ALBANY — Though low hazelnut prices may limit spending on orchard upkeep, farmers say they’re wary of cutbacks that inevitably backfire by jacking up costs later.

Economizing must be done carefully to avert negative impacts, since ignoring orchards during unprofitable years isn’t an option, said Bruce Chapin, a hazelnut farmer near Keizer.

“You’ll have a mess and it will take you years to get the orchard back to where it was,” Chapin said at the recent summer meeting of the Nut Growers Society in Albany.

Deteriorating prices have reduced money available for farm expenses, requiring sacrifices that often involve undesirable trade-offs, growers say.

“People are cutting back. Some intelligently, some less so,” said Dan Keeley, a hazelnut grower near St. Paul.

The hazelnut market has weakened for several years, but last autumn’s price plunge was particularly steep. Hazelnuts fetched as little as 40 cents per pound, roughly half the previous season’s initial price.

Trim costs carefully

However skillfully a farmer trims costs, such a sharp decrease still hurts the bottom line, Chapin said. “No matter what you did, you’re not making money.”

Growers may realize some savings by switching to generic insecticides and other chemicals.

Major investments in machinery or new orchards are often delayed or eliminated when cash grows scarce, farmers say.

“Some folks who were buying brand new equipment aren’t this year,” Keeley said.

Seed crops are currently offering better returns than hazelnuts, discouraging farmers from planting new trees or convincing them to tear them out in some cases, said Terry Ross, executive director of the Hazelnut Growers Bargaining Association.

Hazelnut acreage in Oregon, the nation’s top producer, is likely to stagnate or even shrink unless the market soon improves, Ross said. Growers are especially likely to remove orchards of disease-prone or lower-value varieties.

“They have other options,” Ross said.

Planting enthusiasm wanes

The enthusiasm for planting has diminished along with prices, said Rich Birkemeier, who grows hazelnuts and produces trees near Canby.

“Our nursery sales are down, that’s fair to say. We expected that,” he said.

Hazelnut farmers have traditionally taken a long-range view of the market’s ups and downs, but some who planted the crop only recently may not share this outlook and abandon the industry, Birkemeier said.

“That’s missing the Johnny Appleseed component of planting trees,” he said.

Some farmers who are sticking with the crop but reducing spending may decide to under-fertilize, which necessarily results in lower yields, growers say. Due to the potential impact on nut production, farmers are reluctant to slash this input too severely, particularly over an extended time.

“The tree is pretty good at mining nutrients in the soil, but it’s going to deplete the soil if you’re not putting stuff back in there,” Chapin said.

Labor is a significant expense, especially with pruning operations, but it’s also tough to scale it back without unwelcome consequences, farmers say.

For example, removing limbs afflicted with Eastern Filbert Blight is necessary to keep the disease in check.

“If you’re not taking measures to control the blight, it’ll come back and bite you,” Chapin said.

But even newer, disease-resistant trees must have suckers removed to prevent the orchard from becoming unmanageable, he said.

Hedging machinery can replace manual pruning, but it’s also likely to shorten an orchard’s lifespan: limbs cut back this way become stubby and more susceptible to rotting, Keeley said.

However, less longevity may not deter farmers who plan to replace orchard blocks with newer varieties more frequently, he said.

Where to cut?Exactly which expenses get chopped and how much depends on numerous factors that vary from grower to grower, including their debt and acreage.

“It’s very dependent on the individual farm and how they’ve handled their finances going into this,” Birkemeier said.

Smaller growers who maintain their orchards without outside help may find it easier to withstand the rising cost and reduced availability of labor, for example.

“We don’t have labor costs other than our own time,” said Jay Price, a farmer near McMinnville, Ore.

On the other hand, farmers who depend on employees to keep their operations running may have to make painful adjustments.

Tiffany Monroe, associate director of the Oregonians for Food and Shelter agribusiness group, grew up in a hazelnut-growing family and married into another.

She said her father, Warren Harper, has stopped taking a paycheck himself to avoid losing any workers.

“When you have poor market prices, it puts farm families in a tough position,” she said. “You can’t always bounce back with a good next season.”

Farmers who lease their orchards may need to renegotiate terms with their landlords, since prices have fallen while the cost of inputs has not, Birkemeier said.

A grower who owes a third of his crop to the landlord under these conditions is “not going to be in business very long,” he said. “There just isn’t enough money to go around.”

Jim Pardey, a farmer near Woodburn, Ore., replanted his entire orchard a couple years ago after losing all his trees in an ice storm.

Though he hates to see other growers suffer, the ice storm’s timing could have been worse for Pardey, since he’s not missing out on high prices while waiting for his orchard to produce nuts.

“It’s a good time for me to be out,” he said.

Enduring down cyclesHowever, after more than four decades in the hazelnut business, Pardey said he’s learned to endure down cycles.

The trick is pre-paying for as many farm inputs as possible when prices are high, minimizing expenses when the market eventually worsens, he said.

Aside from building up supplies, “you’re cutting your taxes back by buying as much up front as you can,” thus reducing net income during profitable years, Pardey said.

Market fluctuations are ultimately a “normal and healthy cycle” for the industry, as “it sometimes takes low prices for manufacturers to develop new products for hazelnuts,” Birkemeier said.

“It doesn’t help us this year, but there’s a healthy component to that,” he said.