Italian confectionery company, the Ferrero Group is giving up on a $70 million hazelnut farm near Narrandera in southern NSW, saying the long-term climate is unsuitable.
Key points:
- The Ferrero Group says its Narrandera hazelnut farm is not commercially viable
- The 2,600-hectare property is now expected to sell for more than $80 million
- Australia imports more hazelnuts than it grows
The Australian arm of the company, which produces brands such as Ferrero Rocher, Nutella and Kinder Surprise, will remove the million hazelnut trees it has planted at the farm since 2013.
In a statement, Ferrero said the decision to discontinue the farm had not been made lightly.
“Given recent adverse weather conditions, the pilot study found that the region’s climate in the long term is not conducive to hazelnut farming,” it said.
“Over the duration of the 10-year project hazelnut yields have fallen below expectations making the project, unfortunately, no longer commercially viable.”
Blow for industry
When the $70 million venture was announced a decade ago it was lauded as a shot in the arm for the Australian hazelnut industry that would encourage more local production.
Australia imports 3,500 tonnes of hazelnuts a year, dwarfing the almost 1,000t grown by about 60 Australian growers, mostly in cooler climates in Tasmania, the Adelaide Hills in SA, Orange in NSW, and north-east Victoria.
Ferrero had hoped to produce about 5,000t from its operation at Narrandera.
Hazelnut Growers of Australia executive officer Trevor Ranford said he was disappointed that trees only now coming into full production were being removed.
“It was working, the trees that were in the ground were producing nuts and they had the ability to be harvested,” he said.
“Seeing that disappear is frustrating … but the decisions are being made by people who own the business outside of Australia and they’re making those decisions [based] on return on investment and I suppose the current climatic or environmental and financial situations.”
Mr Ranford said new varieties brought into Australia by Ferrero that were suited to confectionary had been distributed to other Australian growers.
He said he hoped that despite Ferrero’s decision to stop growing nuts locally, there would be opportunity for Australian hazelnuts to be used in their products.
“I think it’s important that we continue to support them as a company in the sense that, as the other producers increase, then maybe their volumes can be utilised by Ferrero in their processing facilities,” he said.
Mr Ranford said the failed venture also highlighted a need for varieties that were more suitable for warmer climates in Australia.
“Blue sky type research [is required], to look at varieties that might in the future be better suited to warmer, drier climate situations,” he said.
Large scale irrigation a ‘rare offering’
The 2,600-hectare property with more than 11,000 megalitres of water entitlements has been listed for sale.
Selling agent and director with CBRE Agribusiness, Matt Childs, said large-scale irrigated horticulture operations like it were rare and the fact that the trees were being removed would make it more attractive.
“Buyers would need to go and remove those trees themselves, which is a significant investment and also the amount of time to prepare the land so that it’s ready for that new planting,” he said.
“This is all being fast tracked and … the land has been reverted from hazelnut trees back to a black irrigated platform.”
He said he expected it would now fetch more than $80 million.
“There’s parts of the agribusiness market at the moment that are struggling, especially around livestock,” he said.
“The institutional and corporate space around horticulture, and particularly with strong and reliable irrigation and water entitlements, that part of the market still has quite a bit of strength.”
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