Chile: Organic walnuts shell out price premium for Geonuts
As a high-end food item the walnut is already a specialty product, so why grow it organically? After all, even if conventional growing leaves residues it is unlikely they will pass through the shell to the nut itself.
But the strong growth in the organic movement worldwide shows the philosophy is about a lot more than just residues, encompassing the entire food chain and its impact on surrounding environments along the way.
For Chilean holding company Molymet this is perhaps more apparent as it owns property company Inmobiliaria San Bernardo, with land on the outskirts of the encroaching urban mass of the capital Santiago.
Since 2005 the group has been growing walnuts on 120 hectares of land in the residential Nos area of San Bernardo, which are sold under the brand GeoNuts.
To meet its corporate social responsibility objectives the group made the decision to avoid pesticides that could potentially impact the environment.
"The company's vision is sustainability, and we realized that a walnut orchard that is inserted in an urban zone cannot be managed in a conventional way, or in other words with agrichemical applications, as we can't affect our surroundings," said deputy manager of agro-industrial operations, Héctor Cortes.
"In 2011 we started a process of conversion to organic certification, whereby we eliminated the application of all chemical products and we could start working 100% in an organic way," he said, adding it takes around three years to make this transition.
"Recently in 2015 we could sell our first container of organic certified walnuts and this year 90% of our production was organic."
When asked about destination markets, Cortes said in the beginning the project was focused on Europe, but because of the old continent's economic problems GeoNuts has sought greater diversification.
"We realized that the market for organic products, and especially for organic walnuts, was divided. Europe is supplied by Eastern Europe and India, where the walnuts are of a lesser quality - it's a different product and in the end it is sold for lower prices, even lower than the traditional Chilean walnut," he said.
"For this reason, and knowing that Chilean walnuts and these in particular are of a great quality, we decided to send them to markets with greater purchasing power like New Zealand, Japan, the U.S. and Canada."
He said in general Chilean walnuts were sold at prices 20% higher than other origins, such as the U.S. which is the main competitor.
"Last year we reached a 63% premium in relation to conventional Chilean walnuts, and this year we're looking at a premium of 80 to 85%."
Last year GeoNuts exported 70 metric tons (MT) of shelled walnuts, mainly to the U.S., Europe, Canada and Japan. This year, the organic product arrived first in South Korea with a 5MT trial, and Italy where 20MT were sent.
The exported total for this year is projected to reach 140MT, however the executive commented it could have been larger if it weren't for rains that affected coloring, giving more of a yellow tinge to some nuts, as well as a cloudy and cold spring in 2015 which meant the fruit could not set as well and affected around 50% of production.
The walnuts are shipped in bulk in bags holding around 5kg (11lbs) which are sealed in controlled atmosphere, allowing them to arrive at destination without any problems.
And while GeoNuts is making progress overseas, the hope is also to get a greater presence at home too.
"We want to enter retail in Chile but it's a complicated process. We hope to close a deal with a supermarket this year."
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