NFAPP's Newsletter October 1995

Featured Articles :

"The Fresh Onion Market", by Pieter van Ispelen
Topic: U.S. Onion Market, Trends and Outlook

"Editors Note.....NFAPP Fall Conference Headlines October Events", by Diane M.Wattson
Topic: NFAPP Fall Conference

Onion production has risen during the last fifteen years; led by a per capita consumption increase of 11.5 pounds in 1980 to 16 pounds in 1993. Production hit a record high in 1994, boosted by expectations following the increased 1993 grower prices. Although per capita consumption increased by 2% in 1994 compared to 1993, it couldn't keep pace with the rise in production. Prices fell, but the market was saved by a 85% increase in export volume. This kept prices from falling as far as they could have, without the additional demand. Ultimately the grower price decreased by 37%. The strong rise in exports was due to increased shipments to Japan. Onion production was down in Japan, and U.S. suppliers had a record storage crop on hand.

While retail prices show a strong upward trend over the last 15 years, grower prices have been increasing at a much slower pace. The average retail price in the 80's was $34.2 per cwt. which is projected to rise by 3.9% to a level of $47.7 per cwt. in the 90's. The average grower price is projected to rise by 1.9% from $10.0 in the 80's to $11.9 in the 90's. This means the marketing spread rises from 71% of the retail price in the 80's to 75% in the 90's.

Spring onions have seen an increase in demand since 1988. This was mainly due to the successful market approach of the Georgia Vidalia onion since the mid 1980's. Total spring planted acres rose by 60% from 1988 to 1994, induced by continuing strong prices.

Summer non-storage onions are the smallest production group in the market, originating mainly from Texas and New Mexico. The downward trend was reversed in the late 80's because of an increase in demand for fresh onions. Since then, planted acres have been fluctuating around 13,500 acres, reacting to the widely fluctuating grower prices.

Storage onions form the lion's share of fresh onion production. The storage onion-producing states have profited from the increase in consumer demand and exports. This follows an upward production trend as prices remain fairly constant. Washington has especially profited from increased exports to the Pacific Rim... considering the advantage of their ideal location. Colorado, Idaho, and Oregon are also favorably affected by this increased export demand.

Total U.S. fresh onion production will be lower in 1995 than 1994's record production. This is due to lower price expectations and a lower export level. If export levels are held on a generally high level after 1995, production continue the upward trend in 1996 - led by a steady increase of per capita consumption in the U.S. Supply will lag behind demand a little bit, resulting in higher grower prices in 1996. As production levels increase, these prices will be moderated. The difference in prices received by growers and retailers is expected to increase from a marketing spread of $34.90 per cwt. in 1994, to levels above $40 per cwt. in the next century.

Spring production is expected to show a declining upward trend as the introduction phase of the Georgia onions matures. The production of the summer non- storage onions is expected to slowly increase as a rise of planted acres in New Mexico is slightly offset by lower production in Texas.

Summer storage production is expected to follow the upward trend of the last years as exports are maintained at a high level. Primarily due to these exports, Washington will it's position as the strongest growing onion production region. Planted acres are expected to double (from 5,300 to 10,700) in the 1994 to 2003 timeframe. Is this realistic? The answer will depend on export market developments. Fresh onion production has the tendency to outgrow domestic demand keeping the grower prices down in the next ten years, so a continuing strong export market will be of importance in especially the summer storage onion market.

NFAPP realizes the growing importance of international trade in the U.S. onion industry, and is working on incorporating trade determining factors in their models. If you have any comments, please contact Pieter van Ispelen at (602) 727-6015.

The NFAPP Fall Conference October 5-6, at Arizona State University, was a success. The Conference featured market activity analyses, projections for the fruit and vegetable industry, and impacts of the new Farm Bill.

Guest speakers from several areas of the fruit and vegetable industry included: Vernon Crowder, Bank of America; Roberta Cook, UC Davis; John Love, USDA; and representatives from the offices of Congress. In addition, Industry Respondents such as: Wayne Minninger, National Onion Association; Bud Middaugh, National Potato Board; and Gerry Davidson of Sunkist were on hand for topic discussion.

In coming months, we will feature Conference results in this newsletter, as well as up-to-the-minute market and legislative analyses. Thanks to those of you who attended. Your presence helped make the NFAPP Fall Conference a success. We hope to continue the tradition next year, and that you will plan to attend. At press time, there was no firm date, but we will keep you updated in future newletters.

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