Wednesday, February 1, 2017

Commodities: Oregon Onion Prices Soaring

What's next, bacon?
From the Spokane Spokesman-Review:

Onion storage buildings collapse, raising onion prices
Heavy snow has caused dozens of onion storage sheds in eastern Oregon and Idaho to collapse, resulting in as much as $100 million in damage.

About 50 onion buildings collapsed under the weight of up to 40 inches of snow, reported the Capital Press. The general manager of Owyhee Produce in Nyssa, Oregon, said three of the company’s storage sheds and a building housing one of its packing lines have collapsed.

“It’s an absolute catastrophe,” said Shay Myers, the Owyhee manager. He estimated that the total damage to the onion industry in southwestern Idaho and Malheur County, Oregon, could be near $100 million.

The region’s 300 onion farmers produce more than 1 billion pounds of Spanish big bulb onions annually, or about 25 percent of the nation’s big bulb storage onions. A big chunk of last year’s harvest, however, was lost in the building collapses. Once the onions are exposed to the cold and freeze, they are no good.

The production loss has dramatically increased the price of onions. A 50-pound bag of yellow jumbo onions was about $3.50 before the collapses and is now nearly $10....MORE
I'm used to the media in India covering big swings in onion (and lentil) prices closely but, barring the October 2006-April 2007 triple, as far as I can find this is the first time since Title 7, Ch. 1, § 13–1 U.S. Code* came into effect that we've seen this kind of move in the grantedly volatile U.S. onion market:

The only solution: a windfall profits tax for Big Onion.

*The Onion Futures Act of 1958.

7 U.S. Code § 13–1 - Violations, prohibition against dealings in motion picture box office receipts or onion futures; punishment
(a) No contract for the sale of motion picture box office receipts (or any index, measure, value, or data related to such receipts) or onions for future delivery shall be made on or subject to the rules of any board of trade in the United States. The terms used in this section shall have the same meaning as when used in this chapter.
(b) Any person who shall violate the provisions of this section shall be deemed guilty of a misdemeanor and upon conviction thereof be fined not more than $5,000.
The act was passed after a bear raid in Chicago crushed the price of the futures from $2.75 to a dime.