December 16 2005, 10:09 Agrarian Marketing Project

Will Onion Get Cheaper?

Companies report significant volumes of onions in storages and fear an oversupply in the market. A representative of one wholesale company, which deals with onions, said the "market has stopped". He meant to say that it is hard to avoid price reduction if you want to sell more onions, as the amount of stored onions are more than sufficient.

In 2005 the amount of gross harvest increased 6% in Ukraine according to the estimation from the Agricultural Marketing Project. Newly harvested onions are of good quality, which means that those who stored large volumes of the product do not worry about the quality of that which was stored. This, and demand growth, has made onion prices very advantageous for producers. Onion wholesale prices of $ 0.33-0.37/kg are a gift for producers. The owners of profitable farms say onion production cost is not higher than $ 0.05/kg.

However, it may soon be revealed that the amount of onions stored now is in excess and prices will drop. Still, vegetable market experts worry more about next year, as many producers are encouraged by high profits brought by onion production this year. Even those farmers, who produce onion on dozens of hectares, tell about their plans to extend significantly, or even double, onion acreage. Experts say this can lead to significant overproduction of onions throughout the country.