California onion acreage off, but volume should be sufficient
by Tim Linden | June 11, 2009
Lack of water and an off-market last year combined to produce what is expected to be a bit less California onion acreage this year, but there has not been enough of a decrease to significantly alter the market, according to grower-shippers.
"We've been up and running since June 1," said Mike Smythe, who is in charge of sales for the Telesis Onion Co. Inc. in Five Points, CA. "The quality looks good, the size looks good, but acreage is down a little bit. Other than that, everything is status quo."
Jon Hyatt, who handles sales for the Jim Hyatt Produce Co. Inc. in Sacramento, CA, said June 9 that his firm has had onions for the past three weeks. He agreed that the deal might be down a bit, but he also did not expect the decrease in acreage to significantly alter the deal.
"It looks like it is going to be a typical deal, but it's too early to tell," he said. "The weather has been good, and the crop looks good."
Echoing these sentiments was Tim Cummings, director of marketing for Peri & Sons Farms of California LLC in Firebaugh. "I know some growers had trouble getting water, and so I think the deal is going to be down a little but not enough to make a big difference. It's probably a good time to be down. It's been a lackluster deal and some people thought it was good to cut back a little."
The central California onion deal typically gets started in late May and lasts into mid-September. At the early part of the deal, grower-shippers tend to compete against the crops finishing up in Texas and Vidalia, GA, and by the middle of July, Washington usually gets back with some later summer supplies.
"We never really have the entire market to ourselves," said Mr. Cummings. "Texas usually says they are cleaned up by the time we get going, but there always seems to be somebody continuing to ship from down there."
The majority of the California deal is made up of the yellow variety, but there are also a fair amount of reds and whites. "We have equal volume of all three because that's what our customers want," said Mr. Cummings. "But this is mostly a yellow deal."
California's water crisis is the biggest factor this season, as much of the acreage is located in the Westlands Water District, which is in the center of the state. The district gets most of its water from the Northern California mountains, which had below-average rainfall and snowpack this year. That water flows through the Sacramento Delta, which has seen further curtailment of deliveries because of political battles over an endangered fish called the Delta Smelt.
Growers in the Westlands Water District received well below their normal water allocation, so many have had to rely on well water or cut back on their acreage.
Mr. Cummings said that the use of the typically lower-quality well water can hurt yields, but that remains to be seen. "Every situation is different," he said. "It depends when they used that water and if they were able to mix it with canal water. We just don't know the impact."
Maybe just as big a factor has been the onion market prices of the past 18 months. U.S. onion prices reached record-high levels in the spring of 2007 and have had very few strong markets since. A less-than-stellar market one year typically results in less acreage the following year, and that appears to be the case throughout most of the onion-producing regions this year. Central California appears to be continuing that trend.
Mr. Smythe of Telesis Onion Co. said June 9 that the market price on onions was ranging from $7 to $11 for a 50-pound bag, depending upon variety and size. That's not a terrible market, but it isn't a strong one either. He did say, however, that the market was stronger than it had been, and indications are that it is headed in the right direction.
Mr. Cummings agreed. "The yellow market has been increasing over the last couple of weeks and should get better when Texas gets cleaned up."
But he said that New Mexico would have onions through June, so he doesn't expect a hot market to materialize.
All the shippers contacted said that there have been no major changes to the California deal this year, and they expect no major changes in the packs that are offered.
"I guess we are the newest player, and this is our second year," said Mr. Cummings. "I think it is going to be a typical deal."