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article imageIf you have a hard time finding Nutella, blame it on the weather

By Karen Graham     Aug 20, 2014 in Environment
Fans of hazelnut-infused products might want to think about stocking up. Turkey, which supplies 70 percent of the globe's hazelnuts, was hit with severe frosts and hail storms in March, just at the time hazelnut tree flowers were flowering.
The price of hazelnuts has risen by 60 percent after Turkey's devastating crop losses in March of this year. Even though the full extent of the damage is not known, the Turkish industry is expecting the hazelnut harvest could be down to 540,000 tons, against pre-frost estimates of over 800,000 tons.
The poor harvest in Turkey has boosted the price of hazelnuts to $10,500 a ton from $4,000 a ton last year. Chocolate and snack food businesses like Cadbury, Nutella's Ferrero group and many others are already trying to deal with the price of chocolate, and now, another wrench has been thrown into the machinery of production quotas.
A view of a hazelnut field in Çamaş district of Ordu province  Turkey.
A view of a hazelnut field in Çamaş district of Ordu province, Turkey.
The biggest loser in this catastrophe is Ferrero group. Ferrero buys at least 25 percent of the globe's hazelnut crop, and relies on Turkey to supply the 50 hazelnuts that go into each 13 ounce jar of Nutella. Nutella is truly a global product, with factories in Canada, Russia, South America and Europe. Last year, Nutella had sales of $2.46 billion.
Last month, Ferrero bought the Turkish-based Oltan Group, the world's biggest grower and producer of hazelnuts. Many industry insiders think the acquisition of Oltan will provide a buffer for Ferrero. Oltan is located in the Black Sea coastal region where most of the losses have occurred. The precise impact to Ferrero may not be forthcoming because the company is very secretive of its business.
Hazelnut losses are not the only product important to the mixed nut, chocolate and snack candies industry. These industries have all been impacted with the loss of almond crops in California and coffee crops in Brazil. Another important ingredient that Ferrero uses in making Nutella is palm oil. The palm oil constitutes an astonishing 20 percent of the spread.
Sadly for Nutella, Girl Scout and Oreo cooky-makers, palm oil, a cheap and natural alternative to trans fats, is becoming more expensive and more difficult to find. Palm oil prices have risen 16 percent since January, when they hit $843 per ton. Again, weather has played a major part in supply and demand.
Oil palm fresh fruit bunches are still on the tree.
Oil palm fresh fruit bunches are still on the tree.
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In 2012, the U.S. imported a record 2.7 billion pounds of palm oil, mainly from Indonesia and Malaysia, where 85 percent of the world's palm oil comes from. These countries have had very little rain, with dry spells disrupting the growth of fresh fruit branches. It has actually become so bad that Indonesia has been battling forest and brush fires, and in Malaysia, they have begun rationing water in Riau Province after declaring a state of emergency.
Regardless of whether or not a consumer eats Nutella, Cadbury chocolate eggs or bunnies, Oreos or Girl Scout cookies, some of the ingredients discussed are going to be in something they buy at the grocery store. Because of the losses of many of these ingredients due to crop failures, consumers can expect prices to rise. Even more importantly is the reason why there were crop losses. Adverse weather conditions around the world are already affecting our food crops. Will it get worse? Maybe yes, and maybe, no.
More about Hazelnuts, Palm oil, Nutella, Turkey, frost and hail
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