Inflation is taking its toll on U.S. onion importers as costs rise above a level where suppliers can effectively recoup their losses.
“Input costs such as fuel, labor and fertilizers have risen dramatically and over a short period of time,” said Troy Bland, CEO at Glennville, Ga.-based Bland Farms LLC. “It’s almost impossible to pass along all the additional costs to consumers.”
Glennville-based G&R Farms has experienced double-digit price increases on everything from labor to crop inputs to packaging materials, said Walt Dasher, vice president.
Something like seed might be up 15% to 20%, where fungicide, herbicides and insecticides might be up 35% to 65%, he said.
“The big ticket increases are being felt in fuel and nitrogen inputs that are running 80% to 100% up in costs,” he said.
G&R Farms works closely with vendors to manage and anticipate costs, Dasher said, and works with its production team to consider ways to manage inputs without impacting quality.
Transportation costs have been a major trouble spot, but Bland Farms has taken a proactive tactic to get ahead of freight challenges, and it seems to have paid off, Bland said.
The company expanded its freight department and brought on Robb Sanfillipo, who has more than 30 years’ experience in the freight industry and is “dedicated to managing freight and keeping costs down,” Bland said.
He is assisted by longtime employee Michael O’Shaughnessy and newly hired Zach Allen, who serves as an analyst.
Logistics and sourcing have been the biggest challenge at G&R Farms, Dasher said.
“We are used to locking in pricing and securing many of our inputs in advance, and some of our vendors are reluctant to lock in inputs, or they are also putting on controlled volume allocations to manage their own supply and demand,” he said.
But Dasher sees an opportunity for some companies, including G&R Farms, which are “well monetized or not overleveraged.”
That’s because many farms may not be able to plant their total acreage due to high input costs, so other farms with more access to operating capital will have the opportunity to partner with them to continue to expand acreage, he said.
Despite some inflation relief in the form of lower fuel costs, no one is breathing a sigh of relief.
“Everyone is happy to see that fuel costs may have peaked and are now coming down,” Bland said, “but we are not celebrating falling costs yet.”
G&R Farms has not seen any signs that inflation is subsiding, but Dasher said it is “somewhat stabilized.”
“We see glimmers of hope that some supply chain issues begin to resolve, only for new ones to pop up,” he said. “I think we can all expect to see some frustrations for another 12 to 24 months.”
Despite high inflation, Bland does not expect to see a major increase in Peruvian sweet onion prices this fall.
“Pricing will be very similar to the prices coming out of Vidalia season,” he said. “The market has adjusted to the increased input costs we have been experiencing.”
