Crown researchers Lania Holt (Scion), Alan Renwick (Lincoln University), Paul Johnstone (Plant & Food Research), and AgResearch's Robyn Dynes and Warren King said growing nut crops would have the additional benefit of helping the environment by removing nitrogen and sequestering carbon.
They said rural entrepreneurs showed growing interest in combining forestry, livestock and horticulture crops, to improve earnings and "offset serious issues such as climate change and resource scarcity".
The Government is allocating $240m from the Provincial Growth Fund for two initiatives aimed at getting more trees planted as part of the One Billion Trees programme.
Three properties in the Lake Rotorua catchment within 20km of each other were used as case studies for the research.
The first property involved Maori forest owners who were considering planting hazelnuts among their pines.
"They want to know if nut trees that crop annually, after five to eight years, could be intermixed into the forest, and if this could provide them more work options, more products [timber and non-timber], and timelier cash flow," the researchers wrote.
The second property was a small block owned by lifestyle farmers who started trialling 70 hazelnut trees last year.
The other 450ha sheep and beef property was run by a farm manager for a small investment trust.
Sixty hectares of pines were harvested on the property last year and the owners wanted to replace them with a mix of pasture, livestock and hazelnut trees.
Cross-sector collaboration would be "critical" to get edible nut crops off the ground in New Zealand, including with government agencies and research institutes, the authors said.
"Integration and co-operation among them is key to achieving the end result."
They said land managers needed to identify groups willing to scale up nut crop production and reduce the risks by spreading innovation costs and sharing what they learn.
Overall they said developing the market would require "risk-taking, market insight, business model innovation, incentives, and radical cross-sector collaboration".
Currently, just 430ha of trees contribute to New Zealand's hazelnut industry and the authors said nuts in New Zealand had yet to demonstrate "clear market success".
"Nut product options are wide-ranging from simply selling the nuts in-shell, raw or roasted, through to more value-added products such as nut oil, milk, coffee, flour, and uses for the shells."
Redpath said many specialist nut tree nurseries had closed in the past 10 years so supplies were limited, and this was an example of the need for teamwork between sectors.
"The remaining suppliers are unlikely to invest in new mother beds to increase supply unless they can see a sustained increase in orders into the future. Landowners are often reluctant to commit to a change of land use unless they can see a clear path to market for their produce," he said.
"At the other end of the supply chain, processors and retailers need certainty of supply before they will invest in new markets or products."
Federated Farmers national vice-president Andrew Hoggard said he had rows of nut trees on his property "but they are just there as shelter and shade and for the occasional snacking".
He said the additional machinery and time required to make a profit from the nuts would be his biggest concerns.
"But maybe there is a place for someone else to handle all that. Much like beekeepers have hives on my land and I get a heap of free honey each year."
Edible nut crops
• Globally, 4.2 million metric tonnes of nuts were produced in the 2017-18 season and more than 11 per cent were hazelnuts
• Most hazelnut trees in New Zealand are in the South Island but research suggests the eastern regions of the country from Hawke's Bay to Marlborough have the best potential
• The Chilean hazelnut is the southernmost grown species of macadamia. It is frost tolerant, bee-friendly and forest hardy, meaning it has the potential to be grown with, or as an alternative, to pine.
