EastFruit analysts report a general decline in onion prices across the region last week, a trend that defies expectations given the commencement of the new onion harvest in Central Asia's southern territories and the persistent shortage of onions in Western EU nations.
Last week, wholesale prices for onions dipped in Moldova, Poland, and Uzbekistan. Ukraine's market remained stable in terms of average prices; however, the lowest price points saw a notable drop, attributed to an influx of lower-quality onions.
Andriy Yarmak, an economist with the Food and Agriculture Organization (FAO), sheds light on the market dynamics: "Onion pricing follows a cyclical pattern, common to many agricultural commodities. Typically, prices peak towards the season's end, drawing attention and attracting newcomers to the market. These new entrants often opt for what they perceive as a simpler venture—purchasing onions at harvest to resell later at a markup, after a storage period of 4-5 months. They base their strategy on the previous season's data, which can be a misstep, as this information alone is insufficient for informed decision-making."
Yarmak further elaborates on the challenges faced by these resellers, particularly after a high-price season: "They encounter a quintet of setbacks:
- harvest-time onion prices are still relatively high, diminishing resale margins;
- a surge in demand from fellow resellers inflates purchase costs;
- storage rental rates escalate as more traders seek to stockpile onions, eroding potential profits;
- farmers, anticipating lucrative returns, delay sales, exacerbating price increases during and post-harvest;
- often, the onions sold immediately post-harvest are those less suited for long-term storage, a detail overlooked by resellers unfamiliar with cultivation nuances.
Consequently, the likelihood of profiting from onion resale in the spring diminishes significantly, right from the acquisition stage," concludes Yarmak.
EastFruit's recent price analysis reveals that, as we approach mid-March, onion prices in Ukraine, Uzbekistan, and Poland have plateaued, mirroring those seen during the harvest season. Moldova stands as the exception, with prices hovering 10-20% above harvest levels, though they are on a downward trajectory. This price stagnation implies that onion storage has not been profitable this season, with storage losses seldom dipping below the 10% mark. The financial viability of onion storage also hinges on ancillary costs such as facility rentals, purchase financing, labor, and transportation, which further erode potential gains. EastFruit's analysts estimate that to offset these expenses, onion prices would need to surge by at least 25-30% from the onset of storage.
For more information: east-fruit.com