Chocolate lovers beware because the world's hazelnut supply is in crisis.
It's World Business Express from the BBC World Service.
I'm Leanna Byrne.
In Jamaica, a catastrophe bond is paying out millions to help rebuild after Hurricane Melissa.
And NVIDIA makes deals in South Korea.
Okay, if you love chocolate, you're going to know these brands.
The ambassador's receptions are noted in society for their host's exquisite taste that captivates his guests.
Ferrero Rocher, a taste sensation.
Rich, luxurious, unique.
Monsieur, with Ferrero Rocher, you're really spoiling us.
And finally, a delicious touch.
Because Nutella always adds something tasty.
Yeah, that's Ferrero Rocher and Nutella, both owned by the Italian confectionery giant Ferrero.
Now chocolate might be smooth, but its relationship with Turkish hazelnut dealers has hit a rough patch.
The two sides are locked in a standoff.
See, the thing is, Turkey has the world's largest production of hazelnuts, is responsible for around 70 of global production.
But a poor harvest, bad weather and a pest infestation have slashed supply and send prices soaring.
I've been speaking to Filiz Kilikli, who's worked as an agricultural economist for over a decade in Turkey.
This year.
Actually, there is some problem because of the climate change and also, I would say, some of the frost and the pest outbreaks, which significantly reduced the yields.
So because of the reduced yields, the prices increased almost double and the farmers faced some challenges about that.
So who's holding these hazelnuts right now?
Is it the farmers, the dealers, the exporters?
We have two main buyers in Turkey.
The one is the Union of Hazelnut Sales Cooperatives.
We call it Pisco Birlik.
And we have the Turkish Grain Board.
It's a state-owned enterprise.
But the Turkish hazelnut dealers.
They're in a bit of a standoff with Ferrero at the moment, aren't they?
If I'm not mistaken, after 2000 the hazelnut market entered the liberalization process and led to a complete restricting of the market.
And then Ferraro entered the market.
And then Ferraro, the biggest exporter in 2014, probably is a big player in the market the largest player, I would say.
I guess we're all wondering could we see a knock-on effect for our chocolate, our confectionery or other nuts that we like to consume because of this?
The whole value chain is affected from these problems.
It's not good for the consumers as well because the prices are increasing.
So also in the domestic market.
Could Turkey be worried, though, about losing market share to Chile or the US over this?
Exactly, exactly.
I was going to say the same things, because especially the rising labor costs, the inputs costs, have weakened the Turkey's competitiveness.
And the Chile is one of the largest competitors compared to Turkey.
And then exporters also fear of losing the market share.
It's this growing, the Chile is expanding aggressively.
And that's a problem.
That was agricultural economist Felice Knickley.
Let's go to Jamaica now, because the country is beginning its recovery from Hurricane Melissa, and there's one small piece of good news for the Caribbean island.
Last year, its government issued what's known as a catastrophe bond, a kind of insurance policy that pays out when a weather event is powerful enough to trigger it.
Melissa was a Category 5 hurricane so Jamaica will receive a $150 million payout this within days.
But how do these catastrophe bonds work?
Here's Florian Steger, CEO of Icasa Investments, a Swiss-based specialist firm that works on cap bonds.
A catastrophe bond is a financial instrument.
And the whole purpose of that is to transfer reinsurance risk into the capital market.
The traditional reinsurance market is not big enough to absorb the financial impact from large-scale catastrophes in some places of the world.
So the idea was born to take some of that risk out of the reinsurance market and place it into the capital markets.
The insurance market can get rid of what they would see as concentration risk.
They can reduce it.
They become safer.
But also for us investors in financial markets.
Our portfolios become more stable by adding these CAT bonds into our portfolios.
So it's very different to traditional disaster insurance, isn't it?
I would say it's different in the way that the risk is not kept within the reinsurance market but it's given to another group, which is capital markets investor.
The mechanism itself is very similar.
It's like an insurance policy.
If nothing happens, the investor earns the premium.
But of course, if you get a big event like now, what we've just had in Jamaica, the capital is at risk.
Now, Jamaica's bond was designed in a particular way, wasn't it?
It is what we call a parametric trigger.
It allows to determine the payout very fast.
So typically after a major catastrophe, if you were to have a normal bond referencing insured losses, it would take a long time for people to come back to their home file a claim with the insurance company.
Then a contractor needs to come.
They need to repair it.
It takes a long time.
With a parametric cat bond, like what we have for Jamaica.
You would simply reference some physical data like, in that case, central pressure of the storm when it makes landfall.
And that allows to determine very quickly if the payout conditions have been met or not.
In this case, they clearly have been met.
And as a result, the whole claims handling process doesn't play a role here.
And then, of course, in a situation like right now, it's super important for the people who are affected in Jamaica because the government will be able to use the proceeds of that cat bond very quickly to start with relief efforts and rebuilding efforts.
How long does it take for that money to get to the people who need it?
I would expect this to be done within a month.
That's Florian Steger, CEO of Ancasa Investments.
NVIDIA's deal-making streak shows no sign of slowing.
This time it's hit South Korea.
The US chipmaker says it'll team up with Samsung, Hyundai and the SK Group to build a series of AI factories.
This is all part of the country's plan to become one of the world's top three AI hubs.
With us now, Randeep Somal from M&G Investments.
Randeep, interestingly, South Korea is calling these AI factories part of a sovereign strategy.
What does this all say about AI investment globally?
We've come full circle here.
NVIDIA, which invented the AI chips, are now going to help Samsung build a factory from AI to produce AI chips.
I mean, it's very good news for South Korea.
They build the memory, they build the chips.
It's going to be huge development as we continue to see AI grow.
Absolutely.
It also helped push Samsung's shares up too.
Another one that caught my eye, I'm sure it's caught your eye too, Randeep.
Amazon shares up massively after the company's cloud business reported its strongest quarterly growth in nearly three years.
I'm sure investors are happy with that one.
Very much so.
Amazon's been quite a disappointment this year.
Despite having the world's largest cloud platform, the shares have been flat up until, of course, today.
The concern was that they'd missed out on AI, but we've seen AWS grow 20, which has put their shares up 12.
So investors are very happy with Amazon today.
Randeep, I can't let you go without talking about Halloween because I'm sure the cobwebs are hung.
This pumpkin spice might be filling the air.
But Randeep, what do you think the scariest thing is about Halloween?
Is it a Jamie Lee Curtis film?
No, it's not.
It's the spending, obviously.
We're on an economic programme.
Come on.
And the US Americans are set to spend $13.1 billion this year.
Over $4 billion of that is going towards costumes alone.
That's according to the US National Retail Federation.
And in Ireland, where I'm from last year, it's the home of Halloween, really.
The country brought in $8 billion from visitor spending.
That's according to Tourism Ireland.
So, Randeep, how much Halloween spending do you do?
Not that much.
Just maybe a night out, but that's about it.
Just a night out.
No costumes, no pumpkins, no nothing.
No, not for me.
All right.
Fair enough, Randeep.
You're not a big, big Halloween fan, but I'll let you go with that one.
Randeep Samal, thank you so much for joining us.
And that's it from World Business Express from the BBC World Service with me, Leanna Byrne.
Now, if you want to subscribe to get the latest from us, just search for World Business Express wherever you get your podcasts.
Thanks so much for listening.
Have a great Halloween.
