As poor seasons go 2004 was worse than most for UK onion growers, so much so that the word ‘disastrous’ has been freely used by major players as they reflect on a miserable year, the consequence of which have included a perhaps inevitable reduction in planted area for the crop.
With a couple of weeks of harvesting remaining this season, there is however a brighter countenance among growers and suppliers following a much better 2005 growing period and the results that will hopefully follow.
Jonathan Tremayne, chairman of the British Onion Producers’ Association (BOPA), says: “Growing acreage has been reduced by about 18 per cent, both in over-wintered onions and brown, but given a good growing year you can still have the same or a higher tonnage than average and this has been a pretty good growing season.
“Last year’s total tonnage was just over 400,000 and it’s reasonable to say that this year should be similar, although it’s difficult at this time to give a totally accurate figure on quantity. But we are hoping for a dry period up to mid-September so that everyone can get their crops in.”
It is to be hoped that the end of season is indeed dry enough to help meet not just tonnage forecasts, but also to produce the kind of quality that can lead to far higher prices than the ones which caused so much distress last year.
“Prices were disastrous for growers,” says Parripak Foods joint managing director James Parrish. “They were the lowest sustained prices I’ve seen for over 15 years.
“UK growers had a very tough year and prices need to come back dramatically - as the reduced planting figures show, there are growers who have either cut back or even simply stopped growing onions altogether this season.”
Malcolm Gray, managing director of the Allium Alliance Ltd, adds: “The situation would not be sustainable if we had another year like 2004. A lot of growers lost fortunes and the UK onion industry cannot afford another year like it.
“But after a disastrous 2004 season people are generally more optimistic this year, even though there was a slight reduction in area planted.
“Everything’s been coming along nicely - the over-wintered onions have been harvested and gone, most of the sets are away in storage and are a good size and good quality. The drilled crops have been mixed - there are some very good crops in terms of size and yield, but there have been some average crops too.
“We suffered from some localised water problems early on, but most people received sufficient water. There were a few areas that didn’t though, and as a consequence those areas have got slightly smaller bulb sizes and a slightly lower yield. In all areas though, I’d say the crop health is superb.”
If that optimism turns into positive results then market prospects should be good, particularly as the fresh onion sector in the UK retail market is growing even though it may not be keeping pace with the tremendous growth in the processing and foodservice sectors.
Jason Burgess, managing director of Rustler Produce Ltd, says: “Provided average yields are achieved, which I’m sure will be the case, supply and demand will equate.
“If you’re dealing with the major multiples these days, and this is certainly the case in our supply chain, then you’ve got your pricing agreed for the whole season. Our growers are contracted with us and we’re contracted with the supermarkets - so from our supply chain’s point of view, prices will remain as agreed.
“We’re predominantly retail, but we have enough processing contracts and foodservice customers to utilise the whole crop - and with more people eating out and sales of ready-prepared meals continuing to increase, these sectors will carry on growing.”
The rise and rise of the processing sector certainly seems set to continue but, unlike the retail sector where supermarkets currently seem more than happy to sell UK product, import volumes are a concern.
BOPA’s Tremayne says: “In the fresh sector it’s very rare in the season to find imported onions on UK supermarket shelves - and a number of companies within BOPA are extending the season through longer cold-storage periods and controlled-atmosphere facilities.
“We are trying to get as much British product as possible into the marketplace and by doing so, restrict the opportunity for imported onions.
“But imports are a big threat in processing, particularly from Poland. About 20 per cent, in tonnage terms, that are going into processing are Polish, so they are certainly making some inroads.”
The contrast between the import situations in the fresh and processed sectors is underlined by Burgess. “We have a clear strategy with our retail customers,” he says. “They want English onions, and we are leading the way in terms of the amount of onions we are supplying to those customers.
“The processing and foodservice sectors also like to support British, but if price becomes more important than the country of origin then imports could well be used.
“Let’s face it, consumers buying ready-prepared meals or eating out in restaurants don’t know what country of origin the meal’s constituents are from, it’s not relevant to them - but that’s where cheap imports can creep in.”
The processing picture has been complicated by one of the UK’s biggest companies in peeled onions, Staffordshire-based Focal Foods Ltd, going bust in June.
Parrish, whose Parripak Foods are leading fresh vegetable preparation specialists, says: “Since Focal Foods went into administration around 300t a week of product has had to be taken up by the remaining companies.
“That means that if the drilled crop is small then capacity could be under pressure with reduced throughputs. There is still possibly too much capacity in the industry, though, partly caused by Polish imports. But with Focal going I think that during the winter months capacity will be at about the right level.”
Whether or not Focal’s demise will have a knock-on effect in terms of capacity, the repercussions are already being felt.
Tim O’Malley, group managing director of Nationwide Produce, says: “The UK onion processing sector is going through a period of consolidation with the largest processor going out of business. This company peeled around 500t of raw material per week but was arguably the weakest seller in the marketplace.
“It’s at least a relief to the UK processing sector that all of the peeling machinery for this company has been sold in the UK. If any of this machinery had been bought by companies abroad, particularly in Poland, it would have undoubtedly had a detrimental effect on the UK processing onion trade.”
O’Malley, whose company supplies the catering, processing and foodservice sectors as well as retail and wholesale outlets, estimates that UK onion processors are peeling around 150,000t to 200,000t of raw material per annum and that this is by far the market’s fastest growing sector.
And despite last year’s problems in the onion trade, he is looking ahead with a good measure of confidence. “Last season was without question the lowest price industrial onion season on record,” he reports. “Ex-farm prices averaged around £34/t for 60mm+ sizes - less than half of the cost of production.
“But with expected reductions in yield throughout Europe this year, it’s my fervent hope that we shall see a sensible onion trade this season,” says O’Malley
“UK plantings are down, but it’s a similar picture across Europe. Dutch plantings are expected to be down by around eight to 10 per cent, although figures have yet to be released on estimated yield.
“There are no official figures yet from Poland either, but plantings are expected to be considerably down on last year - estimates range from 20 to 30 per cent,” he says.
“And the drought in Spain this summer is expected to have a considerable downward effect on the Spanish yield this season.
“If we do get these reductions in yield, the market will hopefully position itself somewhere between the peaks of 2003/04 and the troughs of last season.”
Wherever the market positions itself, UK growers and suppliers must be in a position to take advantage - in both the fresh and processing sectors - in order to re-stabilise the industry following the hardships that were suffered last year.
Tremayne says: “The challenge to the UK grower is to be able to market the whole of the crop.
“Over 90 per cent of UK production is sold on the home market and, in terms of weight, supermarkets take about 60 per cent of the total with around 20 per cent going into the processing industry and the rest into the wholesale market and non-multiples.
“In terms of value, the market is dominated by the supermarkets - but we not only have to be able to sell to the supermarkets the quality they’re looking for but also to have the same quality going into the wholesale markets and then to sell the surplus into processing.
“The challenge we’ve got in processing is the price that the competition is prepared to put in from Europe compared to the prices our producers are capable of delivering,” he says.
“We must find the balance between the processors’ demands and the UK growers’ demands in terms of price to try and find common ground, because this is a very important part of the marketing mix for the UK grower.”
Can the challenge outlined by the BOPA chairman be met? It’s a debatable point, and one about which the Allium Alliance’s Gray has some doubts.
He says: “There’s a bit more mileage in the UK market, if you consider that our consumption is around 700,000t - and still growing - and that we produce 400,000t to 450,000t ourselves. But what our industry must do is get better at packaging, marketing and supplying to order.
“Specialist marketing operations like ours supply exactly what our customers order, but there are some smaller growers who still write invoices on the back of fag packets and think they can put five tonnes on the back of a lorry and a mate down Covent Garden will do a job for them.
“That kind of thing is admittedly now in the minority, but we’ve got to eliminate it altogether if we are going to make ourselves smarter at this part of the business.
“In the long term our aim has to be to grow sufficient quantity and quality to meet the demands of the supermarkets, who are pro-British given the opportunity, and we have to be able to take advantage of that.
“In our markets outside the multiples we have to become smarter, looking perhaps at what our competitors in Europe are doing in terms of packaging, presentation and marketing,” Gray says.
“Last year as a company we went to Fruit Logistica in Berlin, and after our experience there we’ll be going back again this year. As well as the opportunity to meet European customers it gave us a clear insight into what our competition is doing in Europe and that was very beneficial to us.
“The destiny of the UK onion industry is in our own hands. We can sit back and be lethargic, watching other nations coming in and pinching our market, or we can get off our butt and be pro-active ourselves - and if we do the latter, I’m sure there’s a bright future for us.”
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