The Dutch onion sector must be running at full capacity this year to export a huge volume of onions. High transport costs pose an extra challenge this season. A low product price partly compensates for this. As a result, the onion sector ultimately pays for part of these logistics costs itself.
Thanks to a significantly increased acreage and a good yield forecast, the Dutch onion sector has a lot of product to export this season. The order book has around 140 different export countries, all of which have to purchase product to a greater or lesser extent in order to end the season empty next summer.
1,65 million tons of seed onions
In the Netherlands, 30.000 hectares of seed onions will be grown this year, according to figures from Boer&Bunder.nl. These are based on the declarations that growers made during the Combined Declaration. This area is an absolute record and an increase of 10% compared to last year (27.307 hectares).
The 5-year average gross yield of seed onions is 52,85 tons per hectare. Insiders agree that the average harvest level will be higher this season, especially gross. The Crop tour Onions already arrives in week 32 with an average of 49,4 tons per hectare. If we therefore calculate with 55 tons per hectare, this means a gross volume of 1,65 million tons. That is an amount that the sector has never had to eliminate before.
In addition to the seed onions, there is also a significant share of second-year onion sets. Although the area decreased this season to 6.243 hectares, the yields here are also at a relatively high level. If we calculate with 45 tons per hectare - over all hectares - this means almost 281.000 tons of onion sets.
Too early for forecasts
Sorting and export capacity has increased in the Netherlands in recent years. But ultimately the customers have to do it. Gijsbrecht Gunter, chairman of the Holland Onion Association, does not yet dare to say whether we can count on more or larger customers this season. "It's simply too early for that."
In October/November, Gunter hopes to have an idea of the European harvest so that export opportunities can be better assessed. "It is possible that one country stands out, but usually it concerns a few containers. That is good news for the exporter in question, but a drop in the ocean for the entire sector."
There are 2 challenges that await the sector this season. First of all, it's the quality. "Due to the predominantly wet growing season, there are significantly more quality problems," Gunter says. "The fungal pressure is very high and this also applies to the bacterial pressure. You must be careful with bacterial and head rot. Downy mildew is a factor in the sowing onions. This disease is also difficult to tackle with the thinned product package. We see this in the onion onions. These quality problems sometimes recur in extreme situations."
Expensive containers
The other challenge is exporting the onion. Transport by container or on pallets has become considerably more expensive. A reefer (refrigerated container) has become between 25% and 40% more expensive in one year. There are fewer containers coming from Asia to the Netherlands, Gunter knows. "This is disadvantageous, because we need empty containers here to fill with onions."
The Baltic Dry Index - the international standard for the price level of dry bulk goods - is at its highest level in 11 years. This is partly due to the closure of China's main port following a coronavirus outbreak.
Onions are also still transported on pallets that go into the ship's hold. "The share of reefers has grown considerably over the last 10 years. Perhaps by 60% to 70%," Gunter guesses. "Africa still purchases a relatively large number of onions that are not in refrigerated containers, but most other destinations have switched. Such a container is of course much better for product quality."
Out of pocket
Unlike grains, for example, onions do not have a FOB (free on board) price. "The exporter or exporters organize the transport themselves and present the buyer with a price for production + transport," Gunter says. "Indirectly, the sector compensates for the increased prices out of its own pocket. It is therefore beneficial for exports that the product price is at such a low level. This makes the Dutch onion very competitive on the world market. In addition to the bale and transport price import duties also have to be taken into account. These sometimes amount to as much as 70%. All these costs have to be paid one way or the other."