Georgia’s Rising Labour Costs Cast a Shadow on Hazelnut Supply

Georgia’s hazelnut sector is under mounting cost pressure as seasonal wages have nearly tripled within a few years, threatening future supply and export growth even as international prices remain relatively stable. The global hazelnut market enters Q4 2026 with firm yet not spiking prices, but underlying regional dynamics are diverging. In Georgia, soaring labour costs squeeze thousands of smallholders and risk undermining orchard care and harvesting. In contrast, Türkiye and other origins are heading into the season with comfortable supply expectations and steady demand from confectionery and ingredient buyers. Buyers currently enjoy stable quotations, but medium‑term supply risks from Georgia could tighten the balance, especially for kernel qualities where the country has been a growing player.

Prices

Recent indicative quotes show a broadly steady to slightly softer hazelnut price environment:

• Türkiye, organic hazelnut kernels 11–13 mm, FOB İzmir: 19.30 EUR (down marginally from 19.35 EUR).
• Türkiye, organic hazelnut kernels 13–15 mm, FOB İzmir: 18.35 EUR (unchanged in recent updates).
• Türkiye, organic blanched roasted kernels, FOB İzmir: 22.85 EUR (virtually flat month-on-month).
• Türkiye, organic roasted chopped hazelnuts 2–4 mm, FOB İzmir: 22.41 EUR (sideways in recent weeks).
• Georgia origin, conventional kernels 11–13 mm, FCA Warsaw: 8.35 EUR (slightly below prior 8.40 EUR).
• Georgia origin, natural kernels 13–15 mm, FCA Warsaw: 9.90 EUR (down from 10.00 EUR), while 15+ mm are at 10.05 EUR.

Price differentials continue to reflect origin risk perceptions and quality positioning: Turkish organic kernels command a clear premium over Georgian conventional material, even as Georgia battles significantly higher production costs.

Supply & Demand

Georgia’s production structure remains highly fragmented: around 65% of hazelnut holdings are smaller than one hectare, leaving growers extremely sensitive to cost shocks. Daily seasonal wages have surged from roughly GEL 35 to about GEL 100 within four to five years, with some labourers seeking even higher rates. This has already led more than 20% of growers to skip essential orchard operations, and some farmers have not harvested at all when nut values failed to cover labour.

Historically, Georgia lifted exports from around 30,000 tonnes to approximately 55,000 tonnes thanks to coordinated public–private action. That achievement is now at risk. If labour shortages persist and costs remain inflated, orchard neglect, lower input use and unharvested nuts could gradually erode yields and cultivated area, reducing Georgia’s contribution to global kernel supply over the next seasons.

At the global level, Türkiye still dominates hazelnut production and exports, and recent crop assessments point to ample supply for 2026/27 despite internal debate over exact volumes. This, along with growing output from emerging producers, is cushioning the market against immediate tightness and keeping demand from confectionery and snack industries largely well covered in the near term.

Fundamentals & Cost Dynamics

In Georgia, the rapid wage escalation is the central fundamental shift. Labour now absorbs a far larger share of production costs, especially for labour‑intensive orchard management and manual harvesting. For many smallholders, expected returns no longer justify full maintenance, resulting in under‑pruned, under‑fertilized orchards and fewer passes for pest and disease control. These choices save cash in the short run but structurally weaken productivity and nut quality.

Industry sources indicate that some growers have consciously skipped harvest because the value of unshelled hazelnuts in the local market did not cover the cost of picking. This behaviour is a clear signal that farmgate prices and cost structures are misaligned. If unresolved, it may trigger further exits from hazelnut cultivation, compounding medium‑term supply risk from Georgia even if current export volumes remain relatively stable in the short run.

By contrast, Turkish producers benefit from scale, more mechanization in some areas and stronger institutional support, moderating unit costs despite higher energy and input prices. While production costs have also risen there, the squeeze appears less acute than in Georgia, limiting immediate upward pressure on export quotations.

Weather & Crop Outlook

No major weather shocks have been reported for Georgian orchards in recent days, leaving labour and cost factors as the dominant near‑term risk to supply. However, lower‑than‑optimal orchard care ahead of winter and the 2027 flowering period could magnify the impact of any adverse weather that does occur, from frost to excessive rainfall in spring.

In Türkiye, recent reports point to generally adequate conditions and expectations of a sizeable 2026/27 crop, reinforcing the view of comfortable global availability. For now, weather is not the primary driver of price direction; structural cost and policy issues in key origins are more important for the medium‑term balance.

Trading Outlook

• Buyers (industry, roasters, chocolate makers): Current price stability for Turkish kernels and processed organic hazelnuts offers an opportunity to extend coverage modestly into 2027, especially for higher‑value grades, while monitoring Georgia’s cost‑driven supply risks.
• Origin sellers (Georgia): With farm margins under pressure, focus on quality differentiation and potential value‑added processing, rather than volume growth, to defend profitability. Collective bargaining for labour and support schemes will be key.
• Traders: Maintain a neutral to slightly bullish medium‑term stance on Georgian origin, as sustained under‑investment could tighten supply of quality kernels and widen premiums versus other origins in future seasons.

3‑Day Price Direction Snapshot

• FOB İzmir (organic Turkish kernels & processed hazelnuts): Sideways bias over the next three days, with quotations holding near current EUR levels amid balanced nearby supply and demand.
• FCA Warsaw (Georgian conventional kernels): Slight downside or flat tone in the very short term, as cost pressures have not yet translated into tighter physical availability, but underlying bullish risk builds further out.