by Dan Burden, content specialist, AgMRC, Iowa State University, djburden@iastate.edu.
Revised May 2008 by Diane Huntrods, AgMRC, Iowa State University.
Overview
According to the UN Food and Agriculture Organization (FAO), onions are grown in at least 175 countries. Of those countries, the leading producers are China, which harvested 2.2 million acres of onions in 2005, and India, which harvested 1.3 million acres.
Total U.S. onion production in 2007 was 79.4 million cwt, and the value of the crop was $840 million. The USDA reports that the 2007 crop of fresh market onions was valued at $334 million, while that year's crop of storage onions was valued at $506 million. In terms of vegetable production, onions are one of the three largest crops; the other two are head lettuce and watermelons. In terms of value, onions are one of the three most highly valued vegetable crops; the other two are head lettuce and tomatoes.
Varieties
Onions can be divided into two marketable categories: spring/summer fresh market ("green") onions and fall/winter storage ("dry bulb") onions.
Fresh Market Onions
Fresh market, or green, onions are pulled while the tops are still green and usually before a large bulb has formed. They are available in yellow, red and white throughout their season, March through August. They can be identified by their thin, light-colored skin and may have edible green tops. Fresh market onions have a high water content, making them typically sweeter and milder than storage onions. They also are more susceptible to bruising. Across the United States, more than 4,000 varieties of fresh onions are grown, but of these, almost 90 percent are yellow varieties. Yellow varieties are very popular with Hispanic consumers and are increasing in market share due to ethnic demand.
Another fresh green onion market is the refrigerated "premium fresh" arena. This encompasses the pre-processed fresh produce that is pre-cut and packaged for fresh toppings used at salad bars, fast food restaurants or for inclusion in pre-mixed and bagged salad greens. One-third of fresh market onions are consumed away from home, with full-service restaurants accounting for 15 percent.
Storage Onions
Storage, or dry bulb, onions account for about 70 percent of annual U.S. onion production. They are a crop that lends itself well to small-scale and part-time farming operations. Multiple markets exist for growers with small (1/2- to 5-acre) acreages, and the various colors (red, yellow, white) and types of mature bulbs allow growers to exploit particular market niches or offer an assortment of varieties to local vendors. The term "dry bulb" onion is used to distinguish them from fresh market onions.
Storage onions have numerous varieties, but those that most growers produce and ship are mainly broken down into three main groups: yellows, whites (Bermuda type) and reds. The yellow variety has a crisp paper skin and is the most commonly seen onion at neighborhood supermarkets. Yellow onions are available beginning in August and continuing into spring of the next year. Availability is usually excellent, depending on the market. The white and red varieties also are popular; however, stocks on hand can be limited at times due to the higher cost associated with raising a quality crop of some of the varieties.
Other
While the fresh market and storage onion markets account for the largest share of onion use, other markets also account for significant production. Most onions used in canning and freezing are taken from fresh market varieties, while dehydrated products use separate varieties having higher solids content. Frozen onions are estimated to account for as much as 10 percent of all onions consumed. Both fresh market and dehydrated onions (largely granulated and powdered) appear in a wide variety of canned and frozen products such as salsa, soups, stews, salad dressings and pickled products. Dried and dehydrated onion products are manufactured for both domestic and export markets. Dehydrated (reconstituted diced/minced) onions are used by some fast food chains for hamburger toppings or ingredients in burritos and similar products. They also are sold in significant quantities to bakers for use in onion bun, roll and bagel production, and are a primary component of many dehydrated packaged soup and sauce mixes.
Production
According to the USDA, U.S. farmers harvested 31,000 acres of fresh market onions in four U.S. states in 2007, producing over 10 million cwt of onions valued at over $334 million. While production declined in Georgia and in Texas, higher market prices contributed to higher crop values in all four states. The 2007 market onion crop in Arizona was valued at $6.5 million, in California $36.6 million, in Georgia $116.3 million and in Texas $174.7 million. By 2008, Texas' fresh onion crop had rebounded while Georgia's onion crop continued to decrease.
Production of storage onions in 2007 totaled 57.8 million cwt, bolstered by record-high yields of 538 cwt per acre. However, extremely low prices reduced the crop's total value to $318.5 million. With its superior yields, Oregon became the leading grower of storage onions, producing 15.4 million cwt. Of that amount, one county, Malheur, produced 8.6 million cwt. California ranked second, producing 13 million cwt. Following close behind, the state of Washington produced 12.8 million cwt.
Yearly prices usually reflect supply and peak in the early spring, followed by a weakening of the onion market as supplies from most of the U.S. storage onion producing states begin to increase. The market then weakens during the period of concentrated harvest, usually including shipments from Mexico and the fresh market onion harvest in California, Georgia and Texas. Prices then moderate as overall harvest data is finalized. U.S. farmers produce a crop worth, on average, about $800 million from the field and $3 billion to $4 billion at retail.
Processing
Growing onions is expensive, requires a lot of water, and like most agriculture, is easily disrupted by extreme weather. Most commercial operations are large-scale, integrated production-processing-packing systems having ample irrigation and processing water, as well as specialized processing and storage equipment. Many field operations, such as land preparation, planting and harvesting, can be custom hired, and most of the equipment needed for production and processing can be used for other vegetable crops.
Harvesting onions may be difficult. Some varieties can easily be mechanically handled, while others suffer dramatically from inappropriate mechanical treatment. Specialized harvesting equipment is required for the different types of onions. For storage onion harvesting, topper/loader, topper/windrower, flailer, hand-topped and untopped harvesting may be employed. Storage onions are undercut by the harvesting machine, which picks them up out of the soil and moves them into the body of the machine where forced air vertically orients the onion so that the top can be cut by a moving blade. The waste material is deposited behind the machine and onto the field. For fresh market onions, harvest is far less mechanically oriented. The delicate nature of these onion varieties dictates that they receive expensive hand harvesting.
Standard practices in onion harvesting include undercutting the onions and allowing them to cure (air dry) for two to three days, clipping the tops and roots, bagging the onions in burlap sacks, transporting them to a warehouse, drying, grading, bagging or boxing and shipping. Onions also need an appropriate "curing period" where the neck opening closes. Inadequate curing will lead to onion rot and loss of the bulbs; prolonging curing can lower bulb quality. Additional processing may include washing, peeling, coring and cutting for special packaged products or ingredients for the prepared foods industry. Most major packers and shippers have quality assurance and quality auditing procedures.
Demand
In terms of both farm value and per person domestic consumption, onions are one of the top five vegetables in the United States. In 2007, the average American consumed 21.7 pounds of onions, up from 19.8 pounds per person in 2006. Historically, demand rapidly increased during the 1970s as the popularity of fast food hamburger chains featuring onions on burgers and onion rings as side orders increased. In the 1980s, the booming popularity of salad bars increased onion demand. By the end of the decade, demand continued to moderately increase as the growing popularity of pizza, pasta, salsa and other ethnic cuisines increased. The booming economy of the 1990s propelled demand for away-from-home foods, many of which feature onions.
Onions also have natural qualities that make them attractive to consumers, particularly in today’s health-conscious market. Research has shown that onions are low in calories and are a source of dietary fiber. Fresh onions also contain vitamin C, with one medium onion providing 15 to 20 percent of the daily requirement. Additionally, onions play a greater role in the diets of many Americans after receiving considerable attention for their healthful, functional benefits. Onions can aid in disease prevention due to their antioxidant content. Antioxidants can reduce the risk of body degeneration and disease by inhibiting the damage caused by oxidative free radical chemical compounds to nutritional and bodily lipids, proteins and nucleic acids. Antioxidants are thought to function by scavenging free radicals. Common household cooking and industrial processing methods may decrease the antioxidant capacity of onions.
An important, lucrative niche market and value-added success story has to be that of the Georgia Vidalia Onion. This mild, sweet fresh market onion is one of 17 approved varieties of hybrid Granex onion produced in a specific geographic area of the state of Georgia. The culinary characteristics of the product are a direct result of the unique interplay of onion variety, soil type, moderate climate and ample availability of water. This onion is available nationwide on supermarket shelves and commands a premium price. The marketing of this product represents an example of an effective marketing strategy whereby legislation, research and aggressive development of a branded product resulted in a "household word" "flagship" brand. Sometimes the product is discounted to wholesale or below wholesale price. In these situations, the retailers use it as a "loss leader," a high-value discounted product, to attract customers to their produce sections.
A great deal is known about the supply side of the U.S. onion markets; however, less is known about consumer preferences. Using data from USDA’s Continuing Survey of Food Intakes by Individuals (CSFII) survey, a group at Texas A&M University demonstrated where and in what quantity fresh and processed onion products are consumed and linked this consumption to consumers’ economic, social and demographic characteristics. The important findings (reprinted below) from this article include:
(1) The bulk of fresh and processed onions were purchased at retail stores and considered as home foods. Likely reflecting the influence of fast food onion rings, 37 percent of frozen onions were purchased away from home, with most bought at fast food places.
(2) Fresh market onions were favored slightly more in the West and Midwest and less so in the Northeast and South. Consumption of processed onion products was strongest in the Northeast and weakest in the South.
(3) Hispanics were the strongest consumers of fresh market onions. Compared with other consumers, fresh onions were discovered to be relatively less important in the diets of many black consumers.
(4) Per capita consumption of fresh and processed onions was greatest in the high-income health-conscious consumer group. Households in this income bracket, with income greater than 350 percent of the poverty level, represented 39 percent of the U.S. population and consumed 41 percent of both fresh and processed onions.
(5) The survey indicated that men consume nearly 40 percent more onions per capita than women.
(6) Children apparently do not begin to acquire a taste for onions until the teen years. Total onion consumption appears to peak for both sexes between the ages of 20 and 39, and remains relatively strong through the middle-age years.
Exports and Imports
According to U.S. trade statistics, onion exports increased nearly 5 percent in 2007, totaling $152.2 million. Onion exports to Canada increased to $91.5 million, but onion exports to Mexico declined to $31.8 million, returning to more normal levels. The volume of U.S. onions exported to Mexico the previous year was $37.7 million, three times the usual amount. The country's heavy demand pushed prices to record-high levels.
Onion imports in 2007 were valued at a record-setting $275.9 million, rising 44 percent from 2006. Once again, the dominant trade partners were Mexico and Canada. Mexico delivered $184.2 million of onions to the United States while Canada delivered $39.2 million.
Government Regulation
With the exception of dry pea and lentil producers, federal farm programs that provide income support to field crop producers do not apply to the vegetable industry. Nevertheless, various federal programs play key roles in stabilizing and promoting vegetable sales, while also partly protecting growers from market uncertainty. For instance, some vegetable growers also produce such crops as small grains, soybeans or cotton—crops that make growers eligible for participation in various government programs—and some participate in federal conservation programs.
A planting flexibility provision allows growers to plant crops other than program crops on their base acreage (acreage used to calculate program support) without losing any base acreage or government payments. At the request of the vegetable industry, the provision prohibits the planting of vegetable crops on these "flexed acres" to protect growers who do not participate in farm programs (and do not receive government payments) from having to compete against producers who do.