He acknowledged there’s still some philosophical disagreement in the industry on which is the right way to go.
“Producers on the open market could sometimes enjoy a month of fantastic price hikes that would make the whole world look rosy, but contract pricing eliminates that,” he said.
The retail customer is the ultimate judge, however, Mininger said.
“Buyers want to see a consistent price in their store and want to know they’re going to pay X amount all year-round, so they’ve locked in their costs,” he said.
Hermiston, Ore.-based River Point Farms LLC contracts most of its 500 million pounds of onions each year, said Bob Hale, president.
“The fixed-pricing, fixed-margin part of our value proposition is sell it first, and that gives you more certainty,” he said.
The challenge, he added, is in understanding the marketing that works for the grower and customer.
“Certainly you don’t have the highs on the spot market, but you don’t have the lows like you have this year,” he said.