Hazelnut shortage has Nutella fans running scared of price spike

The weather has been nuts this year. Between the ice storms and the devastating droughts -- and let’s not forget the polar vortex -- we’ve practically all had to become amateur meteorologists just to step outside the door.

This isn’t just a North American problem. Climate destabilization is a global issue costing billions in damaged food crops and insurance claims every year.

As if that wasn’t bad enough, now we learn the price of Nutella is probably going up.

Thanks to an unseasonably chilly spring in Turkey, this year’s supply of hazelnuts into the global market has been dramatically cut.

Although it’s still early on in the harvest, Turkish farmers, who supply about 70 per cent of world’s hazelnuts, are reporting a total yield of about 517,000 tonnes.

Initial expectations put the figure closer to 800,000 tonnes – a yield that, had it come to pass, would have seen hazelnut prices decrease.

Alas, the opposite is proving true. Michael Stevens of Freeworld Trading, an Edinburgh-based commodity-trading firm, told Yahoo Canada Finance that prices have already spiked from 6,500 Turkish lira (C$3,300) per tonne in early March to 10,250 lira (C$5,200) per tonne in late May.

Stevens said the situation will likely result in some sellers defaulting on contracts with global buyers.

“The prices have jumped so much, for anyone who bought back in February, there is a good chance they are not going to get the stuff,” he said.

Not just hazelnuts

Hold on, though, it doesn’t stop there. As long as you are heading in to the stores to stock up on your favourite hazelnut-flavoured treats, from Ferrero Rocher chocolates to Frangelico liquor, you may want to save room in your cart for anything almond-based.

Yes, almonds, too, are having a rough go of it from Mother Nature this year, and we, the consumer, will likely start to feel her wrath on our grocery bills by the holiday season.

Turkey may produce the lion’s share of hazelnuts (with budding competition coming from Oregon, Italy, Spain and Chile), but California is the undisputed king when it comes to almonds. Tallied up, about 90 per cent of the world’s almonds come from the Golden State.

It’s a fact that hasn’t been lost on California almond tree growers who, said Stevens, are “just really squeezing the market.”

Growers are standing firmly together in their refusal to sell any of their crop right now, claiming the severe drought that continues to plague the state has ravished the expected yield.

“The crop is starting to come in now,” said Stevens. “Most of the guys have 5 or 6 per cent of the crop in and they are all saying it looks terrible.”

That’s a big disappointment to almond buyers, from chocolate-makers such as Nestle to all those healthy almond-butter churners, who were already anticipating a bear market this year. Reports in the spring indicated a huge harvest in the range of 2.1 billion pounds. That, combined with Russia’s recent decision to ban western food imports for a year, and almond prices were anticipated to fall for the first time in about a decade.

Russia, it turns out, is a huge consumer of almonds, importing about 50 million tonnes of the little nut every year, according to Stevens. The wide-ranging food ban was imposed by Russian leadership in angry response to sanctions by the west following the downing of a Malasian Airlines flight over Ukraine in July. All 298 passengers and crew onboard were killed.

In California, meanwhile, the farmers aren’t budging.

“They don’t want to sell anything. You cannot get any offers from them. They are just saying they want to wait,” Stevens said.