rearview mirror. Best wishes for a safe and profitable harvest.

If you have any questions please contact me directly,

Terry Ross
503-278-2912
tross@integratedseed.com

SUPPORTING LONG-TERM GROWTH 

Many Willamette Valley farmers are surprised with how stable and profitable Oregon hazelnuts have been over the past 15 years. One key part of this long-term stability has been the success of a farmers’ bargaining cooperative called the Hazelnut Growers Bargaining Association (HGBA). 

For background, there are three types of agricultural cooperatives: 1). Supply cooperatives (think farm stores, equipment, agronomy), 2). Marketing cooperatives (think NORPAC/Tillamook), and 3). “Bargaining” cooperatives. 

The HGBA is a bargaining co-op in Oregon that negotiates the terms and price under which member Oregon farmers sell their hazelnuts to independent processors. With nearly 300 members, the HGBA is the largest cooperative of any type in the Oregon hazelnut industry.

The HGBA, in partnership with participating Oregon hazelnut processors, has created a market relationship that is truly unique in American agriculture. Oregon hazelnut processors have agreed to a very “grower-friendly” contract that allows for total transparency, a fixed gross margin per in-shell pound, and the ability to audit the processors’ books. This structure allows farmers to get the “commodity price” for the hazelnut as a guaranteed minimum and then ensures that, in order to earn grower volume, Oregon hazelnut processors must compete each year to see which company can provide the biggest “profit share” for their growers.

Let me explain:  Every year in September the HGBA and Oregon hazelnut processors get reports on the Turkish and Italian hazelnut crops and world market trends. Those two countries make up nearly 80% of all hazelnut supplies in the world market – the prices from Turkey and Italy are the world “commodity price” of hazelnuts. Based on this world price, the HGBA and its processors then agree to the baseline “economic value”, or “fair market price” of Oregon hazelnuts in the world market. We also call this the “guaranteed minimum price” for Oregon hazelnuts.

With a “bargaining cooperative,” a farmer can get the upside of competition, without the downside price and equity risks that can come with other forms of cooperatives. This is especially true in the Oregon hazelnut market, where HGBA participating Oregon processors have consistently beaten the commodity/world price of hazelnuts by 10%,15%, or even 20%. Each year HGBA hazelnut growers expect to reap a profit-share based on how their Oregon processor succeeded in beating the markets and creating additional efficiencies. 

Through the unique “profit share” system the HGBA has given Willamette Valley hazelnut farmers unprecedented transparency in the market, strictly enforced rules governing grading and inspections, and years of prices above the market price of the world hazelnuts. 

The Hazelnut Growers’ Bargaining Association exists due to strong support among Oregon hazelnut farmers, and the support of Oregon’s hazelnut processors who have had the foresight to see that higher returns for growers are better for everyone in the supply chain.

Please note that the only way to guarantee these benefits as a grower is to be an HGBA member and deliver to a participating processor. The HGBA participating processors are: Firestone Processing Co., George Packing, NW Hazelnut Co, and Willamette Hazelnut. If you are a hazelnut grower and deliver to one of these processors you are not protected unless you are a member of the HGBA. Please contact me directly with any questions in regards to membership and participation.

Terry Ross
Executive Director
Hazelnut Growers Bargaining Association
503-278-2912
tross@integratedseed.com