Hard nut to crack: The quest to make Nutella a bit more Canadian

Hazelnuts are on the road to becoming a big cash crop in Ontario, thanks, in part, to an Italian company called Ferrero, the maker of the chocolate and hazelnut spread Nutella.

When the Ontario Hazelnut Association held its annual general meeting last month, things were a little busier than usual, with close to 200 participants.

What used to be a tiny cottage industry only a few years ago is changing quickly.

Adam Dale, a professor emeritus in the department of plant agriculture at the University of Guelph, has been working on boosting hazelnut production in Ontario for more than a decade.

"When we heard that Ferrero, who make Ferrero Rocher and Nutella, were building a plant here in Ontario in 2006, we looked at it and said, 'Well, we ought to develop an industry in Ontario to supply them with hazelnuts.'"

Ontario produces a few hundred tonnes of hazelnuts a year, a mere drop in the bucket in the global picture: worldwide production is just short of 900,000 tonnes.

But it is up dramatically from a decade ago.

Ferrero, which has plants around the world, buys up about a quarter of the global crop. For the most part, the plant in Ontario buys ingredients from outside the country.

Most of the world's hazelnuts are grown near the Mediterranean in Turkey, Italy and Spain. The U.S. is also a major producer, with almost all of the growers based in Oregon.

But Ferrero committed to buying local if more nuts were actually available.

That's where Dale came in to answer some fundamental questions in 2008.

"We needed to determine which would be suitable varieties. Secondly, we needed to find out how we could rapidly propagate trees. And third, we needed to get a handle on the economics."

Dale said he and his colleagues have been able to isolate existing varieties that do well in Ontario, despite cold winters. 

Propagation, planting and maturing can take a few years, he said.

"The big problem is the upfront cost of planting the trees," he said.

"You're putting 250 trees per acre in the ground and $10 or $15 a tree. You've got to pay for it and you're not going to get a crop until year four, and that's going to be a tiny crop. You're not going to get a full crop until year seven. That's a big investment upfront."

And that's the biggest hurdle: convincing corn or soybean farmers to tear it all out and plant nut trees.

The provincial government provides interest-free loans to farmers who want to convert to producing nuts.

In the end, it can pay off. Crop yields could mean a couple thousand dollars per acre, which is higher than average in agriculture. 

Ferrero says it's in Ontario to stay, unlike some other multinationals — Heinz pulled out of the province's tomato-growing heartland five years ago, leaving tomato growers scrambling to find new markets until the ketchup plant was bought by another manufacturer.