Analyzing Production Costs of Organic Hazelnuts in Oregon

Final report for OW21-367

Project Type: Professional + Producer
Funds awarded in 2021: $73,124.00
Projected End Date: 06/30/2024
Host Institution Award ID: G364-21-W8614
Grant Recipient: Oregon Tilth
Region: Western
State: Oregon
Principal Investigator:
Ben Bowell
Oregon Tilth
Expand All

Project Information


A recent market study identified strong potential to grow Oregon’s nascent organic hazelnut industry, advancing the crop as an economically and ecologically rewarding opportunity for more small farmers. This project aims to improve the viability of organic hazelnut enterprises by helping producers better understand their production costs and improve financial decision-making. PI Ben Bowell of Oregon Tilth will work with a group of six to ten producers from the Oregon Organic Hazelnut Cooperative (OOHC) to develop and pilot an approach for determining and analyzing production costs. The team will develop a costing model with input from an agricultural economist with expertise in tree crop enterprise budgeting. We will coach and support producers to use the approach to track and calculate costs of production activities on their own farms over two seasons; and then evaluate how various changes to practices, labor, equipment, scale, etc., can increase profitability. The pilot will inform refinement of the approach and development of a sharable model and user guide. Resources will be electronically published and the project will be shared with producers at Nut Growers’ Society Annual winter meetings and OOHC summer orchard tours. An educational webinar will be developed for Extension and other service providers to learn how to support organic nut producers using the approach. The project will help increase the viability of organic hazelnut enterprises, build interest in transition, and grow the industry’s role in Oregon’s farming future.

Project Objectives:

1. Develop a production costing model, time study protocols, and data collection requirements for organic hazelnut enterprises.

2. Develop and implement on-farm data collection and recordkeeping processes that producers can use with the costing model.

3. Test the feasibility and effectiveness of the costing approach through a pilot on six to ten organic hazelnut farms.

4. Generate results from analysis that producers expect to support improved management and increased profitability of their enterprises.

5. Refine the cost analysis approach and develop user guidance; broadly disseminate resources and lessons learned to other organic hazelnut and other organic nut producers, as well as those interested in transition.

6. Increase Extension agents' and other service providers’ knowledge of and interest in using the resources to support organic hazelnut and other organic nut producers to conduct their own cost analysis.


Time Period


Summer 2021

Recruit Additional Organic Hazelnut Producers at OOHC Summer Tour

Summer 2021

Develop Costing Approach with Producer + Expert Feedback

Nov 21- Oct 22

Support Organic Hazelnut Producers with Year One Data Collection

Summer 2022

Promote Project, Share Lessons Learned at OOHC Summer Tour

Winter 2023

Support Organic Hazelnut Producers with Cost Calculation and Analysis

Winter 2023

Table at Nut Grower Society Annual Winter Meeting

Spring 2023

Refine and Update Approach Based on Producer Feedback

Nov 22 – Oct 23

Support Organic Hazelnut Producers with Year Two Data Collection

Summer 2023

Promote Project, Share Lessons Learned at OOHC Summer Tour

Winter 2024

Support Organic Hazelnut Producers with Cost Calculation and Analysis

Winter 2024

Panel Presentation at Nut Grower Society Annual Winter Meeting

Spring 2024

Refine and Update Approach Based on Producer Feedback

Spring 2024

Educational Webinar for Extension and Service Providers

Publish and Disseminate Costing Approach + Instructional User Guide


Click linked name(s) to expand/collapse or show everyone's info
  • Margaret Bengry - Producer (Researcher)
  • Cassedea Ashley (Researcher)
  • Ben Larson - Producer (Educator and Researcher)
  • Raina Wickstrom - Producer (Researcher)
  • Mary Stehman - Producer (Researcher)
  • Lori Stole - Producer (Researcher)
  • Rich Schwartz (Educator)
  • Suzette Pedroso Galinato (Researcher)
  • Craig Clark (Researcher)


Materials and methods:

Research was focused on developing an approach for organic hazelnut producers to analyze their costs of production. Our goal was to equip farmers with a tool that would help them to understand how their businesses are performing and how performance could be improved, aiming to increase the profitability of their organic hazelnut enterprises. While enterprise budgets can give growers a preliminary idea of what they can expect costs and returns to be, ultimately it's important for producers to look at costs in the unique context and conditions of their operations, using their actual, current costs to produce accurate, meaningful analysis. In addition, currently no enterprise budgets are available for organic hazelnut production. The research portion of this projected focused on designing and testing an approach that can fill this need.

The research methods that were conducted to achieve our research objectives included convening a small cohort of organic hazelnut growers to begin identifying the costs that the tool would need to account for and the best approach for capturing this data.

At our fall 2021 kick-off meeting we focused specifically on brainstorming to identify the labor activities that growers would be keeping records on. Next we introduced growers to time studies as a sampling technique that can be used to establish labor activity rates e.g., “minutes to mow one acre of orchard floor” that are ultimately used to calculate the total time spent per activity and estimate the labor cost of that activity.

The growers were asked to begin experimenting with conducting time studies immediately so that they could identify the recordkeeping system that worked best for each of them. We emphasized identifying recordkeeping systems early on because our past experience highlighted the importance of establishing these systems so that the time studies get done. When we asked growers how they were recording time studies they shared varied approaches including: recording in a farm journal; keeping track on the phone via text messages and then inputting them into a spreadsheet; and recording on a whiteboard (dry erase board). We worked with the growers to clarify the protocols for doing time studies including determining the units to use to measure their time studies and how to distinguish between labor that was variable with production and labor that was fixed.

WSU agricultural economist Suzette Galinato provided input on the initial design of the costing tool, specifically on the how establishment costs factor into decision-making; resources for estimating costs that will occur far into the future; accounting for opportunity costs using discounted cash flows and NPV  analysis versus as interest charges; and how to account for having trees of different ages/maturity in the same orchard. We also referenced (conventional) hazelnut enterprise budgets and economic studies to inform the development of the costing tool including:

Orchard Economics: The Costs and Returns to Establish and Produce Hazelnuts on a Standard-Density and Double-Density Orchard System in the Willamette Valley, Nik Wyman, Matt Miller, and Clark Seavert, 2022

A Production and Economic Model for Hedgerow Hazelnut Production in the Midwestern United States, Jason Fischbach & Lois Braun, February 2017

A Comparative Cost-Benefit Analysis of Conventional and Organic Hazelnuts Production Systems in Center Italy F. Coppola, M. Costantini, l. Orsi, D. Facchinetti October 2020

Growers collected data during the 2022 and 2023 growing seasons and began plugging data into an initial version of the costing tool in 2022. Quarterly meetings with the growers during 2022, including individual phone meetings with each grower in winter and spring, in-person farm visits with 5 of the 6 growers in the fall of 2022 and a group meeting in December of 2022. During these meetings the PI observed the accessibility of the approach and UX (user experience); challenges arising in using the tool (e.g., too complicated, too time-consuming); adaptability by diverse producers (e.g., different scales of operation, stages of maturity, production methods). All observations and feedback informed the on-going development of the costing tool.

In the summer of 2022, we also gave a presentation on this project as part of the Oregon Organic Hazelnut Collective Summer Farm Tour. While the presentation was primarily intended to promote awareness of the project and ultimately interest in the costing tool and user guide, this presentation included a costing exercise during which participants estimated some the different costs and other factors that go into cost analysis including the cost of different production tasks (pruning, mowing, harvesting), the cost of amendments and the expected yields in an organic system. The way that growers approached this exercise and the estimates they came up with further informed the development of the costing tool.

At the end of the 2022 growing season 4 of the 6 growers had completed a preliminary cost analysis. The consensus at this point was that having an additional season to fill in gaps in their data would be beneficial before using the results to evaluate any production changes. The growers focused on collecting this data in 2023, while further refinements to the tool were made based on observation and direct grower feedback from the 2022 season.

In fall 2023 investigators met one last time with each participant. Together, they checked the data entered into the tool for accuracy and used the results of the cost analysis as the basis for further enquiries. These included projecting multi-year analyses as well as performing a “what-if” analysis regarding the price and yield combinations required to cover cost of production.

Investigators also engaged one conventional hazelnut grower – Jonathan Edmonds - about using the tool to help decide about transitioning part of the orchard to organic production methods. In the fall of 2023 this grower entered information from his current conventional practice into the tool, and then worked with investigators to project what production changes would need to be made to meet organic standards, and how costs and revenues would change in this new system. While the grower was not yet ready to decide about transitioning to organic, we were able to show how the tool could be used to help with the decision-making process.

Research results and discussion:

A costing tool was developed that can be used by organic hazelnut growers and other organic tree nut producers as a tool for management and decision-making. The tool calculates production costs including labor, input and machinery costs. It provides a breakdown of costs that promoted an understanding of how different production activities affect profitability. The tool is designed to allow growers to easily make changes to any of the variables that impact costs. This allows growers to analyze the impact of potential changes to their systems and scale and make choices leading to better financial outcomes.

All participants in our study indicated that conducting time trials was relatively straightforward. The biggest barrier was just getting started, though participation in the cohort model and encouragement from the investigators helped get past that barrier. Once processes were established, data collection was not a burden. Most of the participants indicated that they appreciated the assistance of the investigators in validating the data once it was entered into the tool, and in helping understand the significance and actionability of the costing analysis. We are cautiously optimistic that the finished user’s guide will reduce the need for technical assistance, but we have not tested this.

Growers felt that the time trial data they collected was “good enough” for analysis purposes. There can be a high degree of variability for many of the orchard tasks, and even sampling under varying conditions can make it hard to determine a true average time per orchard unit. However, growers felt that the data derived from the time trials provided them with estimates that were sufficient to help answer most of the managerial questions in which they were interested.

Participation Summary
6 Producers participating in research

Research Outcomes

Recommendations for sustainable agricultural production and future research:

Small to medium sized organic hazelnut orchard operations are quite labor intensive. All participants in the study found that labor accounted for significantly more than half of the variable cost of production. (Note that the cost of labor was not necessarily a cash cost, as much of the work in smaller orchards is performed by the orchard owners and their families. However, the value of owner labor must still be considered when calculating cost of production.) The process of tracking labor efforts as part of the time trial activities led each of the growers to focus on the most time-consuming activities on their farm and begin to consider ways to complete those activities more efficiently.

The profitability potential of an organic hazelnut orchard is directly related to the sales channel selected. Most of the growers in our study sold or were planning to sell their nuts wholesale to an organic processor. The price per pound offered by the processor can vary greatly from year to year, in part depending on the international organic hazelnut supply. Most organic hazelnuts consumed in the US are imported from Turkey, and an abundance of Turkish organic hazelnuts in the market will drive down the price per pound that local growers will receive for their nuts. On the other hand, one of the growers in the study sells their nuts directly to consumers via farmers markets, local retailers, and online sales. This grower has some control over pricing and can adjust prices based on the insights from their cost of production analysis.

A related challenge concerns the availability of processing facilities for organic nuts. An Oregon processor closed in 2023, forcing some of the growers to send the nuts out of state for processing. It will be hard for growers to invest in organic hazelnut production if there is uncertainty about how the nuts will get processed.

To support growers who are considering establishing a new organic hazelnut orchard or transitioning an established conventional orchard the tool provides “reference rates” growers can use to project future labor costs. These rates are based on data provided by the growers in this study as well as published rates for conventional hazelnut orchards. We would like to fine-tune the reference rates going forward by continuing to gather activity rate information from a wider range of growers throughout the region.

Ultimately, this tool supports producers with the business planning that is necessary to grow healthy, sustainable farm businesses. Demonstrating that organic hazelnut production can be a viable business model will inspire others to transition and ultimately build a thriving sector with long-term economic opportunities and ecological benefits for the region. Recommendations for future studies include research to better understand yield variability and potential in an organic hazelnut orchard. Research on soil fertility and nutrient uptake would also be beneficial, both on the economic front – where growers could potentially reduce input costs if they had a better understanding of nutrient needs in an organic system – and could limit the overapplication on nutrients that are not being utilized and end up impacting watersheds.

Another area of research that came up with this project is factoring in the benefits of the ecosystem services that established orchards provide and the external costs that are avoided by using organic production practices. Accounting for these cost savings could be factored into policies that could reward more sustainable practices with incentive payments that would make the adoption of these practices more viable for growers.

Education and Outreach

1 Curricula, factsheets or educational tools
4 Webinars / talks / presentations
1 Other educational activities: Tabling at Nut Society Winter Meeting

Participation Summary:

35 Farmers participated
20 Ag professionals participated
Education and outreach methods and analyses:
  • Ben Larson, Project Cooperator (Educator and Researcher) gave a short presentation about the project at the Summer Nut Tour on August 14th, 2021.  
  • We gave a  presentation about the project at the Organic Hazelnut Annual Farm Tour on August 19th, 2022. This presentation focused on promoting awareness of the project and building interest in the costing tool. We also led a costing exercise focused on estimating some the different costs and other factors that go into cost analysis including the cost of different production tasks (pruning, mowing, harvesting), the cost of amendments and the expected yields in an organic system. There were approximately 30 grower participants and 10 service providers at this event.

  • The project PI tabled at the  Nut Grower Society Winter meeting on January 12th, 2023 to increase awareness of the project.
  • We gave a demonstration of the tool at the 2023 Organic Hazelnut Annual Farm Tour on August 25th, 2023. The demonstration included an example of investing in an over-the-row harvester that was used at the farm that hosted the tour. There were approximately 91 participants at this event per the OOHC.
  • We had planned to give a presentation on the tool and lessons learned at the 2024 Winter Nut Grower Society Meeting in Corvallis, Oregon. Despite our extensive efforts, we were unable to secure a spot on for our presentation in the 2024 meeting program. In lieu of this presentation we presented on the tool and lessons learned on a webinar hosted by Oregon Tilth on April 18, 2024.

  • On May 13 we presented a webinar to technical assistance providers across the country who work with orchard crop growers. (While the tool was designed specifically for organic hazelnut growers it can be used to analyze production costs for any perennial crop, organic or conventional.) The webinar discussed how to use the tool, how to conduct time trials to get more accurate labor costing information, and how the tool can be used to answer managerial questions. It also featured a panel of growers who participated in our program who discussed their experience using the tool.

Education and outreach results:

At the 2022 Organic Hazelnut Annual Farm Tour presentation growers were highly engaged in the costing exercise. The exercise was structured as small group activity where each table had discussed a different factor that goes into cost of production. For example, one table discussed organic yields and options for increasing yield in an organic system. Another table discussed the harvest labor and identified factors that affect the amount of time that harvest takes. A third table discussed soil amendments/fertilizer application costs. Focusing this cost analysis exercise on the growers' actual production experience seemed to make a cost analysis on a spreadsheet come to life and seemed to spur interest in thinking about the economic viability of organic hazelnut production.

The demonstration of the costing tool at the 2023 Organic Hazelnut Annual Farm Tour was less successful. We gave an overview of how the costing tool works using an example and actual estimates of labor and other costs from the farm that hosted the tour. Unfortunately the projection capabilities that were made available to us were less than optimal. Growers would likely have been more engaged if they could have followed along while using the tool on their own computer.

5 Farmers intend/plan to change their practice(s)
1 Farmers changed or adopted a practice

Education and Outreach Outcomes

Recommendations for education and outreach:

Recommendations have been included above.  Despite efforts to encourage attendees to complete an evaluation with the questions included below, including attempting to require their responses prior to accessing the tool, we experienced a very low response rate.  

1 Producers reported gaining knowledge, attitude, skills and/or awareness as a result of the project
Non-producer stakeholders reported changes in knowledge, attitudes, skills and/or awareness as a result of project outreach
5 Ag Service Providers
Key changes:
  • In the next year I am likely to use some aspect of this project to incorporate value-added into some aspect of my operation.

  • Improved my awareness of the topics covered

  • Modified my opinions and/or attitudes

  • In the next year I am likely to use some aspect of this project to reduce my use of purchased off-farm inputs.

Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the view of the U.S. Department of Agriculture or SARE.