COVID-19’s effects on onion market expected to lighten over summer
As the COVID-19 coronavirus pandemic delivered a devastating blow to many businesses that buy onions, it left no doubt about the importance of onions in diets worldwide, suppliers say.
“When COVID first hit, onions, potatoes and toilet paper were the hottest items out there,” said John Castillo, buyer and salesman with Fullerton, Calif.-based grower-shipper JBJ Distributing Inc.
Orders flooded into JBJ almost immediately, Castillo said.
“Generally, I buy about three or four tons a day; then, I was buying 10-12 tons a day, and it was going out the back door as fast as we could get it,” he said.
Demand contributed to a supply gap between the end of Mexico’s season and start of the deal in California’s Imperial Valley, Castillo said.
“I think that’s where the gap came from,” he said.
“Most of these guys had what they usually had in storage to kind of bridge to where their new crops came in. Between them and Mexico, that’s kind of getting us through.”
The pandemic brought various social-distancing and stay-at-home restrictions in March and April and forced closures of restaurants and schools — both key onion buyers — across the U.S., Castillo said.
“They’re the ones that got hit the worst; that’s why retail stores, luckily, we have some good retail accounts, and that’s why we’re buying all we could get our hands on,” he said.
By mid-May, restaurants in some regions were beginning to open to diners again, with restrictions in place.
“I’m sure there’s a couple of companies that are going to come out of this wobbling pretty hard,” Castillo said. “They’ll come back, but it’s going to be a slow go.”
For onion suppliers that focus primarily on retail accounts, the pandemic was less devastating, suppliers said.
“We do about 80% retail, so it’s had a positive effect for our bottom line,” said Derrell Kelso, CEO of Stockton, Calif.-based Onions Etc.
COVID-19 damaged the foodservice sector, but not permanently, Kelso said.
“In the long run, it’s going to be great for foodservice people, too, because they’ve been very creative,” he said.
“Those that have survived will come out stronger, with developing new markets and all the things they’re doing.”
Oxnard, Calif.-based fresh-cut onion processor Gills Onions noted the resilience of onion sales, even though foodservice took a major hit from the pandemic, said Megan Jacobsen, vice president of sales and marketing.
“When you think of a consumer — say a millennial mom — cooking in your kitchen, onions are a good way to add flavor,” Jacobsen said.
“We all know the storage capabilities. It lasts a lot longer than other fruits and vegetable. People are cooking at home more with what’s happening. You can buy it easily and don’t have to worry about using it up right away.”
The retail and industrial sides of the onion business have remained strong through the COVID-19 crisis, and foodservice is showing some signs of recovery, Jacobsen said.
“It is no secret that foodservice has dropped, but we’re seeing increased volume in foodservice every week,” she said. “Everything dropped off the week of March 16, but we’re seeing big growth every week now. The positive direction is, the longer we’re in this, the more our supply-chain partners are adapting.”
Meanwhile, suppliers have instituted their own restrictions to protect workers, said Robert Verloop, COO with Salinas, Calif.-based Coastline Family Farms.
“The onion industry has been affected by the COVID fallout in myriad ways,” he said. “We have the same concerns as all grower shippers: the health of our workers, labor shortages, and concern for our customers required to shut down or limit sales.”