Can Georgia’s nut industry crack the global market?

For Georgians, the country’s nut production is a source of national pride – and a major source of income, particularly on the back of growing global demand and rising prices. Georgian walnut export volumes were up nearly 100% in 2024, with prices up 36% over the last six months at a value of $84.4 million. Hazelnut exports rose in price by 37% in the second half of 2024 to reach a value of $73.3 million. And almond growers, though newer to Georgia, are starting to see the fruits of their labors as thousands of hectares of new orchards are replacing imports – which were down 49% in 2024.

Reminiscences around the supra table always agree that Georgian almonds are sweeter than those from world leader California, the walnuts oilier than giant grower China’s, and hazelnuts rounder and better than market leader Turkey’s. Proof of the latter being the increasing EU demand! Then, adding to the crops’ elan right now, there are expanding EU orders and rising prices, bringing a little prosperity to the lives of Georgia’s many tens of thousands of growers.

While a tiny nut producer on the world scale, Georgia could grow and sell a lot more than it does. Globally, demand for nuts is rising. And, for a wide range of reasons, supply has become unreliable and may continue to be so. Currently climate change is doing its worst across the EU and U.S. In mega-nut-producer California’s orchards (70-90% of walnut productions are normally exported), there are highly concerning reports of collapses in the bee colonies so vital for pollination. Europe has also suffered badly from adverse weather, and imports have soared.

Yet, despite the current success stories, Georgia’s nut industry faces notable challenges. Its major mentor, USAID, which has for years been helping to raise yields and in improving growing and processing standards, combating the stink-bug invasions, and introducing new buyers, is most likely ending its engagement. In Georgia, USAID has helped educate farmers to meet Western market standards. As a result of its demise, EU and U.S. investment plans, aimed at boosting Georgian production to meet increasing international demand, are uncertain. Moreover, the global nut industry is waiting to see what will happen as trade tariffs rise across the globe.

Consumers are mostly oblivious to the tumultuous background in the world of nut trading caused by the extreme weather that has resulted from climate change and tariffs. Growth in demand is put by most analysts at a steady growth of 6% per year. In value, the nut market globally is currently worth around $70 billion annually, according to leading German research group Statista. Demand is being driven by healthier eating trends, with a widening range of nut products (from milks to confectionery) launching on the market, and modernization and technology are increasing production. Almonds and walnuts are the most popular nuts internationally, accounting for 27% and 22%, respectively, of the total, according to the International Nut and Dried Fruit Council.

Walnuts

This nut is extremely important for Georgia, its place in the local cuisine making Georgians the largest consumers in the world – at 1.04 kilograms per year, they eat eight times more than the global average. Georgia is a net importer of walnuts, but higher world prices last year enabled local producers to sell their top-quality production abroad, satisfying local demand with the help of cheaper Uzbek, Chinese, and Kyrgyz imports. Georgian walnut export prices have increased by 36% over the last six months and export volumes rose by 18% to $84.4 million, according to the Almond & Walnut Producers Association. Georgian walnuts are being sold to Italy, Spain, Germany, France, Poland, Czechia, Armenia, China, Turkey, Israel, Russia, and Ukraine. For 2024 as a whole, Georgian walnut export volumes were up by almost 100%.

Walnut production began to gain in commercial importance in Georgia only in 2018, reflecting the large increase in plantings in 2014, according to the latest Galt & Taggart Nut Report. “As for Georgia, our country is a net importer of walnuts – 88.7% of walnut imports to Georgia come from Ukraine, Kyrgyzstan, Uzbekistan, and China. Imported walnuts are considered of poor quality on the market. Chinese walnuts have become significantly cheaper due to increased production in China,” the Nut Report states.

There is a lot of scope for improvement in Georgian walnut farming, the Nut Report comments, with yields at only 1.96 tons per hectare in 2023 compared to the world average of 3.1 tons. True, the low yield reflects to some extent the fact that many orchards have yet to reach full fruiting, which happens when the trees are eight years old.

A new heavier-yielding walnut variety, Chandler, was introduced in 2015 under the government “Plant the Future” program. However, the Nut Report points out, this has been a disappointment, largely due to lack of knowledge among farmers, insufficient orchard attention, and incorrect storage. The Nut Report states that many producers were “planting seedlings at the wrong time, in the wrong conditions,” and failing to care for them properly.

While most of the walnut orchards have yet to reach full maturity, by 2030, production is forecasted to reach 4.9 million kilograms.

Hazelnuts

With centuries of growing history behind it, Georgia has enjoyed a world market share of around 3%, despite being hampered by low orchard productivity. Hazelnut exports rose in price by 37% in the second half of 2024, according to the Ministry of Environmental Protection and Agriculture of Georgia, to reach a total value of $73.3 million, and volumes rose by 17% – going mainly to EU countries including Italy, Germany, Spain, France, Poland, Czechia, and Lithuania. The world’s largest consumers of hazelnuts are the European chocolate confectionery producers, who are also the major buyers of Georgia’s exports.

Given its importance to the rural economy, hazelnut farming has received a lot of support from donor organizations, the EU, and Italian confectionery giant Ferrero Rocher (which has a subsidiary, AgriGeorgia, that runs local farms) – an important customer for Georgian hazelnuts. This has been aimed at improving the hazelnut value chain and the quality of Georgian hazelnuts.

Historically, Georgian nut orchards covered far more ground than today and played an even more important part in the rural economy as an export crop. Records even as far back as the 6th century BCE show the local population grew wild hazelnuts in their gardens, and horticulturalists have recorded the development of at least seven different varieties of nut, adapted to different regions of Georgia. Even early in the last century, growers sent large quantities of hazelnuts to Europe. Georgian producers have a timing advantage, with their crops ripe for picking several weeks earlier than those of the large U.S. producers.

Native grades in Georgia have a number of advantages, says producer Geonuts:

● The powerful root system of local varieties of hazelnut in sufficient quantities draws all the necessary components from the soil, and therefore, in Georgia, chemical fertilizers are almost never applied.
● Local varieties do not suffer as heavily from diseases, and therefore, in Georgia, pesticides are used lightly.

But today, Georgian small hazelnut farms face a number of challenges in increasing their production, and the mentor that had been helping improve the volume and quality of the crops, USAID, is expected to end its engagement. The development agency had been supporting efforts to raise the level of arboriculture, training farmers to combat the ravages of the stink bug, spraying regularly, and attending to the proper drying of the nuts to avoid infestation, mold, and mildew. The result has been a fall in rejection of export consignments in the EU as training overcame local attitudes that nature alone would provide.

Georgia’s hazelnut producers might struggle without U.S. support. As Levan Kardava, head of the Hazelnut Processors and Exporters Association, noted at a press conference in February, USAID has been involved in Georgia’s hazelnut industry for ten years now as “the main funder” and helped tackle the industry’s major stink bug threat. “Also very important was the construction of hazelnut drying centers,” which were created with co-financing from the state, he said, adding that it would be “hard to find replacements.”

Given hazelnut orchard importance in social as well as economic terms, in 2025, the government will provide 23 million GEL in subsidies to support hazelnut production, up slightly on last year’s payments. This is a valuable crop for the country, with 17.7 million tons of hazelnuts, worth $106 million, sold last year – a 16% rise in value and 6% increase in quantity, according to the national statistics service. This money has, however, to go a long way. The Rural Development Agency said last year that its subsidy program covered 95,000 farmers.

If the hazelnut orchard yield, currently around 0.62 tons per hectare, was raised to 1 ton per hectare, production could reach 25 million kilograms by 2030, says the Nut Report. The reasons for the recent low yields are “increased precipitation at harvest time…improper care of seedlings…and lack of fertilizer,” plus the invasions of stink bugs were inadequately countered, with pesticides applied with varying effectiveness.

While published world nut prices are dictated by international supply and demand, these are benchmark numbers set by the market leaders. The price Georgian growers achieve is a discount or premium on this, dictated by the quality of their produce.

However, the picture in world nut markets is not always clear, as is currently the situation with hazelnuts, where trade is dominated by Turkey. Current pricing tactics of the Turkish government’s agent in the market, the Turkish Grain Board, have left both buyers and sellers confused and created conditions, brokers Commodity Board Europe says, are “ripe for speculators!” So, with the help of these and other shenanigans, prices have been rising.

Almonds

A new market to Georgia, its market share is very low. The U.S. produces three-quarters of the world’s almonds, mainly in California, although this is now beset by serious climate change problems, including a lack of water, and orchards are being abandoned. So, the scope for Georgia, as a new producer, to win international orders is excellent, and there is every attraction as this is one of the highest-priced nuts. One current success story for Georgian almonds is the extent to which the thousands of hectares of new orchards are replacing imports. As of 2023, the yield, given that the trees were young, was on average 0.52 tons per hectare against the world average of 1.54 tons per hectare. However, the Georgian yield ranged from 0.5 to 5 tons, which shows the prospects when care is taken.

Major groups have appeared as producers – Adjara Group has planted 2,300 hectares of almonds on its Kakheti organic farm, another local group Nuts Incorporated has 700 hectares, Indian-owned Nuts Cultivated has 500 hectares, and there are several more. They, and the many smaller new growers, are all focusing mainly on the export markets. Almonds are only gradually increasing in popularity domestically, with cost being a major factor.

In 2024, according Niko Nikoladze of the Supervisory Board of the Almond and Walnut Producers Association, Georgia’s imports of shelled almonds decreased by 49%, and almond kernels by 25%. Until recently, local prices were above world levels, but increasing supply has brought them down and at the same time increased demand.

“This year, the harvest will meet local demand; we will need to compensate only a little with imports. Next year, the local market will be fully satisfied,” says Nikoladze. However, he adds, it will be another couple of years before the new orchards achieve their full potential for export – almond trees start to fruit when two years old, but the nuts do not appear in large numbers until they are five or six.

Overall, therefore, the opportunity for Georgia to increase all varieties of its nut business is there – world demand is rising and Georgian yields have enormous scope for improvement. However, pitted against such strengths as its climate, soil conditions, free trade agreements with the EU, China and the UAE are a long list of weaknesses – in particular, farmers’ lack of knowledge, poor processing lines and storage facilities, and a lack of access to finance.

Plus, says the founder of Georgian walnut producer, Ana Kevhishvili, the pace of planting new orchards has slowed down significantly. And now the industry, which is facing a future of international market gyrations, will be forced to become master of its own destiny with little outside help.