Disappointing quality loosens supply

The Dutch export apparatus has shown its strongest side in the past few weeks. The counter stands at more than 45 tons up to and including week 448.000. That is an increase of almost 27.000 tons compared to the same period last year. There will be written about staggering export figures.

Special scenario
On the other hand, there is a special phenomenon that even experts in the sector have not seen before. Record exports normally imply favorable prices, or positive price formation. However, that is not the case at all at the moment. Last week, both Goes and Emmeloord had to compromise on fine onions.

The reason for this special situation can be roughly divided into two. For example, there is 1 group in the market that has disappointing quality calls, and 1 group that specifically points to the immediately available volume of (pool) onions as a reason for the availability of onions. We analyze both options.

Do pools have an effect on market prices?
Several insiders mention the large supply of onions from pools as the reason for the current situation on the market. Particularly in the new cultivation areas in the northeast of the Netherlands, cultivation is on the rise and good yields have been achieved this year. Many consignments are shipped off the land or left dry from the shed. Due to the wet autumn, the quality is sometimes disappointing, which puts extra pressure on sales. These onions are sold both in pools and on a day trading basis.

Growth put into perspective
In Drenthe, Overijssel and Groningen, onion cultivation has increased the most this year in percentage terms. The 3 northern provinces have increased in area by 45%, 41% and 26% respectively. That sounds big. However, if we look at the rural area, Drenthe accounts for 3% of the total Dutch area. We are talking about 800 hectares, good for a gross volume of 45.360 tons. The total national increase is 241.000 tons. That puts the figures somewhat into perspective.

In addition to the area and yield increase, the effect of the onion pools is mentioned. According to insiders, this is reflected in the figures of the Holland Onion Association (HOA) and the export figures. The idea is that onions from the pools are not reported to the HOA. However, if we compare the figures, this feeling is not reflected in figures. Up to and including week 47, the HOA list is good for more than 80.000 tons this season, compared to 72.000 tons in 2016. In 5 of the 13 export weeks, the list reported a smaller volume this year than in 2016.

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The HOA list shows no deviating picture compared to onion exports.Exceptional scenario
Agrifirm Plant manages a national onion pool, for which sales are taken care of in the off-farm and autumn periods. "The pool works via an action plan that has been carefully put together in advance. The sales and method by which the processors pay for the pool are secured in various ways with the various pre-selected customers," says Aart den Bakker, sales manager. at Agrifirm Plant, know.

"We always strive to achieve maximum value for the onions. The off-field period has been very short this season. That put a lot of pressure on logistics. An exceptional scenario. The opportunity to store onions offers growers more flexibility and makes them less dependent on logistics during this busy period."

Quality the culprit
Why is the onion sector squeezing away huge volumes at these low prices? "The big culprit for the time being is the quality. It is not always easy. That is the case on sandy soils, but it also plays a role on clay. We have to keep the Dutch onion quality high. Onions that you know do not have a long shelf life are delivered early. There has been an area expansion in the northeast this year, but nationally we are talking about a relatively small percentage. The higher yield achieved in the traditional cultivation areas largely contributes to the additional supply."

Onions from the clay
There are commission agents who can identify with Den Bakker's story. Onion quality is particularly disappointing in the south-west of the Netherlands. The 'falling bald' of onions in particular is mentioned as a problem. Parties that cannot be held until February/March are now being offered. Last season, growers sometimes waited a long time, which did not pay off. With this experience fresh in our minds, more offers are currently being made. In the clay soil, the late and wet harvest conditions are not the culprit, but rather rain that fell during the growing season.

In addition to the fear of long market prices, growers also keep a close eye on exports. They know that exports to Africa are not endless and that Senegal has largely filled its quota. Farmers with onions that are of excellent quality, but that do not meet Asian and South American requirements, also make offers.

New rounds, new opportunities
Wouldn't poorer onion quality ruin Dutch exports? Insiders who Boerenbusiness were not immediately afraid of that. Better quality onions are also for sale, but they are more expensive and the majority of the market is not interested in them at the moment.

Apart from the record exports, demand is also healthy, according to traders. Africa dominates the buyer's country, but for the beginning of 2018 there is also hope for other destinations in Central and South America and Eastern Europe. This is where tentative demand would now come from. Optimists see new opportunities emerging for the second half of the season for those who have good quality product in their sheds.