Major global supply issues in the onion market this season are bringing about fundamental change, according to one UK operator.
Martin de la Fuente of processor Parripak said: “The bottom line is that the onion market has gone mad this season around the world and no one knows how it will pan out. But I believe we will not go back to the ways of old: there has been a step change and the whole industry is moving much more towards contracts than the spot market.”
The UK crop has not behaved as expected this year. Once the product was safely in store, growers and marketers were forecasting a low-price year due to the bumper harvest, despite excellent quality. “But by mid-November, prices were starting to rise,” said de la Fuente. “This was on the back of a poor set-skin crop coming out of store that was full of rot.”
De la Fuente believes that problems arose because conditions were so wet during planting in February last year. As a result, prices have risen and coupled with this, supermarkets have lowered their specifications. Prices have climbed from £200 a tonne before Christmas to some £280 a tonne this month, against average production costs of £160.
Supply issues in other source countries are also taking their toll. Extremely cold temperatures in Poland have put pressure on demand for the Dutch crop, as have poor yields in Brazil.
