'Onion market remains dependent on export'

The most striking thing about this season of the Onion Crop Tour is that the spread between the lowest and highest hectare yield was enormous. "This year the highest gross yield is 80 tons and the lowest at 27 tons. A difference of 53 tons. Last season the lowest yield was 42 tons and the highest at 67 tons," says Pieter Post, market expert at DCA. Group, know. "These trial harvest figures provide a good reflection of the current situation in the Netherlands. There are major differences between the plots and cultivation areas."

Small increase in area
In the cultivation of seed onions, it is a matter of trial and error every season: in 2016 the market rebounded and in 2018 the market fell again. That was the year with very low yields, which caused the acreage to increase again in 2019. "Based on the price development that season (above €15), you would expect an increase in the acreage this season, but that did not happen. This has to do with the moisture supply in the southwest of the country. Seed onion cultivation there is risky. because there is little fresh water available," Post explains. "We see this reflected in the onion acreage, which has increased especially in the southwestern regions. If we add both crops together, the onion acreage shows a slight increase."

When we look at the yields of the crop tour plots, the trial harvesting shows an average of just over 50 tonnes. "However, this is not very realistic. We therefore assume a yield of approximately 48 tons per hectare, which is slightly below the average of last season." This amounts to a total of 1,32 million tons, compared to 1,37 million tons harvested last year.

Export remains essential
According to Post, there is little room for improvement on the export figures. "The 2020 season is still preliminary, but the difference between this year and last year is only 1.000 tons. So it must be possible to catch up." The figures show that most of them go to Africa. This year even more than last year: more than 95.000 tons versus approximately 72.000 tons. "The sales can therefore be considered fairly narrow, because in the Netherlands we rely quite heavily on Africa." Brazil shows that the Netherlands remains the gap filler in the market. "That country was in the top 10 of destinations for Dutch onions last year, but is not on the list at all this season. After all, the country has no shortages yet."

A country that is not included in the list, but is important, is Poland. This year, more than 1.200 tons of seed onions went to Poland, last year that was 3.500 tons. "It should be noted that a lot of field crops go to Poland. These figures are not included in this. Last year there was a lot of trade with Poland during this period, for prices around €14 to €15. As a grower you dream only of that now," said Post.

Pricing
The first listing of onion sets came in week 26. That quotation fell by €6 in 10 weeks. "We are currently in a situation where there are plenty of sowing onions available. This makes it more difficult to sell onion sets." The quotation of seed onions also shows a price drop every week. "However, the market mood is perhaps even more worrying. It seems difficult to turn around that lackluster mood. This is a free product and so a mood is needed to move trade and get growers into action," Post explains. "In retrospect, the time to do business was at the end of May/beginning of June. At that time there was a mood due to the poor moisture supply and high temperatures. The fact that the red onions are now recording a steady mood gives the citizen some courage."

If we look at the price forecast for this season (until the market closes in Senegal), a price (yellow onions) is assumed between €10 and €14 per 100 kilos. "You can already see that the €10 is slowly becoming commonplace. Yet the onion market remains dependent on sales and that is difficult to predict during this period."

Risks remain in onion cultivation
However, onion cultivation remains a risky cultivation. "With potatoes you can hedge the price risk on the futures market, but this is not possible with onion cultivation. When participating in a pool you also have no control over the price. The only other option is to conclude a fixed price contract." The corona crisis and Brexit are also playing an increasingly important role. "The fact that the corona crisis did not previously play such a major role is because 80% had already been exported. In addition, a potato, for example, is a stomach filler, while the onion is a seasoning. The potato can therefore be replaced more easily," says Post.