A single rain shower of 150 to no less than 250 millimeters caused considerable flooding on New Zealand's North Island last weekend. The onion harvest is currently in full swing in this area. The freshly harvested onions floated through the streets.
The growing area around the town of Pukekohe, about 50 kilometers from the big city of Auckland, is the onion hotspot of New Zealand. European immigrants brought the crop to New Zealand after which it became a great success. The growing area has its own successful export variety: the PLK (Pukekohe Long Keeper).
The onion area in New Zealand is approximately 5.000 hectares, of which 10% is grown in the Pukekohe area. This makes it the most important growing area.
Onions float through the streets
The harvest runs from January to early March, after which the export season starts. Many plots had already been cleared, causing extensive damage. A huge amount of rain fell on Friday and Saturday, washing away the onions from the mostly mountainous areas and onto the streets of Pukekohe and Auckland. Photos and videos on social media show images of gardens full of onions in the metropolis.
In Auckland itself, 250 millimeters fell, forcing the airport to close and residents to be evacuated. In the onion area around Pukekohe, slightly less water fell, about 150 millimeters, but the damage was also great for arable farmers. It is not known how many hectares are involved. In total, about 600 hectares of onions are grown around Pukekohe.
Bad growing season
Not only onions but also other crops have been affected by the heavy rainfall. A relatively large number of (seed) potatoes are also grown in the area. The North Island has been experiencing heavy rainfall for several months of the growing season due to cyclonic storms. It is normal for two to three of those storms to hit the region. This year the count is already above six. The season started off extremely dry, which also cost yields.
Onion growers in particular are struggling with significantly higher cultivation costs this season, which has also doubled sales prices. The current damage is likely to push that price up further. The chance that we will notice much of the news in the Netherlands is small. Exports to the Netherlands only start in the summer months. The country now mainly serves Asian countries, but high transport costs make the product unattractive.
The world market is a demand market
Onion prices worldwide are at a high level across the board. Ukraine is a very important player for Eastern Europe, but those growing areas were occupied by Russians last year. This means that buyers of Ukrainian onions had to look elsewhere. Last summer, heavy rains destroyed much of the onion crop in Pakistan, one of the largest onion exporters worldwide. The country has therefore become a net importer. The Asian market is largely fed by China, which is therefore hardly active in other destinations.
Egypt and Turkey have no trouble finding buyers for their product. Ramadan begins at the end of March, which is an important driver for onion consumption in Muslim countries. Given the tight availability, this could be a driver for price formation.