Hazelnuts: farmers shun Ferrero

Mundus-Agri: Ferrero has finally issued a bid. Prolonged rainfall has not only delayed the harvest but is also giving rise to concerns over quality. Autumn and winter will prove tough for Turkey’s hazelnut exporters.

Stolen income

Exporters, in fact, feel betrayed by their own government. The issue is that officials forced businesses to pay foreign currency earnings into the “Exchange Rate Protected TRY Term Deposit Account,” with state inspectors even visiting companies refusing to do so. Although initially promising bank loans with low-interest rates for the equivalent amount of the money placed in the deposit accounts, the government recently pulled the plug on this, leaving exporters to lose their income. Companies feel betrayed, and it is impossible for them to complain unless they want to risk being shut down.

On top of this, the government raised electricity and gas prices for industrial use by 50% last week. Official figures also suggest that inflation hit a 24-year high of 80.2% in August, but agreement is that actual figures range much higher. With inflation spiralling further out of control, prospects are tough for exporters, especially in winter. Not only do they have to pay for several imports in foreign currencies, such as for packaging or logistics, but demand is also exceptionally low. Many buyers in Europe still hold ample supplies of last year’s crop.

To make matters worse, president Erdoğan’s election campaign will gain momentum in winter, which will make it more challenging to deal with long-term contracts. Turkey will hold a general election on 18 June. Some exporters are already reporting drawbacks for the first and second quarters, and the situation is completely unpredictable after June.

Ferrero bid with little impact

Farmers are meanwhile still busy harvesting. Many could only start in September due to continuous rain as of mid-August. Suppliers agree that harvesting will continue through to the end of September. Although yields are satisfying, concerns are voiced over quality as the number of rotten kernels is higher than usual, and several nuts have already cracked themselves, leaving the kernels vulnerable to damage. As weather conditions are, fortunately, expected to improve in the next few days, aflatoxin should not become a big issue. Suppliers reckon that drying will be finished in around ten days.

Turkey’s inshell exports reached 338,439 mt worth USD 1.97 billion, which is in line with expectations. Prospects for this season are, however, far less encouraging. Although supplies will certainly improve in the next few weeks and demand is set to remain low, especially in Europe where buyers are confronted with an energy crisis, it is far from certain if and in how far prices will give way in Turkey as political and economic developments continue to disrupt normal market dynamics.