Spain: Onion prices plunge in a context of global oversupply

The medium-term storage onion harvest is underway in the Spanish region of Castile-La Mancha, the country's largest producing area, which will soon start harvesting long-term storage onions. Although the product comes this year with better quality and better calibres than last year, the imbalance between supply and demand caused prices to start falling from July and they now stand at a fairly low average. "It is not yet a critical situation, but it is serious," affirmed Luis Fernando Rubio, of Procecam (Onion Producers Association of Castile-La Mancha).

Contrary to the 2015/2016 campaign, the onion acreage (for all varieties) in Spain has grown by around 4% this season; this, combined with the good performance due to the favourable weather conditions, has resulted in the production volume increasing by between 8 and 10%, according to Procecam.

The situation is generally similar worldwide, with an increase in both acreage and yields. "The Netherlands and Germany have had an earlier production and Spain has consequently not had access to this market window, unlike every other year. Along with Germany, the UK is one of the main markets for Spanish onions, and this country also expects a greater harvest," explains Luis Fernando Rubio.

Moreover, according to the expert, until this week, Senegal has maintained its restriction on the import of Dutch onions as a protectionist measure to the local onion. "Although the Netherlands has not yet reached its peak production, the first harvests have remained in Europe, thus competing against Spanish onions, which do not enjoy the logistical advantages of the Dutch. This week, the Netherlands will again be able to export to Senegal, its main customer, which will be positive for everyone."

The situation is not rosy when it comes to the Brazilian market, which last year was very important for Spain. Last season, Brazil imported a lot of Spanish and Dutch onions due to problems with the local production and supply.

According to Luis Fernando, "this year they have expanded their acreage and have much higher yields, which has already caused prices to sink. The price at origin of Brazilian onions is ten times lower than that of last season. In these circumstances, imports have shrunk, despite the Olympic Games."

"With the lack of Brazil, if we do not find alternative markets, there will be moments of great tension in the markets, and we will not know how to dispose of such a large volume of onions. In the sector, we are working to open alternative markets outside Europe, although it is not easy. We continue shipping onions to North Africa, and there may be opportunities in other African countries. Taiwan is a market that has just been opened for both onions and garlic and prospects there are good."