Onion growers say product provides bit of insulation
By Jim Offner
Special to The Packer
The U.S. Bureau of Labor Statistics’ Consumer Price Index says meat prices rose 6.4% from April 2013 to April 2014. Most other food items, including fresh onions, did not follow suit.
New Mexico onion growers and shippers say they expect to sell ample volumes this year, but some are cautious about economic factors that may pose even an indirect threat.
“I think everything is affected to some degree, but potatoes and onions are normally a pretty staple item,” said Bill Coombs, salesman with Arrey, N.M.-based Desert Springs Produce.
Coombs said onions remain a “value” in the marketplace, perhaps because they’re offered in an array of counts and sizes.
“You’re seeing the consumer packs and bulk onions displayed; 3-pound yellows and 2-pound whites, different sizes, and the retailers are doing a nice job of displaying the product,” Coombs said.
Jeff Brechler, salesman and grower liaison with Deming, N.M.-based J&D Produce, agreed.
“Folks gotta eat, so we haven’t noticed any changes on the onions,” he said.
Onions have some insulation from harsh economic trends, said TJ Runyan, owner of Las Cruces, N.M.-based Mesilla Valley Produce.
“Obviously, the stronger the economy, the better off we all are, but my experience tells me onions have shown to be somewhat recession-proof,” he said.
Jay Hill, salesman with Hatch, N.M.-based Shiloh Produce Inc., said onions are not invulnerable to economic conditions.
Other factors, such as weather, could affect onion sales over the summer months, Hill said.
“You get extreme heat and people stop barbecuing, but you have a mild Fourth of July and everybody is outside barbecuing and putting onions on their burgers, and you’ll see a bump,” he said.
The weather hasn’t cooperated in the last couple of years, Hill said.
“Back east, it’s been real hot on the Fourth and slowed the market a little bit,” he said.
Brandon Barker, salesman with Las Cruces, N.M.-based Barker Produce Inc., said he’s not worried about selling onions, but he also said a faltering economy could hit some market channels a bit harder than others.
“It affects restaurants, of course,” he said, noting that his company has some foodservice customers.
Scott Adams, owner of Hatch, N.M.-based Adams Produce Inc., said he couldn’t predict whether the economy would affect onion sales this year.
Trucking costs up
There are cost concerns related to trucking, Hill said.
“It’s horrible, right now, just trying to get a reasonable rate,” Adams said of the trucking situation.
New regulations, particularly in California, and a shortage of drivers have created a sellers market in the trucking business, Hill said.
“We’re $600 to $1,000 more per load — that’s if you’re finding cheap trucks,” he said of the rates this year. “As far as mileage rate, it’s probably gone up 50 cents a mile at least. It’s off the board.”
A possible solution, for now, is to lock down long-term contracts, Hill said.
“We’ve really focused on getting contracts with some trucks to make sure we don’t have to change our f.o.b.s, so we can take care of our growers,” he said.
It’s helpful to develop a “good relationship” with trucking firms, Hill said.
“Last year, we might have paid 10 cents a mile over what the market was, but this year, I’m 10 or 20 cents below what the market is,” he said.
Trucking firms haven’t abandoned the company, even with lower margins, Hill said.
“It’s making it worthwhile to stick with these guys,” he said. “Pay your bills and stay with them and they’ll stay with you.”