Texas onion shippers hopeful for turnaround in the market
Texas onion shippers hopeful for turnaround in the market
In 2007, The Onion House in Weslaco, TX, invested in new packaging equipment to facilitate two-, three-, five- and 10-pound consumer packs of the famed Texas sweet onion.
"But we ended up shipping very few bags last year," said Don Ed Holmes, president of the Rio Grande Valley growing, packing and shipping operation.
It wasn't lack of popularity that doomed sales of the bagged onions last year but rather a very nice problem to have. "Prices were just too high," he said. "At the kind of prices consumers were paying, most of them just wanted to buy one or two onions. A three-pound bag would have had to cost over $5."
Texas onion growers enjoyed a very good market in 2007. "The price on yellows was consistently over $30 [for 50 pounds], and whites were selling for $35-$50 per sack," said Mr. Holmes.
As Texas started its season in 2007, it was a red-hot onion market and it stayed strong all season. "The industry is paying the price now," he said in mid-February.
As is typically the case, very high prices bring out abundant onion supplies and the market falls, usually sooner than later. Last year it remained strong for an extended period, but by autumn it was in the dumps again. The Northwest had perfect growing conditions, record volume and a depressed market. Onion prices have been low for six months and remain in the $4- $4.50 range per 50-pound sack.
Chris Eddy, sales manager for Duda Farm Fresh Foods Inc. in McAllen, TX, told The Produce News March 4 that an early start to the Texas deal is compounding the supply situation.
"We have had unseasonably warm weather pretty much since fall," he said. "The onions have enough heat units and it looks like the crop is going to be a week or two early. Texas onions usually start shipping between March 15 and March 20, but there are going to be some early onions this week."
He said that Duda, which usually starts a bit later, would have its first onions one week early on March 15. "Certainly there is no need to rush to get going this year [because of low prices], but on the other hand, if you can spread out your volume over a longer period of time, that's usually a good thing."
Mr. Eddy said that Texas acreage is down about 10-15 percent this year, with most of the decrease being in the latter part of the deal when production shifts to the Laredo and Winter Garden districts. He expects that it will be a tough market through March and well into April, but because of the acreage reduction, the latter part of the season could see some good marketing opportunities.
"We could see a strong market in May and June," he added.
Ken Nabal, vice president of sales for Frontera Produce Ltd., which operates its Texas deal from Edinburg in the Rio Grande Valley, agreed that 2008 "is going to be a difficult selling season with overall increased volumes domestically." He said the company will have to be on its "A-game" to come out ahead.
But while the Texas acreage is down, Frontera is expecting about 10 percent greater volume than 2007. Mr. Nabal said that "plenty of bagged promotions have been lined up to offset deflation in f.o.b.s from last season."
Mr. Holmes said that the low fall prices definitely affected Texas onion acreage this year. He estimated acreage to be at least 15 percent less than last season's figure of about 12,000 acres. The Onion House executive is a bit more optimistic about this year's supply-and-demand situation, expecting that prices will rebound from where they are now and that Texas producers will have a normal season.
By late March, Mr. Holmes expects the Northwest to be cleaned up and for prices to have risen. He said that a market of $6-10 for that 50-pound sack is normal, and most shippers will be happy to get the upper end of that this year.
"When you have a big year you usually have to divide by two," he said referring to the typical scenario when the following year is a bloodbath. Mr. Eddy said that in the past, the onset of spring and the accompanying warm weather in the Northwest would usually result in some onion sprouting, a lighter packout and the curtailment of shipments. But he said that more and more shippers have constructed climate-controlled storage facilities that enable them to hold the onions that much longer.
"I know there are shippers that can go through April and well into May," he said.
Though it might not be a great year with regard to f.o.b. prices, Mr. Eddy said that the popularity of sweet onions in general continues to grow, and he is looking forward to increased sales.
"The sweet onion continues to grow in popularity, and most retailers now have a year-round program [by sourcing from many different districts]," he said. "Because of that, the spring crop [from Texas] might not generate the same amount of enthusiasm as it did before, but it is still a very good deal."
Mr. Eddy said that Duda is concentrating its marketing efforts on "certifying" the sweetness of the onions themselves to assure customers a good eating experience and the desire to come back and buy more. He said the certification program is a tricky one, as you can't give customers too much information about the interplay between acidity and the sugar level as that will confuse them, but you do want them to understand that this is a sweet onion.
With the new season now begun, it is easy to forget last year, but Mr. Holmes said that it is one the Texas shippers won't forget for a very long time. "I was still in high school in 1973, but my dad was in the onion business and that's the last time we had a market this good. In fact, if you adjust the dollar for inflation, I think 1973 was even better [than 2007]. We also had a really good year in 2003, but not as good as last year."
In fact, Mr. Holmes wouldn't be surprised if he never sees another market quite as good. "If we have them every 30 years, I expect to be retired by the time the next one comes around," he quipped.
He admitted that there are lots of smiling faces on Texas growers this year, even as they face a difficult year. And even though he didn't use those new bagging machines last year as much as he expected, he was able to pay for him.
"If we have another year like last year, I don't mind putting them away for another year," he added.
"But we ended up shipping very few bags last year," said Don Ed Holmes, president of the Rio Grande Valley growing, packing and shipping operation.
It wasn't lack of popularity that doomed sales of the bagged onions last year but rather a very nice problem to have. "Prices were just too high," he said. "At the kind of prices consumers were paying, most of them just wanted to buy one or two onions. A three-pound bag would have had to cost over $5."
Texas onion growers enjoyed a very good market in 2007. "The price on yellows was consistently over $30 [for 50 pounds], and whites were selling for $35-$50 per sack," said Mr. Holmes.
As Texas started its season in 2007, it was a red-hot onion market and it stayed strong all season. "The industry is paying the price now," he said in mid-February.
As is typically the case, very high prices bring out abundant onion supplies and the market falls, usually sooner than later. Last year it remained strong for an extended period, but by autumn it was in the dumps again. The Northwest had perfect growing conditions, record volume and a depressed market. Onion prices have been low for six months and remain in the $4- $4.50 range per 50-pound sack.
Chris Eddy, sales manager for Duda Farm Fresh Foods Inc. in McAllen, TX, told The Produce News March 4 that an early start to the Texas deal is compounding the supply situation.
"We have had unseasonably warm weather pretty much since fall," he said. "The onions have enough heat units and it looks like the crop is going to be a week or two early. Texas onions usually start shipping between March 15 and March 20, but there are going to be some early onions this week."
He said that Duda, which usually starts a bit later, would have its first onions one week early on March 15. "Certainly there is no need to rush to get going this year [because of low prices], but on the other hand, if you can spread out your volume over a longer period of time, that's usually a good thing."
Mr. Eddy said that Texas acreage is down about 10-15 percent this year, with most of the decrease being in the latter part of the deal when production shifts to the Laredo and Winter Garden districts. He expects that it will be a tough market through March and well into April, but because of the acreage reduction, the latter part of the season could see some good marketing opportunities.
"We could see a strong market in May and June," he added.
Ken Nabal, vice president of sales for Frontera Produce Ltd., which operates its Texas deal from Edinburg in the Rio Grande Valley, agreed that 2008 "is going to be a difficult selling season with overall increased volumes domestically." He said the company will have to be on its "A-game" to come out ahead.
But while the Texas acreage is down, Frontera is expecting about 10 percent greater volume than 2007. Mr. Nabal said that "plenty of bagged promotions have been lined up to offset deflation in f.o.b.s from last season."
Mr. Holmes said that the low fall prices definitely affected Texas onion acreage this year. He estimated acreage to be at least 15 percent less than last season's figure of about 12,000 acres. The Onion House executive is a bit more optimistic about this year's supply-and-demand situation, expecting that prices will rebound from where they are now and that Texas producers will have a normal season.
By late March, Mr. Holmes expects the Northwest to be cleaned up and for prices to have risen. He said that a market of $6-10 for that 50-pound sack is normal, and most shippers will be happy to get the upper end of that this year.
"When you have a big year you usually have to divide by two," he said referring to the typical scenario when the following year is a bloodbath. Mr. Eddy said that in the past, the onset of spring and the accompanying warm weather in the Northwest would usually result in some onion sprouting, a lighter packout and the curtailment of shipments. But he said that more and more shippers have constructed climate-controlled storage facilities that enable them to hold the onions that much longer.
"I know there are shippers that can go through April and well into May," he said.
Though it might not be a great year with regard to f.o.b. prices, Mr. Eddy said that the popularity of sweet onions in general continues to grow, and he is looking forward to increased sales.
"The sweet onion continues to grow in popularity, and most retailers now have a year-round program [by sourcing from many different districts]," he said. "Because of that, the spring crop [from Texas] might not generate the same amount of enthusiasm as it did before, but it is still a very good deal."
Mr. Eddy said that Duda is concentrating its marketing efforts on "certifying" the sweetness of the onions themselves to assure customers a good eating experience and the desire to come back and buy more. He said the certification program is a tricky one, as you can't give customers too much information about the interplay between acidity and the sugar level as that will confuse them, but you do want them to understand that this is a sweet onion.
With the new season now begun, it is easy to forget last year, but Mr. Holmes said that it is one the Texas shippers won't forget for a very long time. "I was still in high school in 1973, but my dad was in the onion business and that's the last time we had a market this good. In fact, if you adjust the dollar for inflation, I think 1973 was even better [than 2007]. We also had a really good year in 2003, but not as good as last year."
In fact, Mr. Holmes wouldn't be surprised if he never sees another market quite as good. "If we have them every 30 years, I expect to be retired by the time the next one comes around," he quipped.
He admitted that there are lots of smiling faces on Texas growers this year, even as they face a difficult year. And even though he didn't use those new bagging machines last year as much as he expected, he was able to pay for him.
"If we have another year like last year, I don't mind putting them away for another year," he added.
