The market for onions has been favorable in recent weeks. Demand is high and prices are firm. However, growers are expressing their concern over the transportation problems that are beginning to bite into the US produce industry.
"The onion market is good and steady, and has been all season," said Steve Proctor, of Sunset Produce in Washington state. "Prices have been good, but they would have been better had the issues with trucking not been present. The truck shortage has put an artificial ceiling on where the market should be and has changed the dynamics of the onion market. Since the mandated use of E-logs came into effect, it's been almost impossible to find trucks."
He also noted that truck freight prices have been so high, that had it not been for rail, it would have made business practically prohibitive. "It's been a tremendous advantage to us to have access to rail which, although also expensive, is not so cost prohibitive as truck freight right now. Our local regional market is doing okay in the Northwest, but anything that goes East, has to go by rail, otherwise the freight costs are much too high."
Costs to be passed on
With growers facing rising costs on numerous fronts, the cost of trucking is expected to be passed on. "Producers cannot absorb any more costs," Proctor said. "It's not just produce that is being affected. Prices for all parts and consumables that farmers require, such as fertilizer - basically anything that needs to be trucked - is rising. Therefore, the costs associated with freight will have to be passed on to the consumer. Otherwise we would not be able to break even."
Proctor noted that there is a trial period for the legislation. He hopes that a review would highlight the impact the legislation is having on the entire supply chain and subsequent adjustments be made. "The legislation needs to be revisited and revised," he said. "Otherwise costs will continue to rise, and trucks will become increasingly scarce as some drivers go out of business."
Onion demand still strong after Holidays
The Holiday period sees a spike in the demand for onions. And while the major Holiday periods in the United States have passed, suppliers are still seeing strong interest from retailers on all onion varieties.
"The Holiday seasons, such as Thanksgiving and Christmas, traditionally see a big pull for onions," Proctor observed. "While the main promotable seasons have now passed, we are still experiencing strong demand as retailers restock. We will also expect to see a small bump as Easter approaches. Right now, predictions are that demand may soften a little from next week. Yellow onions are currently at $8.50, reds are $7.50 and whites are steady at between $17 - $18. These are for 50# bags on Yellows and Whites and 25# bags on reds."
For Sunset Produce, contract pricing has fit into their business plan well. "Our program and contract business works well for us to ensure we keep movement on our onion inventory," Proctor said. "We are a large producer and it fits our needs. It's something we will continue to work on and develop into the future."
For more information:
Steve Proctor
Sunset Produce
Tel: +1 (509) 786-3996