The Ferrero Group is selling its $70 million hazelnut development near Narrandera amid claims that the region’s climate played a key factor in its decision.

The move to not proceed with its NSW project is considered a major blow to the establishment of a commercial-scale hazelnut growing industry in Australia.

The Group has listed adjoining Riverina farms five years after planting some million hazelnut trees over part of it. The Italy-based group behind Nutella abandoned the operation, razed the shrubs and offered the 2665 hectare Narrandera site as a vacant agricultural asset.

With 11,361 megalitres of water entitlements, offices, sheds, residential accommodation and significant infrastructure, it is said to be worth more than $80 million. Purchased as an import replacement opportunity, it had been hoped the Narrandera property could yield some 5000 tons of kernel hazelnuts a year.

The group stated: “This is a unique opportunity in an attractive agricultural region that is appealing to corporate and institutional investors —particularly for large scale development.”

Ferrero Group, founded in Italy in 1946, is one of the world’s largest chocolate producers. Ferrero Rocher, Nutella and Kinder Surprise are among its most popular products.

Its departure comes five years after its subsidiary Agri Australis celebrated planting its one millionth hazelnut tree at the farm on Dellapool Road in 2018.

“Ferrero Group confirms it will discontinue its pilot program trialling the production of hazelnuts in the Riverina region,” a company spokesperson said.

“Ferrero has made considerable effort in making the project viable, so this decision has not been made lightly.

“Given recent adverse weather conditions, the pilot study found that the region’s climate in the long term is not conducive to hazelnut farming. Over the duration of the 10-year project, hazelnut yields have fallen below expectations, making the project no longer commercially viable.”

The multinational company acquired the 2600-hectare property from local potato farmers the Menegazzos in 2011.

Property agents at Commercial Real Estate Services (CRES) are managing the sale of the Dellapool development, which includes 11,361 megalitres of water entitlements and it is expected to be sold for more than $80 million.

About a million hazelnut trees are being uprooted and removed to provide a clean slate for future developments at considerable cost to the company.

The closure comes despite the fact that five years ago Agri Australis manager Claudio Cavallini reportedly said this region was well suited to nut growing.

However hazelnut trees are not native to Australia, require a cool climate and are stressed by temperatures higher than 35 degrees. On average, there are 23 days over the summer months when this maximum temperature is exceeded in Narrandera.

It is said that it takes 4769 litres of water to produce just one pound of hazelnuts and currently low water allocations for irrigation farmers on the Murrumbidgee River and intense competition for scare water entitlements from the growing number of large foreign corporations investing in the region may result in even more companies withdrawing from the Riverina in the coming dry years.

A big feature of Dellapool is the availability of water on the property.

The $70 million investment had included planting one million hazelnut trees by 2018. Ferrero hoped to harvest around 5000 tonnes of hazelnuts from its NSW operations by 2022, reducing its reliance on external growers for nuts for its confectionary.

Hazelnut trees produce their first crop after about three years, but it can take 10- 15 years to reach full maturity.

Abandonment of its this Riverina project comes amid a global shortage of hazelnuts due to low rainfall and insect problems in Turkey, which supplies around three-quarters of the world’s hazelnuts.

The Dellapool aggregation – owned by Ferrero-affiliated Waratah Land – is being marketed by CBRE’s John Harrison, James Auty and Matt Childs.

A key ingredient of the offering is 11,361 megaltires of groundwater and surface water entitlements. There’s also as a large on-farm water storage dam of about 500 megalitres plus extensive structural developments including offices, residential accommodation and multipurpose agricultural shedding.

It is expected to appeal to corporate and institutional investors seeking large-scale development assets with extensive river frontage and significant water entitlements.

The Dellapool aggregation has been extensively developed with state-of-the-art irrigation infrastructure, enabling flexibility in the potential production of various permanent horticulture plantings. 

This article appeared in the Narrandera Argus, 2 November 2023.