As inflation grips various sectors, the onion market is experiencing historic price levels in 2024.
Factors including weather-related disruptions in key growing regions like Mexico and Texas, coupled with increased costs of production, have led to a tight supply situation, John Harris, president and founder of Paradigm Fresh, told The Packer.
Despite challenges, the National Onion Association says it remains proactive, advocating for the industry and launching initiatives like “Certified Delicious” to promote onion-centric culinary experiences.
With the onion market surpassing $3 billion, according to Nielsen data, adaptability and innovation remain crucial for sustained growth in this staple vegetable category.
Onion per capita consumption in the U.S. has been increasing, according to USDA data. Fresh onion retail per capita consumption in 2020 was 19.21 pounds, up from 18.22 pounds in 2019 and up from 17.74 pounds in 2000, according to the USDA.
In The Packer’s Fresh Trends 2024 consumer survey, 60.1% of participants reported they bought onions during the past year. Those reporting the highest rates of purchases included higher-income, older consumers and households without dependent children.
Market outlook
Onion prices for 2024 to date have been near historic levels, first with white onions and now with red onions, Harris told The Packer.
Yellows have been above market averages for the year until just a few weeks ago, he said.
“Hurricane Hilary came through in late August of 2023 and destroyed much of the early Mexican crop that fed their domestic demand,” Harris said. “It was transferred to buying from Mexico in late 2023 and well into 2024.”
Canada and New York had a short crop due to torrential rains during their late summer harvest periods. Mexico was down in acreage this year due to water shortages.
“Texas had similar issues as Mexico, with significant water shortages when they planted,” Harris said. “All exports to Mexico created a supply shortage in the U.S., and the markets reacted.”
There was a month when the only white onions in the country were in contract business, with no open market availability anywhere, he said.
“The storage supply of reds was depleted early this year, and fresh-crop reds are the only supply left now with a shortage of reds and very high fob prices,” Harris said. “We are in line to have above-average market conditions through the summer, with [New York] and Canada being buyers, where they are usually part of the supply chain.”
The situation has been like a double whammy with the two providing supplies and being a buyer of all sizes and colors.
“They typically have at least yellow onions this time of year and well into June,” Harris said.
Time will tell if this higher market trend continues into the fall.
“It’s not a secret that input — ground, seed, diesel, fertilizer, packaging costs, the list goes on and on … — costs to raise these crops have skyrocketed in the last five years,” Harris said, adding that there is no question that the market average will rise to support these costs.
Rather than that extra money going into the grower’s pocket, it’s simply covering the additional overhead costs to produce the crop, he said.
Sales and demand
Overall, Circana retail scan data for the 52-week period ending Jan. 28, 2024, shows modest growth in onion sales, driven by increased volume sold, in both conventional and organic, despite a slight decrease in average prices.
According to the data, volume sales of onions totaled 2.26 billion pounds, up 3.3% compared with the previous year. The average price for onions for that period was $1.27 per pound, down 2.5% compared with the previous year.
Circana data for the period showed that retail onion sales increased 0.7% compared with the previous year.
“2023 was interesting. We entered the beginning of the year with very good markets on all sizes and colors and a manageable supply of onions in U.S. storage,” Harris said. “Mexico had a very large crop that started crossing in January and didn’t seem to relent until sometime in July, which put the brakes on what would have otherwise likely been a strong market from January to July.”
This year’s storage crop was typical when fall 2023 started, he said.
“2024 has yielded 7,000 more truckloads sold this year from last year,” Harris said.
Part of what is driving that is the importing of 3,500 fewer truckloads this year than at the same time last year, he said.
“The market was decent in September, sluggish and under production costs in October and November,” Harris said. “The effects of [Hurricane] Hillary and the Mexican buying started to take place the last week of November 2023, and that led us to know what a market has been, which has been a dream for most growers.”
Demand will continue to be strong through July, and it usually slows in later August as children get back to school and routines change, he said.
“For instance, a contract price on a [50-pound pack of jumbo] yellow in the fall out of the Northwest three to four years ago was probably around $7.50/50wt,” he said. “We probably won’t see contracts for the same item for below $10 fob this fall.”
Cobbtown, Ga.-based Shuman Farms is offering Vidalia onions from Georgia from April to September, sweet onions from Peru from September to March and sweet onions from Texas from March until Vidalia season kicks off in April, company President and CEO John Shuman told The Packer.
Shuman Farms promotes its sweet onions through its two consumer brands: RealSweet and Mr. Buck’s Farm Fresh, Shuman said.
“We recently announced the acquisition of Generation Farms, which has allowed us to take operational control over all of their land and facilities,” he said. “The additional assets have allowed us to add 30% more acreage to our Vidalia onion program.”
With more packing capability in the new site, plus capital improvements to its existing facilities, Shuman Farms has increased its storage capacity by nearly 25%, allowing it to continue distributing Vidalia onions through Labor Day, Shuman said.
Promotions
This year Shuman Farms is focusing on “edutainment” — creating content and programs that are engaging and entertaining to teach consumers about sweet onions, healthy eating and fresh produce, Shuman said.
Based on the company’s own research and industry trends, there is a lot of opportunity to educate the next generation of shoppers — young millennials and Generation Z — on fresh produce, he said.
“Reaching this age group is different than previous generations and edutainment is an important tactic to do so,” Shuman said. “Through our programs and content, we are aiming at educating consumers, helping them with their health and wellness goals, increasing their knowledge about items in the produce department and teaching them culinary skills that will empower them to cook with fresh ingredients.”
He said Shuman Farms’ tactics include a social media strategy; SEO-favored website content; active shopper marketing programs; simple and clear in-store signage and display bins; traditional media campaigns; and strong giving-back initiatives.
The National Onion Association is currently promoting a program called Certified Delicious, which recognizes chefs and restaurants across the country that have been identified by the association’s culinary team as serving fresh, delicious meals with onions.
Criteria for Certified Delicious designation includes:
- Restaurants and/or the dish must be spotted or submitted by a member of the National Onion Association culinary team.
- No restaurant or chef solicitations are allowed; no restaurant may buy its way into the program.
- Onions used in dishes are plentiful and fresh; no frozen onions or preprepared foods are allowed.
- Menu items must be regular or established on the menu; no specials or one-offs.
- Only U.S. restaurants are eligible for awards.
