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Fall in spring onion prices reflects supply, demand

While most Rio Grande Valley onion producers were able to get excellent prices earlier this spring, the market has weakened in past weeks, leading to reduced profits for those harvesting now, said a Texas Cooperative Extension economist in Uvalde.

"Beginning last summer, bad weather in the U.S. and Mexico affected both the amount of onions available for storage and the spring onion planting this year," said Jose Pena, Extension economist at the Texas A&M University System Agricultural Research and Extension Center in Uvalde. "Reduced storage and significantly reduced U.S. planting, along with worldwide onion shortages, led to excellent market bids when onion season opened."

Onion prices reached record levels earlier this spring, Pena said.

"Around mid-April, white jumbo onions were trading for about $55 per 50-pound sack, around seven times the price at the same time last year," he said. "And 50-pound sacks of yellow jumbo onions were trading at about four to five times last year’s price, while Super Colossals were trading at about three to four times their previous price."

According to the U.S. Department of Agriculture’s 2007 vegetable report, the nationwide acreage for spring onions is down about 8.7 percent from last year. In Texas, reduced planting is expected to mean a 19.4 percent decline in this year’s onion production.”

“Lower production contributed to higher prices earlier in the season,” Pena said. “And onion imports from New Zealand, Chile, Mexico and other countries helped ‘fill the demand gap’ and contributed to weakening the market.”

Foreign onion imports have helped create an oversupply in the U.S. market at this time, he said, and have contributed to once-record prices now dropping to about the same as last year.

"Producers in the Rio Grande Valley were able to take advantage of the higher prices earlier in the season because when most of their harvesting was done,” said Ray Prewett, executive vice president of the Texas Vegetable Association. “But now the market has decreased and that’s bad news for the folks now harvesting in the Winter Garden area.”

Though the importation of foreign onions has had an effect on the market, there are other contributing factors, Prewett said.

“Some of the lower pricing situation now is due to the increase in imports of foreign onions, but I think other issues, such as onion contracts, have probably had some effect,” he said. “And once onion prices get low, it’s just difficult for them to come up again.”

Onion production in many areas was delayed due to cold weather and problems with disease, Prewett said. And many Texas producers continue to have difficulty in finding adequate labor for harvesting.

The lower Rio Grande Valley, which produces most of the spring onions in Texas, was planting about 30 percent fewer acres than last year, according to the USDA report.

“Limited onion supplies created record market prices early in the Valley’s harvest, which got off to a delayed start due to heavy rains during planting in October,” said Dr. Juan Anciso, Extension vegetable specialist at the Texas A&M research and extension facilities in Weslaco.

Prices were excessively high around mid-April, Anciso said, but later dropped, in part due to slower demand resulting from those initial prices.

Disease also was an issue with this year’s onion harvest, he said. Plant pathologists are trying to determine the cause of a what could be a new bacterial disease affecting this year’s bulbs.

In the Texas Winter Garden region, where most of the production is now taking place, onions are being planted on about 2,600 acres, down about 900 acres from last year, according the USDA’s vegetable report.

“We’re producing a lot fewer onions in the Winter Garden than last year,” said Frank Eddy, the new owner of McBryde Produce in Uvalde. “Mexico was buying onions earlier in the season and that was helping drive prices up, but now they’re exporting them to the U.S. That and our own onion production in the Rio Grande Valley has helped supply the demand and led to lower prices.”

Watching this year’s onion prices has been a lesson in the complexity of today’s agricultural markets, Pena said.

“So many factors – from acreage reduction to the weather to the availability of similar produce in other parts of the world – have had an impact on this year’s onion market,” he said.

“Several things happened to create this current situation and affect pricing. But I think you can say the consumer ultimately has been the beneficiary of what’s been going on recently in terms of supply and demand.”

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