Argentina (Mendoza): With low profitability, onion producers sound the alarm over their situation

Malvina Luera, a representative of the Cuyo Small Producers Association (an organization that brings together horticulturists from Maipú and the eastern region), emphasized that when consulting with producers in the sector, it has been noted that, for example, in 2023, "Mendoza onions were worthless." This same scenario, she clarified, is currently being experienced. In fact, she explained that producers are paid an estimated value of between 500 and 1,000 pesos for a 20-kilogram bag. A comparison with the final price displayed in greengrocers highlights the problem, given that today, a kilogram of high-quality onions can be purchased at a local grocery store for 600 pesos.

“A truck chassis with a trailer costs around one or one and a half million pesos to work on one hectare,” the head of the producers’ association emphasized, pointing out that labor also accounts for a significant portion of the overall investment. “Prices continue to be a very decisive factor when it comes to harvesting and are correlated with the final price; expenses are much higher than the selling price,” Luera warned, noting that a bag of uria (fertilizer) costs between 30,000 and 40,000 pesos, while the rest of the inputs and services continue to increase in value, while the price of vegetables “remains the same.”

Fewer hectares cultivated

The fact that Mendoza’s horticultural sector is experiencing a complex situation, to say the least, creates a prospect of a decline from a production perspective for the coming seasons. From Luera’s perspective, what is generally being done is to plant fewer hectares; a situation that most affects small producers, who are less able to cope with the high costs and potential losses that may arise as a result of economic fluctuations, the fluctuation of the dollar, and the decline in general consumption.

In this regard, Luera analyzed that those producers who rented or were able to partially manage their plantations now, due to their lack of profit, have forced many to return to being percentage-payers or to occupy a role limited to minimal rural labor. The impact of this problem on the subsequent links in the production chain (intermediaries, market vendors, greengrocers, and the end consumer) is also felt, Luera emphasized, with final prices that also do not fully benefit the consumer and therefore curb consumption.

In the case of Valencian onions, planting takes place in May and harvesting takes place around October and November. "We’re coming off a particularly difficult year in which the onions sold nothing. We can divide it into three plots, of which only one yielded onions; the rest went unsold," said Luera, explaining the situation in 2024, which was not much different from 2023. From that year to the current one, the selling price has not increased, he warned.

Thus, the underlying problem, Luera indicated, is that ultimately, "local or national production is not being taken into account." This is because this situation of contraction causes producers not to sell, causes producers to leave, and causes them to stop producing in Mendoza to seek other alternatives. In his view, the Mendoza onion is not exempt from the general exclusion generated by the import policy. Therefore, one of the challenges to be resolved in the short term, Luera indicated, is related to the existence of a registry that considers the different sectors and their specificities. All of this, he clarified, must be taken into account when evaluating the costs and benefits that this problem represents for the province’s overall productivity. He also raised the need to increase agricultural insurance rates to allow small producers to cope with inclement weather more comfortably. Another aspect highlighted by Luera is the importance of establishing minimum prices for the sector.

From the perspective of Omar Carrasco, president of the Mendoza Fruit and Vegetable Association, the analysis is somewhat more positive, since in his case, the members of the organization are comprised of middle-level workers in the production chain. In this regard, he considered the onion season to have been "fairly good," which has led to the maintenance of low prices.

“With a good production volume, prices remain low, and this situation is similar to last year,” said Carrasco, who is an intermediate link in the fruit and vegetable purchasing, distribution, and sales chain. He also emphasized that while potato and onion prices have remained low, they have increased during times of inclement weather. “This is because the sector couldn’t export its production due to storms, and there was a shortage of merchandise in the markets; this caused prices to rise. But then it settled, and prices have been quite low for some time now,” said the president of the Mendoza Fruit and Vegetable Association.

In taking stock of the sector’s overall situation, Carrasco indicated that it is necessary to create a record of the productive matrix of the fruit and vegetable sector in Mendoza, in order to know for sure "how much is consumed in the province and how much is exported." This tool, Carrasco indicated, is positioned as a key possibility for establishing a balance between the end buyer and the producer. If this were achieved, Carrasco emphasized, the outcome could be very positive for the entire fruit and vegetable production sector.

Little entry into the foreign market

For small and medium-sized onion producers, the situation is complex. In fact, for those who have committed to generating an acceptable production volume, the challenge has been far greater than the positive results. Cristian Puebla, a garlic and onion producer, said his experience in this first cycle of planting the vegetable in his field was not what he expected. "This has been my first year with onions, and it has really been very bad," he stated.

In their case, their focus was on producing sweet onions for export. But that wasn’t possible. "It wasn’t possible because a lot of onions came from Peru, the main supplier to both countries, to Spain and the United States. Peru’s ocean freight and logistics costs were much lower than ours," Puebla explained, adding that when they decided to expand their production into the domestic market, they found a large quantity of onions imported from Brazil, as a result of the national government’s liberalization of imports.

As a result, the Mendoza producer emphasized, it was not possible to market the production. In his case, he also clarified that one of the frequent problems he has encountered has to do with social security contributions for hiring staff. "I think the situation is very complex for companies like mine that are in compliance with the staffing requirements. But for those who are informal, it can be different since they don’t have the same social security contributions. Ultimately, we find that because we have all the regulations in place, we go bankrupt, while those who don’t contribute anything continue without problems," said the producer, who has a single farm in the department of San Martín.

Total losses

In the case of Martín Calafiore, his 15-hectare crop comes from the Los Álamos area in Beltrán. From his perspective, the situation has been similar to that of other medium- and small-scale onion producers. "We’ve had a very large harvest but very low prices," he explained, assessing that a 20-kilogram bag of onions has even sold for 700 pesos. For this very reason, he believes there is currently a significant gap between producer and end consumer, at least tenfold. Added to this is the fact that, for example, the onion planting season begins at the end of June, but it’s only between January and February that the profits achieved can be assessed.

“If we have inclement weather, such as a very strong hailstorm, as has happened, we lose production,” Calafiore added, adding that from a profit perspective, it has been a year of total losses, especially considering the drop in the dollar. As producers in the sector expressed, costs have been very high and in many cases have doubled, thus generating a loss. “In terms of spare parts and inputs, all prices have doubled. The domestic market is depressed; there are no sales. Last year the situation was better because the Brazilian market consumes our onions. This is not the case,” Calafiore assessed, describing the reality in Mendoza as being that with just a few hectares of onions grown, it is possible to meet the demand of the Argentine market. “Last year we had another situation, but this year has been a disaster. We are in a very critical situation from a cost perspective; hopefully, in the short term, we will be able to achieve a stability that will allow us to move forward,” the producer expressed.