A red onion is not a yellow onion, it turns out

A week and a half ago, the first quotation for red seed onions from the 2024 harvest appeared on the board at the stock exchange in Emmeloord. With a start of €18 to €23 per 100 kilos for the size sorting 60% coarse and mood fixed, this still provides some surprise and cheerful faces on the onion market. Certainly when you compare it with the yellow onion market, which is increasingly difficult in terms of price and where the seed onions are not really getting into their stride yet. And this while the seed onion harvest is about to burst. The stock exchange quotation in Goes also noted for the first time this week and came out at €20 to €23 for red onions, while Emmeloord kept prices stable this week. However, the mood did change: from fixed to calm.

Supply and demand relationship completely different
The explanation for the big difference with the yellow onion market is currently mainly due to the difference in supply. Various packers and sorters indicate that supply and demand are much better balanced and that at the moment demand is in control. The volume of red plant onions, which is experienced as a difficult cultivation, is limited. The same applies to the early red seed onions and, for example, the part that goes into the ground as press pots. On the other hand, there is also a pretty good demand, several sorters notice from their orders. Europe remains on the market for red and there is not that much new harvest available. The Netherlands is one of the few that can supply new harvest at the moment, says a sorter. Germany is one of the major buyers at the moment and Great Britain is also on the market for red, says an exporter. But volumes are also being prepared for other destinations and there is interest by sea.

Another reason is that the red onion market (unlike yellow) started with an empty or better said 'clean' market from last season. Imported onions from outside Europe and from the Mediterranean filled the demand on the European market. It also ensures that the bale prices for red onions have remained relatively stable and the market is now also profiting from that.

Waiting market
The start of the red onion market this season is good, but a large part of the sector initially thought differently. As mentioned, the height of the quotation comes as a bit of a surprise. Until recently, the red onion market was very hesitant. There was limited trading and what was fixed in advance, dates back a long time and was not fixed at prices of more than €17 to €18 per 100 kilos, with a few exceptions. Both the growers and the trade and sorters found and still find it difficult to estimate what the kilos of a hectare will amount to this season. The late spring and a special growing season with various extremes are the reasons for this. In addition, the last kilos still have to grow. And it does not make it any easier that the red onion is more vulnerable and sensitive to environmental factors and, for example, structure in cultivation.

Area growth
The red onion cultivation has also grown considerably in size this season, after the prices of the 2023 harvest rose during the harvest period and then settled at a high price level. It is therefore not surprising that the market has been hesitant until now due to the special growing season and expansion in cultivation. If you look at the figures from the Central Bureau of Statistics (CBS), the red onion area has grown from 3.680 to 4.652 hectares, an increase of 26%. Onion seed supplier De Groot en Slot, which has a large market share in the red onion segment, indicates that sales of red onion seed have indeed increased considerably this season. If you compare it with the 2022 harvest year, the red area is still 258 hectares or 5% smaller. However, this is based on the CBS figures and what has been filled in by the growers themselves. Area figures from before 2022 are not available for red onions. In previous years, the red and yellow onion area were not broken down. However, the red onion area has increased on average over the years.

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Opportunities for 2024
Sorters and exporters are seeing an increase in demand for red onions in Europe and worldwide. This demand and production no longer really constitute a niche market, as was previously the case. However, it remains a very different market than yellow and the two types are hardly comparable. For example, African countries demand yellow onions, while many countries in Asia buy pink and red onions. This became apparent in 2022, when the yellow onion market boomed and red was a cheaper alternative. Some red onions did go to African destinations, but in many cases it remained there. 

There are opportunities for overseas exports this season, according to a survey among sorters and exporters. Export restrictions for red onion exports are still in place in India, although there is no ban at the moment, as was the case from 2023 to May this year. With the expected Kharif harvest (summer harvest), which is rumoured to be somewhat disappointing due to excessive rainfall, these export restrictions may continue. Not that India will enter the market for Dutch onions, but neighbouring countries that normally import onions from India will be able to do so. This has happened more often in other years.

On the other hand, the price level in Europe is also important. Last season, the red onion price was very high from the start and with the transport costs on top of that, it was difficult to compete in Asia. Certainly with a country like China, which has developed into a large onion exporter in a short time and can deliver cheaper. However, quality is also a top priority for some countries, although there are of course limits. The amount that is exported overseas is by no means the volumes that an Ivory Coast or Senegal takes, but added together and looking at the smaller red onion area, that is not necessary either.

Europe
In addition, the red segment is also growing on the European market, as sorters note. The demand in Europe for red onions is increasing every year and this is expected to continue in the coming years. No hard figures are available on this, but this is clearly reflected in the sales to sorters and packers. 

Not only is the demand for red onions growing, production is also increasing on the European plots due to a larger area. After a few years of good prices and a good balance, growers outside the Netherlands have also opted for more red onions in the cultivation plan. This is certainly something we see every season in the Netherlands, but also outside the Netherlands. The growth in the red area is large compared to other years, where, for example, according to insiders, a lot has been expanded in Germany and part is grown in the border region. It is known that part of this ends up on the Dutch market. These are figures that are not included in the CBS count. In addition, the European expansion of cultivation ensures that there may be fewer export opportunities, although this cannot be estimated at the moment. Incidentally, red onions are not grown everywhere in Europe.

Not below €11,50 in five years
With the grower prices of the past five years, a positive balance has been made for red onion cultivation with an average yield. In the past five years, the grower price has never been below €11,50 per 100 kilos for the coarse size grading (60 mm upwards). The last time was at the end of the harvest period in 2020 for just a single week. In addition, the storage season started in 2019 with €13,00. Furthermore, the prices, also later in storage, have always been higher. The storage season has also paid off at many times. However, the differences between the fine and coarse size grading sometimes increase rapidly. Something that is often said by sorters is that size 40-60 is difficult to get rid of at some times in the season.

Over the last four years, farm gate prices started lower or at approximately the same level as the storage season. 

A repeat of 2022
In terms of area, the 2022 harvest year is not far off from this season. According to the CBS, the yield was estimated at exactly 40 tonnes per hectare that year; 5,5 tonnes lower than for yellow seed onions. In that year, drought and heat took their toll on the seed onions. What the yield will be this season remains to be seen, but according to various insiders from the sector, the yield seems to be slightly higher than 40 tonnes per hectare. It is clear that it is disappointing in the field. The area in 2022 was 258 hectares (5%) larger than now, which somewhat compensates for the better yield. Apart from exports, the strong growth of this area does not mean that there are too many red onions in advance. In 2022, the ex-land price started higher than now, but grower prices also rose to more than €35 per 100 kilos after the turn of the year. This happens more often after New Year's Eve, as can also be seen in the previous graph. This has to do with the fact that sales in the months of September, October and November are the smallest for red onions.

In short, there are opportunities but it can go either way. After all, they are still onions.