Overproduction and low quality: what is happening to the onion market in Ukraine
2 October 15:51
EXCLUSIVE
For the third year in a row, the onion market in Ukraine is entering the season with record low prices. According to analysts, wholesale prices have already dropped to UAH 5-10 per kilogram, and this trend may continue as long as there are significant volumes of medium and low quality products on the market.
What will happen to the prices of the popular vegetable, which is part of the “borscht set,” "Komersant Ukrainian" asked Oleksandr Khorev, the coordinator of the EastFruit Weekly Ukraine project.
The key vegetable crop
The expert emphasized that onion traditionally ranks second in terms of production among vegetable crops after potatoes and remains a basic product in the consumer basket of Ukrainians. In case of a shortage, the country is forced to resort to imports. That is why this crop always attracts the attention of both producers and traders.
This product should always be in the Ukrainian grocery basket, so we cannot do without it. And as always, people want to make money on it, especially newcomers, when they see high prices for this crop in spring, for example, they try to make money and plant it,” Khorev explained.
“However, problems with growing and storage technologies lead to the fact that a significant part of the crop is lost every year. While in the south of Ukraine (Kherson, Mykolaiv, Odesa, Zaporizhzhia regions) onions were traditionally harvested in August in dry weather, which guaranteed quality storage, now the geography of production has expanded to the whole country. This means a later harvest in September, often during precipitation and temperature fluctuations. As a result, the onions get sick and quickly deteriorate in storage, losing their marketability before the New Year.
Currently, onions are grown in all regions of Ukraine, and harvesting is postponed until September. And when the temperature and precipitation are right, the onions get sick, they are stored in storage facilities, and such products, especially those that are not processed properly, spoil. And it is thrown away before the new year, and then, in the spring, we see that there is sometimes a shortage again,” the expert said.
Overproduction and pressure on the market
The EastFruit Weekly Ukraine project coordinator explains the current price drop by oversupply. “Over the past three years, many producers have relied on onions, expecting a steady rise in prices.
One year, prices were low, the second year, prices were low, and the third year, they were sure that prices would be high. No, prices will never be high if there is overproduction, i.e. supply exceeds demand,” he said.
“However, this season’s bumper harvest, particularly in the north and west of the country, where late varieties are still being harvested, has led to a surplus of produce.
Due to unfavorable weather conditions, the onions received a “double blow” – disease damage and storage without proper processing. As a result, the market is dominated by large volumes of medium and low quality products, which are unlikely to last even until the end of the year. This forces farmers to actively sell their crops, creating a downward price trend.
Read also: Demand is there, supply is lacking: an expert explains the rise in pumpkin prices in Ukraine
Impact of the war and reduced demand for onions
An additional factor affecting onion prices was the decrease in the number of consumers due to the war and the outflow of people abroad. Demand for onions cannot actually grow, while supply exceeds market demand. This creates conditions under which prices fall and producers’ profits decline.
Experts note that in this situation, only consumers who receive a basic product at an affordable price will benefit. For professional farmers and large farms, the current season is a loss. The situation is complicated by competition from new market players, who often do not have sufficient technological capabilities to grow and store onions, but are trying to make money on short-term price fluctuations.
When prices are likely to rise
According to Oleksandr Khorev, the situation may change only in the second half of the marketing season, in spring. In March-April, prices for quality onions are likely to rise, and they will be able to keep until then. However, the volumes of such products are limited, and the outcome will depend on the storage technologies used by farms.
In Western Europe, particularly in the Netherlands, there are no problems with late harvesting of onions due to the widespread use of drying chambers, which allow for high-quality preparation of the vegetable for long-term storage. In Ukraine, however, such technologies are used only in some farms.
Currently, the Ukrainian onion market once again demonstrates the classic risks of overproduction: low prices, losses for farmers and crop losses due to imperfect technology. Despite this season’s anti-record prices, there is a possibility of a price rollback in the spring, when the remaining quality products become scarce.
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To stabilize the market, experts advise producers to invest in modern drying and storage technologies, as well as to take a more balanced approach to planning onion areas. Otherwise, the situation with oversupply and sharp price fluctuations may be repeated from year to year.
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