Hazelnut Plantations in Chile
In 2016, we were frankly optimistic about the excellent record price of USD 5 per kilo of hazelnuts. In 2017, the price paid has been more than USD 6 per kilo, for the Tonda di Giffoni, one of the varieties most appreciated by the buyer market.
The projections for the next 5 to 10 years indicate a steady increase of the value per kilo. This is explained by the great acceptance and growth of the buyer markets. However, as in all markets of agricultural production, there will be harvests that are better paid than others, depending on quality and supply, and on the success of producers in the different parts of the world where hazelnuts are grown, especially in Turkey, which continues to be the big supplier.
Projection of Hazelnut Plantations in Chile
The projection for Chile in 2020, if maintained without great variation, is that it would be the largest producer in the southern hemisphere, a great advantage because each season sees a producer enter the market at a time of the year when there is less competition. Globally, Chile is expected to be in third position after Italy, Turkey being the largest bidder.
So far, the great buying power is still Ferrero Rocher, especially for its most successful product, Nutella, which is sold in more than 90% of the supermarkets and grocery stores in Europe and America and continues to expand into markets in Africa and Asia.
As regards Chilean production, the Ferrero branch in Chile manages, that is to say, it produces a proportion of the hazelnuts and acquires by contract a great part of the local harvest, thus totalling 75% of the Chilean production.
To the extent that the local producers, who today sell on contract to Ferrero, become independent at the end of their contracts, it is expected that there will in the future be a greater supply from medium and small producers. This would boost the market and generate a better income for small producers of hazelnuts.
So far, the contracts and the high cost of skilled labour for the harvest, because it coincides with other local crops, have been big limitations. However, the low-cost technology of a combine harvester allows producers to look forward with great optimism.
Last month the Revista del Campo presented the harvester as follows: “It is mechanical equipment, but it must be operated by a person to fulfil its function. The tool, which promises to collect 90% of the hazelnuts in the first pass, aims to become a solution for all those producers who still harvest manually.”
A Closer Look at Hazelnuts
Hazelnuts are considered one of the healthiest fruits. They are marketed for consumption as a dried fruit, as well as for the production of oil, cream and butter. The world’s great houses of chocolatiers demand them as a primary ingredient in the development of new lines of premium chocolates, since they have a great measure of acceptance by the buyers, which guarantees success in sales of new lines of products.
Faced with such high expectations, we wanted to carry out further investigation with an agricultural investor in hazelnuts. The closest one to us is an investor who acquired his farm from GTSA Real Estate Brokers.
He kindly agreed to an interview, although he requested the withholding of his name and that of the estate. As per his wishes, we will name him only as Frank.
Frank is an American and made the decision to invest in agriculture, along with his family. After a thorough study of the market, he located the best place to invest, for the climate, land and security that Chile offers for investments. The property they acquired, advised by Gateway, is situated in the region of Los Lagos, in southern Chile.
How did you get to Chile? Did you have friends in Chile? Did you know about the country?
Yes, we had been studying the country for almost two years, with several visits to the country to meet with people and view fields from Santiago to the south. We saw almost 30 fields before deciding on the one we bought.
– How many hectares are planted? What is the size of the project?
So far we have planted only half a farm. In the next two years, we expect to cover every square metre available. Our goal is to produce the best quality of hazelnuts possible, keeping the long-term costs low by mechanisation and sustainable irrigation.
– What made you decide to plant hazelnuts? What level of agricultural knowledge did you have in the beginning?
In truth, an article about hazelnuts and mechanisation interested us a lot. In addition, Chile is a country where there are many opportunities, and people welcome foreigners. But at the level of knowledge about agriculture, literally nothing. The first time we sat on a tractor was the one we bought. Therefore, we ourselves had little concrete knowledge, but many desires. In addition, we are very well advised on the technical and legal side.
– Do you live in Chile, plan to live here in the future, or is it just investment?
We live in Chile most of the time, in order to understand the industry.
– What profitability do you estimate the investment will have, once production begins?
We have no intention that this investment becomes just a hobby farm. The farm is a business that has to produce, albeit with the responsibility of providing a safe and interesting workplace for the workers. Farming is not like owning a bond with a specific yield; there are too many variables that can interfere. We try to think ahead and diminish the risk, but finally, the weather just isn’t in our control. We are laying a solid structure to be able to grow the best quality hazelnut.
– What have been the biggest difficulties you have faced? What has pleasantly surprised you?
Learning Spanish was my biggest challenge. I’m no longer 20 years old but the Chileans are very gracious and pretend to understand me. I was very thorough in my homework since everything was new to me – Chilean history, labour law, real estate transactions without title insurance etc. It helped tremendously having my daughter being totally fluent in the language.
If you are interested in knowing more about hazelnuts in Chile, we invite you to read our previous article.
English Editor: Audrey Van Ryn
Contact the Gateway to South America team to learn about the best investment opportunities in the region. The company is a benchmark for foreign investors wishing to invest in Argentina, Brazil, Chile, Paraguay, Peru and Uruguay, providing expert advice on property acquisition and disposal.