Most southern-hemisphere onion producers begin eyeing the UK market with interest in February, as they gear up for the new season.
Normally, Fresh World Ltd imports onions from New Zealand, Chile and mainland Australia. However, 2008 looks likely to be anything but normal, and the Spalding-based importer will not be handling onions from Australia this season. “Drought conditions in several areas during the growing period will mean that Australia will be buying in onions, rather than selling them,” says Fresh World’s managing director Colin Galbraith.
New Zealand is also expected to face a challenging run. Reports are now filtering through that poor weather conditions have affected South Island production, and that the crop could be down by as much as 15-35 per cent, depending on the growing area.
While normal production is between 18 and 20 tonnes per acre, Galbraith says Pukekohe, a key growing area, is said to be producing around 14-15t per acre, while in other areas, volumes are down to as low as 11-12t per acre.
“The overall situation is short, and there is going to be no overall surplus in the UK, no matter what the size,” Galbraith tells FPJ.
In addition, a threat is hanging over Chinese onion shipments to Japan, due to possible residue problems. If Japan closes its borders to Chinese product, it is likely to turn to New Zealand onions, which could impact on prices.
Gerard Goekman, who is responsible for southern-hemisphere onion imports for Dutch firm Mulder Onions BV, says the first New Zealand onions arrived at the port of Rotterdam in the third week of February.
As well as New Zealand, Mulder Onions BV also imports from Argentina, Chile and South Africa. The company primarily deals with European supermarkets, although it sells some product, in particular large-sized Chilean volumes, via the wholesale markets.
Meanwhile, Oakley Grower Services (OGS), part of the Oakley Group, is gearing up for the new Tasmanian onion season, and first arrivals are due to land in the UK on April 4, says Lance Cornell, joint marketing manager.
Cornell spends nine months of the year in Australia, and is on hand to see the crops at every stage. He comes back to the UK during the marketing season, and says weather conditions in Tasmania to date have been good generally, although a few isolated areas are experiencing a lack of rain.
“Yields in the field are down by four to five per cent, but quality levels have been very good and, because of this, yields could pick up in the packhouse,” he tells FPJ. “Planting areas are on a par with last season.”
OGS is aiming to increase its Tasmanian onion imports by 50 per cent this season. The company deals exclusively with Webster Fresh (formerly Field Fresh Tasmania), handling the onion variety Cream Gold, and supplies the brands Field Fresh Tasmania and Premium Gold.
This will be the third season that OGS has been involved in Tasmanian onions. “When we first started in 2006-07, we faced challenging conditions, but reasonable returns were achieved,” Cornell says. “It was a much better story in 2007-08, as onions achieved record prices. We are looking to gain ground on the back of last year’s successful season.”
OGS also handles red onions, which Cornell acknowledges are less easy to handle and are more of a delicate product. The company does a lot of direct deliveries from the Port of Southampton, but has extensive storage facilities at Oakley Farms’ Wisbech site, which enables the onions to be kept at their optimum quality.
Cornell says significant improvements have been made in getting Tasmanian red onions to the UK market in good condition, and OGS is looking to increase its red onion volumes by 60 per cent on last season.
OGS has been busy with a whistle-stop tour of the UK, informing its customers of first arrivals. This communication is vital, and Cornell says that regardless of how the market performs, a key objective is to deliver a good commercial return that will encourage Tasmania to continue shipping to the UK.
The foodservice sector makes up OGS’ main customer base for Tasmanian onions, and Cornell says the company’s aim is to “stabilise and increase its presence in this sector”. Furthermore, he acknowledges that the wholesale sector is gaining a “foodservice mentality”, and is offering a wider range of services and better continuity of supply to its customers.
Tasmania’s biggest rivals in the UK are South Africa and New Zealand. South Africa comes on line slightly earlier than Tasmania, and early volumes were available in the UK market at the end of February. Cornell says this will mean the South Africans exit the market earlier.
According to Galbraith, South Africa is not expected to throw up any surprises on the export front. “Although the crop may be down domestically, the premiums for high-quality export onions are still being sought,” he explains.
Goekman agrees that South African onions are achieving good returns, although he adds this could affect the volumes shipped to Europe. He predicts that southern-hemisphere onions may linger for slightly longer this season although, due to the inclement weather in some growing areas, sizes might tend to be a little smaller than usual.
“The volume expected from most southern-hemisphere countries will be similar to last season,” he adds.
One difference Goekman expects to see in 2008 is the number of traders involved in the southern-hemisphere onion deal. “Last season, a lot of exporters and importers were not the traditional traders, but companies looking to make fast and easy money in a market with high expectations and prices,” he says. “This season, we are back to basics, where the traditional exporters and importers will do the job.”
Galbraith says some Chilean onion shippers could see resistance in the UK market this season. “Those growers without long, established relationships, who pursued opportunities in the US at the expense of Europe last season, are suffering from a credibility problem, and need to do a lot of convincing,” he claims.
While sources debate whether the UK represents a good return for southern-hemisphere growers, Galbraith says the UK is an important market, as customers are loyal to their suppliers and producers can be confident they will have a market, “albeit one which is subject to the pressures of the monetary policy of each country”.
The pound sterling has experienced a 13 per cent devaluation since the end of the 2006-07 southern-hemisphere season. “With UK retailers not wanting to increase their prices, it means either they reduce their sales price in New Zealand dollars, or see a reduction in orders,” explains Galbraith.
How the UK onion growing sector will react to its current difficult situation is also a consideration. “The capability of growers to achieve higher prices for crops such as wheat and rape seed, without the risks and costs, is just as important, if not more important, than UK onion prices,” Galbraith says. “The fact is that if the UK retail sector does not pay more for its onions, it will see the supply base shrink, as growers ignore crops like onions and get nice, easy returns on low-risk crops.”
In the future, some sources argue that southern-hemisphere exporters could face greater competition from northern-hemisphere producers, particularly from Europe, as growers there attempt to extend their season.
But it is no secret that the European onion sector has faced challenging times in recent months and, while some growers are more bullish than others, claiming that their season can even run until June, Cornell believes that consumers will always pick a new onion over an old one.
“We always need to maintain our standards - you are only as good as the last order,” Cornell says. “The year-on-year challenge is to maintain presence and quality.”
However, he argues that given Tasmania’s superior air quality, clean water and fertile soil, “you couldn’t wish for better conditions in which to grow vegetables”.
The weather is likely to be on the agenda for global producers in the coming years, given the recent focus on climate change. Cornell says that Tasmania has experienced higher temperatures and less rainfall over the last couple of years, but he adds that the industry is monitoring the situation carefully.
Climate change has shown that the UK cannot rely on producing its own onion supplies year round. “The summer weather seems to vary from extremely warm and very dry, to very cool and extremely wet - both conditions result in crop shortages,” Galbraith says.
“If the weather was more stable and predictable, as it was in general terms in the 1980s and 1990s, then you could rely on producing high-quality product in large volumes, and reducing the need for southern-hemisphere onions to a minimum.”
However, given the unpredictable British weather, that scenario does not seem possible, at least not for the foreseeable future. Galbraith says that when controlled atmosphere (CA) stores were initially developed, there were hopes that UK onions would be able to be stored year round.
But Galbraith says low prices, due to European oversupply, have discouraged investment. “Worries about shelf-life capabilities and the supermarkets’ need to have ‘fresh’ product on the shelf has meant that there is a place for southern-hemisphere onions, although the marketing period may have seen a cut at both ends,” he says.
OGS EXPANDS TASMANIAN RANGE
Oakley Grower Services (OGS) is to begin importing Tasmanian carrots for the first time this season. First arrivals are expected to land in the UK in late May, and the season will run through to June.
“OGS will handle the carrot varieties Mojo and Koyo,” says OGS’ Lance Cornell.
Webster Fresh Ltd will supply OGS with carrots, and the two companies have worked together on the packaging design, so that the boxes suit the UK market.
“We are offering a value-added product,” says Cornell. “We don’t want to simply fill in a seasonal gap. We are trying to create a niche and point of difference, by offering consumers different choices.
“Tasmania always needs to achieve a premium given its long distance from the UK, and we are confident that we will be giving consumers greater choice and added value.”
OSO SWEET EYES UK RETAIL MARKET
Chilean sweet onions may only represent a small percentage of the southern-hemisphere deal in the UK, but Oso Sweet is excited about this season’s prospects. Victor Phaff, Oso Sweet’s European marketing manager, has been in talks with two UK retailers since February, and is confident that they will begin importing Oso Sweet onions in the coming months.
“Although sweet onions are still considered to be a niche product, I estimate the EU will import around 6,000-7,000 tonnes this season,” Phaff tells FPJ. “Of this amount, the UK imports 1,500t.”
According to Phaff, no one really believed in sweet onions in the early 1990s, but he says the tide has turned, and more producers are entering the sector. “The UK, France, Spain and Benelux countries offer the best opportunities for Oso Sweet onions,” he adds.
Oso Sweet consists of 13 growers and a packing station in Chile. Onions are available from the first week of January until the beginning of May and, according to Phaff, growing conditions have been “superb” this season.
Oso Sweet has been exporting sweet onions to Europe since 1995, and the product is shipped to Rotterdam. From the Netherlands, the product is then distributed to several European cities, which this season will include Moscow for the first time.
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