Issue 3 2016. June-July



Georgia is the fourth largest producer of hazelnut worldwide. Now its focus is on improving their quality and quantity.

Maia Edilashvili

Hazelnuts are a top Georgian export, outselling traditional products like wine and mineral water. But the sector has to tackle issues like supply and quality in order to take full advantage of the market's potential, according to specialists.

Booming demand

"This business is expanding," Davit Svanidze, founder and director of Natinvest, one of the 26 hazelnut processing plants in Georgia, told

The company was set up in 2011 as an exporter, initially renting out plants to process the product. Later, in 2015, Svanidze opened his own processing plant in Zugdidi, western Georgia, with the support of the Ministry of Agriculture.

Today he cooperates with around 50 farmers. With a processing capacity of 200 tons of hazelnut per month, the plant employs 90 persons during peak season, in August and September.

From August through mid-May, Natinvest sold approximately 1,500 tons of hazelnuts, mainly to Italy, the UK, Germany, Latvia, Estonia, Belgium, the Czech Republic, Russia and Kazakhstan.

Svanidze said that nearly 80 percent of Georgian hazelnut exporters work through international traders.

"We have to send our product to whichever country they request, depending on market demand," he explained. England and Italy, he noted, have been the most welcoming markets for his business during this latest season.

In 2014, the latest year for which full statistics are available, Georgia's hazelnut yield was 37,400 tons, larger - in terms of weight - than all other Georgian crops other than grapes, apples and tangerines.

"Of course, the hazelnut industry has good potential in Georgia," Rati Kochlamazashvili, a senior researcher at International School of Economics at Tbilisi State University (ISET), told "We are in the top five producers [worldwide], holding as much as a 5% share of the international market and taking the third place in terms of hazelnut plantations, with only Turkey and Italy being ahead. And there is a possibility for Georgia to increase its share."

Building a better business

To help farmers and exporters tap into the full potential of Georgia's hazelnut production, the European Neighbourhood Programme for Agriculture and Rural Development (ENPARD) is helping increase the capacity and efficiency of the players involved in the sector.

Launched in 2013, with an allocation of 102 million euro so far, ENPARD works to reinvigorate the agriculture and the rural sector thorough fostering cooperation between farmers, the government and civil society.

The ENPARD improves farmers' know-how through consultations and local information centers, and also strengthens cooperation among smallholder farmers to increase productivity and reach economies of scale.

The Georgian government is trying to help the sector, according to Nana Chinchilakashvili, Deputy Head of the Public Relations Department at the Ministry of Agriculture.

The ministry's scientific-research center has conducted a number of training sessions in hazelnut growing municipalities throughout Georgia and has handed out information leaflets, in order to strengthen knowledge of hazelnut growers and exporters.

"State co-financing schemes were developed, allowing farmers to expand their business, launch new plantations or replace old, less productive hazelnut varieties with new, high-yielding ones. With the assistance of the government numerous hazelnut processing plants and cooperatives were set up," the ministry said in emailed comments.

In addition, Georgia's hazelnut industry celebrated the launch of a new, Georgia Hazelnut Improvement Project (G-HIP) in May. The five-year project is a public-private alliance between USAID, Ferrero and CNFA (Cultivating New Frontiers in Agriculture), a non-profit organization head quartered in Washington, D.C. and Brussels.

Experts working with the project say one of the challenges to the quality of Georgian hazelnuts is the pay system: many farmers in Georgia have traditionally been paid based on the weight of their harvest. As a result, farmers attempted to harvest their crop early when the hazelnuts are moist and heavier in weight, which is detrimental to the hazelnuts' quality. The goal, according to CNFA's webpage, is that by the time the project ends in 2020, there will be two sustainable associations that assist growers and processors in exporting high quality, dried, traceable hazelnuts that sell at a premium to international buyers.

Competing with Turkey

These measures could also help Georgia compete with Turkey, the largest player in the international hazelnut market. Turkey holds a 68 percent share of the world's hazelnut supply and, as the leading producer, it sets the rules of the game, according to specialists. It's hard to compete with Turkey for a number of reasons, economists believe, particularly considering its high productivity and the proportional volume of good quality kernel remaining after the hazelnut shell is removed. "In Georgia this index is 35-40 percent, while in Turkey it's 50 percent," Kochlamazashvili noted.Some of the assistance from donors, the Georgian government and the ENPARD, is starting to help, according to Mamuka Beriashvili, the owner of three hazelnut production plants. Beriashvili is particularly impressed with the hazelnut export procedures to Europe, which have become easier. "Previously [farmers were issued] a temporary license but now it is a permanent EURO-1 certificate, which is issued in Georgia," the ENPARD's webpage ( quoted him. In addition, hazelnut production enjoys VAT-free status in Georgia, unlike Turkey, which makes Georgian hazelnuts more competitive on global markets.

"Our biggest competitor Turkey is paying three percent export tax so they lose in terms of price policy," Beriashvili said. Malkhaz Khuntsaria of Soplis Imedi (Hope of the Village), a hazelnut producing cooperative funded by ENPARD in Senaki municipality, in western Georgia, told that the future of the sector looks promising. "There is a deficit of around 25% annually in European markets," he noted.