Love Nutella? World's Hazelnut Supply Faces Climate Threat
WHY YOU SHOULD CARE
Extreme weather events are damaging Turkey's ability to supply the hazelnuts that go into sweet treats globally.
By Stephen Starr
Aug. 8, 2018, was the day Turkey’s Ordu province found itself transformed into a disaster zone. Storms blew in from the Black Sea and washed out bridges and highways, triggering landslides along the jagged coast that killed one man. Summer storms aren’t uncommon in eastern Turkey’s high-altitude regions, but this was different. And its reverberations were felt globally.
Ordu and neighboring provinces along Turkey’s Black Sea coast produce 70 percent of the world’s hazelnut crop, a commodity increasingly popular with major international confectionery companies. Up to tens of thousands of tons of harvested hazelnuts were washed into the sea during that August storm, affecting the livelihoods of 4,000 farmers, and underscoring a major climate-change-induced challenge threatening an industry that’s estimated to be worth $9.5 billion by 2026.
Last June, sea temperatures along Turkey’s Black Sea coast averaged 79 F, way above the 40-year average of 66 F. On the day the floods hit Ordu, the local ambient temperature stood at 72 F with the water in the Black Sea at 82 F. Warmer water sends more vapor into the atmosphere above seas and oceans, producing rain. When that vapor meets cool air on the sea-facing side of eastern Turkey’s Pontic Mountains, heavy downpours occur.
That’s bad news for global confectionery brands that depend on hazelnut-based chocolate products, and for millions of consumers who love the flavor. Italian confectionery giant Ferrero Group depends on Turkey for 80 percent of its hazelnuts — 47,500 tons in 2017 — an essential ingredient for the company’s popular Nutella spread.
The confectionery industry is undoubtedly concerned about the impacts of climate change.
Oliver Nieburg, Lumina Intelligence Sustainability
In 2018, Swiss chocolatier Lindt launched a hazelnut spread in Europe made of 40 percent hazelnuts from nuts sourced in Turkey and Italy. The same year, Mars Wrigley Confectionery launched Hazelnut Spread M&M’s in North America to meet growing demand. The imminent crisis is forcing some companies to adapt, either by embracing more ecologically friendly practices or by finding diversified sources of hazelnuts to lessen their dependence on Turkey.
“[Climate change] may cause great loss of hazelnut (and the tree) before harvest, based on the vulnerability of the production areas which are predominantly close to the sea level,” says Beyza Ustaoğlu, a faculty member of Sakarya University’s geography department.
The evidence suggests that the pattern of warming Black Sea waters is here to stay. A study published last year in the Journal of Geophysical Research: Oceans found that the temperature in the Black Sea’s intermediate layer rose by 1.26 F between 2005 and 2019. Though the report’s authors were cautious about drawing a direct link between changing water composition and extreme weather, storms are known to cause landslides and soil erosion.
The timing couldn’t be worse for confectionery firms. The global demand for hazelnuts is estimated to grow 10 percent annually. Ferrero, valued at $12 billion and the company behind iconic brands such as Ferrero Rocher, Nutella and Kinder Chocolate, is the king of the hazelnut confectionery market. World Nutella Day has taken place on Feb. 5 since 2007, while Chicago, New York and Dubai International Airport are just a few of the growing places to boast a Nutella Cafe. Ferrero buys a third of Turkey’s entire hazelnut harvest every year, even though it doesn’t own any farms there. In 2014, Ferrero acquired a local Turkish hazelnut company with a $500 million annual turnover.
With Ferrero investing around $5 billion in the American candy market in recent years, is it feeling the climate-change-induced heat? A Ferrero representative didn’t respond directly to OZY’s question but says that “in Turkey … we offer trainings that include Good Agricultural Practices (GAPs) that aim to make the best use of resources, while preserving the environment.”
Experts believe that’s something more major companies will need to be mindful of, in the face of changing weather patterns. “The confectionery industry is undoubtedly concerned about the impacts of climate change,” says Oliver Nieburg, an analyst at Lumina Intelligence Sustainability. But it isn’t easy. “Being further from the raw material inhibits a company’s capacity to provide climate-resistant planting materials, good agricultural practices training and to incentivize farm rehabilitation,” he adds.
And it’s not just major confectionery firms. Small stores across Europe that use hazelnut to flavor baked goods and ice creams might be even more vulnerable than the giants to price fluctuations caused by a supply shortage.
Some companies say they’re already taking action in eastern Turkey. Steven Fairbairn, head of external affairs at Olam Progida, Turkey’s second largest hazelnut exporter, says the firm is “implementing climate-mitigation practices in our hazelnut supply chains” to raise awareness, increase resilience of farms and enable farmers to adapt. The firm, he says, does “not foresee any imminent increased risk of flooding.”
To be sure, there will be good and bad years. Last year Turkey’s hazelnut harvest showed a significant recovery, increasing 300,000 tons over 2018. Meanwhile, Ferrero says it has planted 5 million hazelnut trees on its own farms in Argentina, Chile, Georgia, Serbia, South Africa and Australia — a move that will reduce its dependence on any one source. And figures show that Turkey’s producers are not the most efficient, meaning that better-managed, flood-ready farms, and orchards could lead to more stable production for Olam Progida, Ferrero and others.
That matters little, however, if hillside orchards are washed away and workers can’t get to the trees, as happened in August 2018. What’s more, while states in the Pacific Northwest such as Oregon are trying to grow market share that would reduce the global reliance on Turkey, they too face difficulties. There, the 2018 harvest fell short by more than 10 percent due to lower-than-expected productivity.
What this means for chocolate spread fans around the world is that climate change may be about to hit where they least expect it — their sweet tooth.
- Stephen Starr, OZY AuthorContact Stephen Starr