‘Perfect storm’ pushes onion prices below costs
NYSSA, Ore. — U.S. onion prices have plummeted significantly from last year’s levels.
“The open market prices right now are below the cost of production. It’s making it pretty tough for growers right now,” said Oregon farmer Reid Saito.
Jumbo yellows are going for about $5 per 50-pound bag now, compared with $12 last year, said Kay Riley, manager of Snake River Produce in Nyssa. Medium yellows are fetching between $3.50-$4 per bag, compared with $10 last year.
“Demand has been a little on the lackluster side for about eight or nine months now,” Riley said.
Owyhee Produce General Manager Shay Myers said prices, on a per bag unit, are 20 to 30 percent below normal.
“These prices we’re seeing are definitely below the cost of production,” he said. “There’s just no money to be made off of onions right now.”
The price decline is the result of several negative factors, Myers said, including limited exports to Pacific Rim and Central American countries, where a lot of U.S. onions traditionally end up.
“They’re still being shipped to those countries but at a much, much slower pace,” he said.
Asian countries have an ample supply of onions this year and are importing less from the United States. When there are opportunities to export onions to those nations, it’s difficult to get them shipped because of the West Coast port slowdown, Myers said.
The Russian embargo on certain agricultural commodities is also a major factor, he added. Onions from the U.S. are not on the list of banned items, but onions from Europe are and a lot of those onions are ending up in nations that typically import a lot of U.S. onions.
Central American countries that are usually major customers of U.S. onions “are flooded with Dutch and Spanish onions right now,” Myers said.
The Treasure Valley area of Idaho and Eastern Oregon typically produces 1 billion pounds of yellow, red and white bulb onions a year, about 25 percent of the nation’s supply.
Plantings in the region were up 8 percent this year, Myers said. “Eight percent of 1 billion pounds ends up being a whole lot of extra onions.”
Freight rates are up 27 percent over last year on a cost-per-unit basis, Myers said, and just finding enough trucks has been a problem as well, Saito said.
Myers said all those factors have added up to a perfect storm when it comes to onion prices.
“It’s a multitude of factors that have come together at the same time,” he said. “Considering all those negative things that are happening right now, I’m glad to be where we’re at.”
Saito said growers are hoping things turn around in 2015.
“2015 is a new year and growers around here are pretty resilient,’ he said. “I think the majority of them will find a way to make it through this.”