27 October 2023

Chocolate maker abandons Riverina hazelnut tree development, blaming climate

| Oliver Jacques
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The Dellapool farm with a box of chocolates

The Dellapool property owned by Ferrero Group is advertised for sale. Photo: CBRE Agribusiness.

Italian chocolate maker Ferrero Group is selling its $70 million hazelnut development in the Riverina, citing the region’s climate as a key factor behind its decision.

The departure comes just five years after its subsidiary Agri Australis celebrated planting its one millionth hazelnut tree at the farm at Dellapool Road, near Narrandera, in 2018.

“Ferrero Group confirms it will discontinue its pilot program trialling the production of hazelnuts in the Riverina region of NSW,” a company spokesperson told Region. “Ferrero has made considerable effort in making the project viable, thus, 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, unfortunately, no longer commercially viable.”

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This “pilot program” has lasted more than a decade, with the multinational company first acquiring the 2600-hectare Riverina property from local potato farmers in 2011.

The 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 items.

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

It’s understood around a million hazelnut trees will need to be uprooted and removed to provide a clean slate for future developments, at considerable cost to the company.

In 2018, Agri Australis manager Claudio Cavallini reportedly said this region was well suited to nut growing.

But hazelnut trees, which 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.

Nuts are also a very water intensive crop. A UK-based environmental group claims that it takes 4769 litres of water to produce just one pound of hazelnuts.

Local farmers who spoke to Region said the 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 would likely see more companies withdraw from the Riverina in the coming dry years.

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Narrandera Shire Council deputy mayor Cameron Lander said he was disappointed by the news of the Ferrero Group’s departure from his local government area.

“They’ve put a lot of effort over a number of years to make sure that development is viable,” he said. “It’s a fact of life that sometimes you have to make a decision as to whether it’s in your business interest to keep going.

“When they started, they would’ve looked at location and thought it was feasible at the time, but it’s proven otherwise. We’ve just got to push on and find other industries and enterprises to get out there.

“I had a lot of dealings with them through the bowling club, I always found them a good company to work with.”

He said the council did not have much say on who might replace Ferrero Group at Dellapool, unless it could identify any potential negative environmental impacts from future enterprises.

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