As demand for UK onions grows at a sustainable and steady rate, the southern hemisphere offer that serves to cover the sometimes as little as six-week gap in domestic and European supply is proving its worth more than ever.
The counter-seasonal product, which comes into the UK from four main supplying countries - New Zealand, Chile, Tasmania and South Africa - continues to sustain demand from April. The first shipments are making their way over to the UK and will be available by the end of March.
The onion marketplace has experienced some shifts in the last 12 months that have contributed to restricted availability and southern hemisphere supply being more in demand than ever. New marketplaces have opened up, as producing countries have looked around for more profitable deals than can be found in the UK. Increased consumption in countries such as Brazil, India and Russia has taken up a good deal of the usually plentiful, mainly Dutch supply from Europe. At the same time, weather issues in Spain and South Africa have meant that in most cases, UK reserves have been pushed and are running low.
“The situation we are in now is a result of what happened in the marketplace before Christmas,” explains Malcolm Gray, director of The Allium Alliance, onion supplier to the wholesale, foodservice and processing industries. “Production in the UK and Europe was normal and produced the usual kind of yields, but South Africa went short and as a result, a lot of European onions went to South Africa and not the UK, and we went through our stocks a lot quicker. From December, the Asian market became more demanding and Russian demand was strong because of adverse weather so basically, there was a mass immigration of European onions. Couple that with the currency problem, and it means that southern hemisphere supplies will be in demand. Stocks of onions are definitely down for this time of year.”
But importers are finding that supplies are hard to source and smaller producing countries, such as Argentina, are being called upon to make up orders, sending prices shooting upwards in the supermarket and the open market alike. With the economic downturn having such an impact on the UK market and domestic production offering good-quality stored onions, onion-producing countries in the southern hemisphere have looked further afield for new opportunities and are no longer so dependent on the UK. “Over time, we have got to become less dependent and find more efficient storage facilities so we are less reliant on the elements,” says Gray. “The UK onion industry needs to be more self-sufficient as we are not the attractive prospect for southern hemisphere onion growers that we used to be.”
But for nearly two months of the year, the southern hemisphere offer remains irreplaceable and provides consumers with a constant supply of the vegetable that everyone must have, for which there are no real replacements. “Demand for the southern hemisphere season is looking very good, mainly because the onion job is strong due to mass shortage,” onion importer the Oakley Group’s Lance Cornell tells FPJ. “Consumers just don’t understand if they can’t get onions -brown or red. It is one of those unique products that have a particular use and people just have to have them for a recipe. You can’t replace an onion with a carrot.”
The southern hemisphere onion season is off to a good start, with growers finally receiving high returns that will go some way to compensate the damage that seriously low financial rewards have caused. Despite the country’s problems this year, the Chilean offer is now on the water, with insiders commenting that potential onion supply from Chile looks similar to previous years.
Cornell works very closely with growers in both Tasmania and New Zealand and is optimistic about the coming season. “In both Tasmania and New Zealand, the planting season from May to June was quite wet and so less of an area was planted - certainly in the case of the growers that the Oakley Group uses,” he says. “We are expecting 15 per cent less than we imported last year and we are in the situation that we are paying more for less product.”
Lincolnshire-based grower Oldershaws of Moulton, part of the Oldershaw Group, plans to bring in more than half as many onions from southern hemisphere sources than last year on the strength of its stored UK crop this year, and has felt the pressure from supermarkets to provide UK onions throughout the year, for both cost and environmental reasons.
“There is always a gap to fill, but this year it will be considerably less for our company because the quality of the onion crop in storage has been much better,” says director Robert Oldershaw Jr. “We will import from New Zealand for six weeks at a lower level. It is good news for the UK onion industry, although imports are very important as they keep momentum in interest going through the summer, when the British crop just won’t last. But there has been a substantial drop in imported onions during this season because the southern hemisphere has found other markets to utilise.
“We have visited the farms we work with in New Zealand recently and everything is looking good for the coming season. The outlook in Chile is also good.”
The strong price of this globally sourced commodity, caused by both the major shortage and the strong sterling, has given the industry a bit of a shake. Insiders cannot envisage prices falling until the new UK onion season gets underway.
“Our main challenge is to keep costs down,” says Oldershaw. “There are obviously cost implications to bringing product from the other side of the world and we need to minimise that as much as possible. Inevitably, it is a necessity to import, but supermarkets are investing money and time into UK crops that can be grown earlier and will store more effectively. But equally, standards have to be maintained and a small import period is needed. Importing onions from New Zealand, for instance, does not have the environmental impact consumers tend to think. The carbon cost of chartered ships per tonne is not that great.”
The continuous increase in shipping costs and the unfavourable exchange rate is also working against onion importers in the UK, with claims that both are “killing the industry”.
“One of two things needs to happen,” says Gray. “Either imports get less of a return or importers see an increase in their costs. The situation will not improve until we stop importing in July.”
Furthermore, although onion growers are benefiting from high prices in the marketplace, the industry is concerned that demand may take a downward turn, with the possibility of end users deciding to buy fewer onions.
“Prices are rising by the day to levels we haven’t seen for many years,” continues Gray. “I hope it doesn’t affect consumption. It has been increasing through advertising and PR work. And we always flag up any new recipes on The Allium Alliance website. We are hoping the long-term effect will be minimal. We have sufficient volumes planned for us to carry on through until UK new crop in June or July.”
For four years now, onion sales in the UK have seen double-digit growth and with a successful PR and marketing campaign behind the onion industry, the future looks bright.
“The industry is amazing and we will be able to find the product we need to deliver, even when there is a shortage,” maintains Cornell. “It is going to be tight for the processing industry as their contracts need a steady price and potentially, the market could become unstable. But our duty is to follow the marketplace wherever it goes; it is a game of supply and demand, after all. It is a good season if three parties are happy -the grower, the importer and the customer. We all need to make a living out of it.”
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