Why has export of hazelnuts from Azerbaijan to Europe dropped sharply?

Hazelnut growing occupies an important place in Azerbaijan’s export of non-oil products. Azerbaijan exports 95% of the harvested products, and 5% is consumed in the domestic market. Over the past 10 years, global production of this product has grown by 4%, and prices by 45%.

Report spoke with the chairman of the Association of Hazelnut Producers and Exporters, Ismayil Orucov, about the current situation in the country.

He noted that 45,000 tons of hazelnuts were harvested in the country in 2020: “But this year harvest is expected to increase by 35-40% in annual comparison, since the yield was higher than last year”.

Domestic sales are down sharply compared to the years leading up to the pandemic, he said: "Due to the decline in tourists, hotels and restaurants cannot operate at full capacity, and this is also affecting our sales."

Orucov stressed that at present, the products exported to the European Union from Azerbaijan and Turkey are subject to more stringent checks than last year due to the growth of pest infestation of products.

According to the State Customs Committee, over 10 months of this year, Azerbaijan exported 13,400 tons of peeled hazelnuts worth $77 million. This is $10 million (11.4%) or 800 tons (5.6%) less than in the same period last year.

“Our main export market is European countries, but sales in the EU have been low this year. Our main competitor in Europe is Turkey. The sharp drop in the lira against the US dollar has allowed Turkish exporters to export more and cheaper to Europe. It also contributed to the decline in our exports to Europe.”

He noted that the export of prepackaged hazelnuts to Europe is uncompetitive, so domestic producers are forced to supply raw products: “Since 2015, Georgia has been exporting raw nuts to Europe under the Association Agreement. In Azerbaijan, a 3.2% tax is applied to the export of raw products. And on the final product of Azerbaijani hazelnut, a tax of 11.2% is applied. Therefore, our end products are not competitive, we have to export only raw products.”

He commented on the export of Azerbaijani hazelnuts to Russia: “The export of hazelnuts from the North Caucasus has sharply increased on the Russian market, where production volumes amounted to 13,000 tons this year. They also competed with our products. In addition, there is a customs agreement between Armenia and Russia, and Georgian exporters, taking advantage of this, supply hazelnuts to Russia through Armenia and organize their sale at a lower price.”

The chairman of the association noted that 70% of nuts in the world are processed by Germany and Italy, therefore, Azerbaijani producers should try to strengthen their positions in these two markets.

Currently, the area of hazelnut orchards exceeds 79,500 hectares.

For 9 months of 2021, 9,367.04 tons of shelled hazelnuts were sold abroad in the amount of 55.923 million US dollars, which in value terms is 17%, and in quantitative terms - 12.57% less than in the same period in 2020.